Monday 27 January 2020

Investors have not grasped Dalata growth story - CEO

Dalata CEO Pat McCann
Dalata CEO Pat McCann
John Mulligan

John Mulligan

INVESTORS "haven't quite grasped" what Ireland's biggest hotel group is doing, even as Dalata has nine hotels under construction that will bring its total to 53 across Ireland and the UK, according to CEO Pat McCann.

"From our own perspective, in terms of growth, people haven't quite grasped what we're doing. Probably we haven't been telling the story well enough," Mr McCann told the Irish Independent.

"I have 44 hotels in operation today, but nine under construction," he added.

"The 44 hotels have 9,200 rooms. I'm building 2,400 rooms with nine hotels. It is a substantial growth in our business."

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He said: "There will be more announcements hopefully in terms of growing the business because there's a lot going on in this space."

Mr McCann said that stock market-listed Dalata may also secure more projects in London than the group had anticipated.

The company, which trades under the Maldron and Clayton brands, currently operates three hotels in London, while a fourth is planned for a site in Shoreditch.

The chain's CEO said it is "too soon" to say that additional London projects will come on stream for Dalata, but the business remains an attractive partner for investment groups such as pension funds.

"We have a very strong balance sheet backed by very strong assets," he said.

Mr McCann added: "It makes us particularly attractive for fixed-income investors, who will build and own hotels for us, and we do long-term leases with them. That's what has made it work exceptionally well for us."

He said any further opportunities that arise in London will be "purely opportunistic deals".

"We won't go chasing some of the heady prices that some people pay for hotel assets," said Mr McCann. "It'll come to us on a different route."

He also said that he is always "reluctant" to go to shareholders for additional equity unless it is to buy assets that are immediately earnings-enhancing.

"When you're doing new builds, as we're doing a lot of, the equity model doesn't really suit that," he said. "We are so attractive to fixed-income investors because we give them a yield that they desperately want - and a long-term yield as well. We have a lot of resources in this space. We're producing almost €100m a year in free cash [flow]."

Mr McCann also said there are no signs of a slowdown at its business in either the UK or Ireland.

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