Dalata out of running for Burlington
Irish hotel group Dalata has ruled itself out of the running for the Burlington Hotel in Dublin's Ballsbridge area.
The country's largest hotel firm said it will not bid for the property, which is up for sale with a guide price nearing €180m.
Dalata chief executive Pat McCann said the board met yesterday morning and decided against entering the bidding process.
Mr McCann was speaking at the company's AGM where he praised the Government's lower 9pc VAT rate on the hospitality sector as "one of the best initiatives it put in place during the difficult years".
"It cost the State nothing, it was a zero sum gain in that because of increased volumes the amount of money they technically lost, they gained back.
"The other critical part is that over 30,000 new jobs have been created," Mr McCann said.
The board heard a question from the floor about the use of a Dutch financing subsidiary called Cenan BV.
Dalata chairman John Hennessey said the company attempts to minimise costs generally and that tax is a cost.
"The purpose of the Dutch BV is to provide a flexible financing structure for our UK business. It does help on the tax line, but our overall blended corporation tax rate last year was 13.5pc, which is higher than the corporation tax rate in Ireland because we have to pay tax elsewhere as well," Mr Hennessey said.
Despite strong growth in Dalata's revenue per available room (RevPar) of 21.4pc last year, Mr McCann said Dublin room rates still have some way to go before being on a par with the likes of Amsterdam.
"The difficulty we have in Dublin is, and why you don't have new hotels being developed, is the economic model doesn't work because RevPars are essentially too low.
"The housing sector is the same. This notion that people will develop and hopefully prices might rise is not going to be what's going to happen," the Dalata chief said.
Mr McCann said that Dublin won't reach the room rates of London, Zurich, and Paris but said the capital should be in or around the likes of Amsterdam and Copenhagen, which would mean a 20pc increase in room rates.
The hotel group is looking to build another three hotels in Dublin in addition to the Charlemont site, which it acquired for €11.9m.
Dalata spent €500m on acquisitions last year.