Dalata splashes out €40m for leases on four hotels
Dalata has dipped into its warchest to buy the leases on four hotels in a deal worth €40m.
The Pat McCann-led firm said it agreed terms to take over the leasehold of the Gibson Hotel in Dublin, the Clarion Hotel in Cork, the Clarion in Limerick, and the Croydon Park Hotel in London.
The firm is also taking over the management of the Clarion Hotel in Liffey Valley in Dublin.
The deal copper-fastens Dalata's position as the dominant player in the Irish hotel market. Combined, the hotels add 1,071 bedrooms to its portfolio, which already operates over 6,500 rooms in Ireland alone. It has access to another €130m for more deals as they come up.
In a statement, the company said underlying earnings before interest, tax, depreciation and amortisation for the four hotels where it was taking over the leases is expected to be about €4.1m.
The four leasehold hotels will be rebranded as Clayton Hotels almost immediately, and the group plans to invest €14m over the next two years in refurbishing the hotels in Cork, Limerick and Croydon.
Dalata deputy chief executive and head of business development & finance Dermot Crowley said the company was "very excited about the opportunity to secure the leasehold interests of these four hotels and the contract to manage Clarion Liffey Valley Hotel".
"This transaction gives Dalata a further 960 rooms in the cities of Dublin, Cork and Limerick. All three cities are experiencing strong RevPar (revenue per average room) 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.
"The addition of these hotels continues the rapid growth of the Clayton brand in Ireland and the UK where on rebranding we will have 18 Clayton hotels," he said. Dalata believes it can drive revenue RevPar - a key metric for hotel profitability - through its own management style.
Shares in Dalata jumped on the back of the deal, sending the stock up 1.7pc to €4.88 even as the wider market fell sharply.
The shares are up more than 70pc over the past year.