Dalata Hotel Group plc, the largest hotel operator in Ireland, has announced its half year results for the six months ended 30 June 2014.
Highlights
- Successful completion of IPO in March raising €256m net of costs
- Strong operating performance with revenue up 31% on H1 2013
- EBITDA up from €0.9m in H1 2013 to €2.4m in H1 2014
- Completed acquisitions of Maldron Hotel Parnell Square and Pearse Hotel post period end
- Announcing the acquisition of the Tower Hotel in Derry for £4.375m
Key Figures
Positive first half
Pat McCann, CEO, commented:
“The business has enjoyed a positive first half of 2014 with a strong operational performance availing of the opportunities presented by improving market conditions. There is continued strong growth in Dublin and encouraging signs of recovery in regional Ireland. Maldron Hotel Cardiff continues to grow its market share and the business has also benefitted from the addition of Maldron Hotel Dublin Airport and Maldron Hotel Tallaght.
“Following our successful IPO in March this year, we have completed the acquisition of Maldron Hotel Parnell Square and the Pearse Hotel, both in Dublin City centre. We have also agreed to acquire a 25% interest in the Ballsbridge and Clyde Court Hotels in Dublin 4 and today announce the acquisition of Tower Hotel, Derry, Londonderry. We are actively pursuing further acquisitions as activity in the market continues to accelerate through the second half of the year.
“The outlook is encouraging and we are confident for the remainder of 2014 with strong momentum maintained. The sustained commitment of Government to the development and support of the tourist industry through a combination of investment, promotional and fiscal measures has revived confidence in the hotel sector. The solid growth in recorded visitor numbers in the first half is continuing into the second half. We expect EBITDA in the full year to be in the range €7.5 million to €8.0 million (2013: €5.3 million) excluding the effect of acquisitions.”
Dalata Group H1 2014 performance overview
The first half of 2014, traditionally the slower part of the year for revenue and profitability, saw continued recovery in Ireland’s hotel sector, with encouraging signs of sustainable growth in regional centres to complement the continued improving performance of recent years in Dublin. This growth has been driven by a number of factors:
- CSO figures for total trips to Ireland show an increase of 9.9% year on year for the period from January 2014 to July 2014.
- In Dublin, event activity – corporate and leisure – continues to be strong
- An improvement in domestic consumer sentiment is also in evidence this year.
Dalata’s revenue comes from the operation of a mix of 13 owned and leased hotels and from fees for hotel management services provided to third party owners under management agreements.
Top line revenue increases in the period were driven by the addition of Maldron Hotels at Dublin Airport and Tallaght and growth in the existing business. Profit growth was derived from a combination of additional management contracts and favourable market conditions in the leased and owned business across all hotels.
The result is unaffected by the Maldron Hotel Parnell Square and Pearse Hotel acquisitions.
Leased and Owned Hotels
EBITDA at leased and owned hotels increased from €0.4m in H1 2013 to €1.1m in H1 2014. The increase in profitability reflects a strong operating performance driven by a recovering market, improving room rates and active management of operating costs.
Like for like revenue increased by 7.6% (excluding the effect of Maldron Hotels Tallaght and Dublin Airport which commenced in December 2013 and January 2014 respectively).
Like for like Revenue per Available Room (RevPAR) in Dalata’s Irish hotels grew by 11.4%; occupancy was down 0.5% (a consequence of refurbishment works at two hotels) and average daily room rates (ADR) were up €8 (12.0%).
Strengthening ADR has had a positive effect on profitability; this reflects management of the business mix towards higher yielding rooms business and away from inclusive package offers. The margin before rent grew from 27.6% in 2013 to 29.5% in 2014 on a like for like basis.
The Dublin market is continuing its strong recovery with growth in occupancy and RevPAR for the fourth consecutive year. The regional Irish properties are also seeing growth in revenues and Maldron Hotel Cardiff continues to win market share with H1 revenues up 21% on 2013.
Hotel Management services
Management Fee revenue is up 75% from €1.7m to €2.9m. This growth reflects a very active period of contract additions between Q2 2013 and the early part of 2014. This trend is being reversed in H2; several hotels operated under management contract are currently for sale including three with sale contracts agreed.
The company continues to actively seek new management contract opportunities and in August entered into an agreement to manage Aghadoe Heights Hotel and Spa in Killarney, Co Kerry.
Acquisitions
The acquisition of quality hotel assets as they come to market either through portfolio acquisitions or single asset purchases remains as a core platform for growth by the Group.
Since the March 2014 equity fundraising which raised €256m (net of costs), the acquisitions of Maldron Hotel Parnell Square, Dublin (€15.3m) and the Pearse Hotel, Dublin (€14.4m) have been completed.
Binding contracts have also been entered with Blackstone to purchase their share and loan capital in the companies that own the Ballsbridge and Clyde Court Hotels for €21.8m. These contracts are subject to pre-emption rights of the other shareholders of the target companies.
Today, Dalata announces the acquisition of the 93 bedroom Tower Hotel, Derry for £4.375m, which will be rebranded as a Maldron Hotel.
Outlook
Performance at the leased and owned properties continues to show good growth on 2013 supported by strong incoming visitor numbers and improving domestic consumer confidence.
EBITDA is expected in the full year to be in the range €7.5 million to €8.0 million excluding the effect of acquisition activity (2013: €5.3m).