Regulators sign off on Dalata hotels purchase
Competition authorities have cleared the way for Dalata to acquire the leasehold of four hotels including the Gibson Hotel in Dublin,
In January Dalata said it would buy the leasehold on The Gibson Hotel, the Croydon Park Hotel in London, the Clarion Hotel Cork and the Clarion Hotel Limerick. The deal would see Dalata add 1,171 rooms to its hotel portfolio in Dublin, London, Cork and Limerick.
Regulators however reviewed the sale for potential competition issues. Dalata is by far the biggest hotels firm in Ireland. Yesterday, the company said the Competition and Consumer Protection Commission have signed off on the deal.
When it was originally announced, Dalata head of business development and finance Dermot Crowley said the firm was very excited to acquire the leasehold interests.
"This transaction gives Dalata a further 960 rooms in the cities of Dublin, Cork and Limerick. All three cities are experiencing strong revenue per available room (RevPar) growth in the recovering Irish economy.
"The transaction also allows us to further grow our portfolio in the UK with the addition of 211 rooms in Croydon," Mr Crowley said.
As part of the deal Dalata will also take over the management of the Clarion Liffey Hotel in Dublin under a short-term contract.
The four hotels are currently operated as part of the Choice Hotel Group with the consideration payable in cash. The leasehold interest comprises of operating leases with an average term of 18 years outstanding.
Underlying earnings before interest tax depreciation and amortisation at the four hotels in question is expected to be €4.1m in 2015.
Last week Dalata said operating profit for 2015 had surged more than seven fold to €62.5m.
The company has been pushing for hotel prices to go higher for some time. When presenting the results, company chief executive Pat McCann said prices had to increase to sustain new hotel development in Dublin.
"There have been little to no bedrooms added in Dublin since 2007," Mr McCann said.
Dalata shares slumped more than 4pc in Dublin.