Ireland’s largest hotel group Dalata is actively seeking premises in Europe, with Germany, Spain and the Netherlands among the countries where it wants to lease premises.
It is targeting big cities with a mix of corporate and leisure travel, according to Dermot Crowley, the new CEO of Dalata, which last week secured a 12-month extension to its €564m debt facility.
He said Berlin, Munich, Frankfurt and Dusseldorf would be of interest in Germany, and Amsterdam in The Netherlands.
“In Spain we would be interested in Madrid and Barcelona, but not somewhere like Malaga because it’s all leisure.”
The sector has had a difficult time during Covid, but Crowley said now was not the time to batten down the hatches.
“Sometimes you get the best opportunities in periods like this,” said Crowley. “Quite often when things are really, really good everyone is chasing new hotels and prices go up as a result.
“Dalata plc was created in 2014 when we started buying hotels at very low prices when no one else was buying hotels. We stopped buying hotels in Dublin two years later when prices got too high.
“What we’ve done with our banks is given ourselves a huge financial cushion,” he said. “We are very careful on costs and we’re optimistic for the future.”
The company has 44 hotels and is opening six next year. It has just opened a hotel in Glasgow, and next year it will open in other cities, including Manchester, Bristol and Dublin.
Hotels are also being built in London, Brighton and Liverpool and will open in the coming years.
Occupancy rates have been at 60pc in Dublin for the past two months for the group – normally that would be well in excess of 80pc.
“Dublin is our biggest and most important market,” he said. “It has recovered much more quickly than we had expected.”
International visitor numbers remain weak but he said domestic business was really strong.
Some international leisure trade is returning, particularly from the UK but there is very little international corporate business both in Dublin and the rest of the country.
“The large US multinationals, those people aren’t travelling yet.”
While occupancy is recovering, Crowley added that room rates are well below where they would normally be in Dublin.
He also said the number of hotel beds required for the capital was adequate, when those already planned for were accounted for. There has been considerable discussion in recent years about the need for more hotel beds in Dublin.
“There is a big pipeline as it is – around 3,500 beds to open between this year and next year. That’s a big increase in rooms. I am going to be biased, but I would say that will be plenty.”
However, he added that the city will continue to grow. “But there is a pretty big supply line.”
He said that the UK regional hotels were the most successful part of the business. Looking into the longer term and the climate change challenges facing international travel, Crowley said people enjoyed travelling for leisure but that corporate travel could be hit.
“It’s a very serious issue and one of the things that I am putting a huge focus on as CEO is sustainability,” he added.
He said business people might plan their travel differently in the future. “We’ll all have to adjust our patterns accordingly. For us, if it’s a challenge, it’s a challenge. We just face it and see how we are and get a competitive advantage within that.”
Crowley has taken over from former CEO Pat McCann. “I am taking over a great company and we’ve a great culture there, so it’s about protecting that. And we’re really focused on the recovery now because the last 18 months have been difficult on our people. But by protecting them we’re really in a good position now to take advantage of the recovery,” he said.
He added that while there may be some twists to come with Covid, hopefully we are at the end of it.
“I am not a public health specialist and obviously if restrictions came back in that would have a direct impact on our business, so we’re not out of the woods yet. We need to be careful how we plan our business right through the winter at this stage.”
The group had three priorities during the lockdowns – to protect cashflow, which it did by selling a hotel and raising additional equity; the second was to protect business relationship; and the third was to protect staff.
“The Government subsidy scheme in Ireland has been hugely helpful in doing that. So in protecting our core teams, we are probably not struggling as much as some other hotels.”
Crowley said there had been a lot of negative commentary about employment in the hospitality sector but he said it has recently taken out 49 people in its graduate programme and promoted 500 people internally the past year.
At entry level he said the sector depended heavily on immigration. “That has slowed down as you would expect during a pandemic but I think it will correct itself.
“It is a challenge but nothing compared to the middle of March last year when hotels were closing down,” he added.