Wednesday 24 January 2018

Hotel room prices must go higher if sector is to grow - Dalata's McCann

Pat McCann, chief executive of Dalata, pictured centre, with, on left, company secretary and chief financial officer Sean McKeown, and Dermot Crowley, deputy chief executive, at the announcement of the company’s annual results for 2015 at the Clayton Hotel in Dublin yesterday. Photo: Tony Maxwell
Pat McCann, chief executive of Dalata, pictured centre, with, on left, company secretary and chief financial officer Sean McKeown, and Dermot Crowley, deputy chief executive, at the announcement of the company’s annual results for 2015 at the Clayton Hotel in Dublin yesterday. Photo: Tony Maxwell

Peter Flanagan and Michael Cogley

Dalata chief executive Pat McCann said hotel rates in Dublin were still cheap compared to similar cities such as Edinburgh and Copenhagen.

"There have been little to no bedrooms added in Dublin since 2007," Mr McCann said.

"Since 2007, we have seen the Convention Centre open, the 3Arena expanded, the docklands have expanded greatly, and hotel construction has not kept up with that," he claimed.

Numerous surveys have found Dublin hotels are increasing prices rapidly.

One, by Hotels.com, showed prices last year increasing at 15 times the rate of inflation.

However, Mr McCann dismissed those claims.

"Surveys such as Hotels.com include mainly tourist rates that have been booked close to the time. They don't include large corporate and tour bookings which will have been negotiated at lower prices and booked long in advance," he said.

Dalata is planning to develop a new hotel at Charlemont in Dublin and is looking at as many as six other sites. Mr McCann said he hoped to build at least one more hotel. He also played down any suggestion that his firm may buy the Gresham Hotel in the capital, which is on the market for €80m. While he has long admitted his interest in the property, he suggested the firm would not get into a bidding war for the iconic hotel.

Mr McCann was speaking after Dalata posted strong 2015 results, which saw revenue per average room (RevPAR) - the key metric for hotel profitability - up 21.4pc and occupancy levels continue to rise.

Over the course of 2015 Dalata spent over €500m on 15 acquisitions with its takeover of nine Moran Bewleys hotels, the most notable deal of the year.

In the company's annual results for 2015 Dalata reported a seven-fold increase on its EBITDA, pushing it up to €62.6m.

Dalata made a €44.9m gain on the revaluation of its property and also raised €202.2m (after costs) in equity and €282m in debt to fund acquisitions over the course of the year.

Pat McCann, described 2015 as "a remarkable year" for Dalata. "We now have a strong operating platform and management capacity from which we will continue to grow and create value for our stakeholders," he said.

Mr McCann praised the integration of its new hotels over the last 12 months. "These properties have performed above our expectation which is a testament to the effectiveness of our integration process.

"There remains significant opportunity to improve further the performance of these acquired hotels as the impact of our decentralised management approach is felt," he said.

In a statement released to shareholders yesterday, Mr McCann said Dalata will "pursue potential opportunities" to grow its brands.

Analyst at Davy Stockbrokers, Robert Stokes, believes the hotel group's refurbishment projects will help grow its RevPAR even further.

"They're going to refurbish 800 rooms over the course of 2016 so that should drive more people through the doors but it should also allow them to command a higher room rate given the fact that the hotels will be of higher standard and higher spec," he said.

Single hotel acquisitions in Dalata had a significant impact over the course of 2015 with revenue of €32.8m in the segment.

Mr Stokes said assets in the segment like White's of Wexford performed strongly.

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