Tuesday 20 August 2019

Dalata plans to add 8,000 rooms as it targets UK

Dalata, which owns or leases 35 hotels in Ireland and the UK, has targeted 20 British cities
Dalata, which owns or leases 35 hotels in Ireland and the UK, has targeted 20 British cities
John Mulligan

John Mulligan

Ireland's biggest hotel operator, Dalata, is aiming to become the largest operator of three-and four-star properties in 20 cities across the United Kingdom.

It hopes to add another 8,000 bedrooms to its portfolio there over the next five to seven years, it has told investors.

Dalata has pinpointed significant expansion opportunities for the company in cities including Edinburgh, Oxford, Liverpool, Cambridge and York.

It aims to take advantage of what it said is a "very fragmented" UK regional hotel sector and capture between 10pc and 15pc of the market in each of the 20 cities it's targeting.

The hotel group has also told investors that while Brexit poses a risk to the economies of the cities it's aiming to expand in, it believes a structural shift in the hotel industry, as international brands leave regional locations, poses a greater opportunity.

Dalata, whose CEO is Pat McCann, already has a total of eight hotels in UK cities including London Manchester, Leeds, Belfast, Cardiff and Birmingham.

They are three- and four-star properties and include a total of 1,700 bedrooms. It has two properties in London but is not aiming to expand there except on an opportunistic basis.

This week, Dalata announced that has agreed to lease what will be a new Clayton Hotel in Glasgow. The four-star hotel, which has yet to receive planning permission, will be built by Artisan Real Estate Investors and have about 300 bedrooms. It's intended that the property will open at the end of 2020.

Dalata announced last year that it secured a 35-year agreement to lease what will be a new Maldron Hotel that's being built in Newcastle by a unit of McAleer & Rushe.

The four-star hotel, which will have 226 bedrooms, will open next year.

Other cities being targeted for growth by Dalata in the UK include Bristol, Bournemouth and Southampton.

Dalata aims to have a total of 2,500 bedrooms in the UK by 2020, deputy chief executive Dermot Crowley confirmed to investors this week.

He added that all of Dalata's hotels in the UK are performing well, with revenue per available room during the first half of the year up about 14.6pc.

He said the group's UK business had also seen a strong increase in its earnings before interest, tax, depreciation and rent costs margin, from 35.6pc to 38pc year-on-year.

Dalata said that the overall hotel market in large regional UK cities is "very fragmented".

"Only budget brands have a significant market share," it added. "The specific three and four-star market in certain large regional cities is very fragmented and there are no dominant brands in this market segment."

It added that more than 70pc of regional hotel owner-operators have four hotels or fewer in their portfolios, while operators each with a market share of less than 4pc, comprise 70pc of the regional three- and four-star market in the UK.

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