Dalata Hotel Group's H1 revenue rises but 'disappointed' about Brexit vote

Irish hotel operator Dalata Hotel Group’s half year revenues increased as it traded ahead of expectations, but was “disappointed” by the Brexit vote as it reduced euro denominated UK earnings.

For the six months ended 30 June, revenues increased by 33% to €130.1m, compared to the same period last year, which generated profit before tax of €18.2m. Revenue per available room increased significantly by 11.2% to €74.90.

Weak sterling exchange rate in the first half of the year reduced euro denominated UK earnings by €600,000.

Chief executive Pat McCann, said:“The continued recovery of the Irish economy has allowed us to benefit strongly from the growth in Revenue per available room in Dublin and the other large cities in regional Ireland. All our Irish hotels have performed very well and we have converted the additional revenue strongly to the bottom line. Sterling weakness has had a negative impact on the euro translated earnings from our UK hotels and this impact has increased since Brexit.

“We were disappointed with the outcome of the Brexit vote in the UK due to the uncertainty it creates and its potential negative impact on the future prospects of the UK and Irish economies. To date, we have not seen any impact on trading at our hotels but we are monitoring booking levels closely to ensure that we react quickly to any impact.

Adjusted earnings before interest, tax, depreciation and acquisition (EBITDA) was up 50% to €35.3m.

Earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) margin increased to 38.7%from 36.9% due to like-for-like revenue growth.

Diluted earnings per share increased to 8.429 cent from 0.429 cent.

Net upward property revaluation was €41.5m as of 30 June, with the company aiming to construct four new hotels in Dublin, Belfast and Cork and extend four other hotels to add 400 full time roles to its current 3,610 employees.

It spent €38.9m on the leasehold interests and businesses of four Choice Hotels in March and €34.5m on the acquisition of freehold interest of three hotels.

The company also spent €30.8m on three hotel development sites in Dublin and Cork and exchanged contracts development site in Belfast which completed on 5 August. The four projects will add about 675 rooms.

About €13.2m was invested in hotel development and refurbishment in the first half of the year.

After the reporting period end, in August Dalata Hotel Group entered into discussions to buy the operating interest and commit to a leasehold interest in Doubletree by Hilton Hotel in Burlington Road, Dublin.

Alongside its latest interims, the company announced it had bought the freehold interest of Maldron Hotel Cork for €8.1m and exchanged contracts to buy three buildings adjacent to Maldron Hotel Parnell Square for €5m in order to extend it.

McCann, added: "Trade has been ahead of our expectations with the Irish hotel market performing exceptionally well in the period ... The second half of 2016 will continue at the energetic pace of the first half of the year. We will continue to work on our four hotel development projects as well as progressing plans to build extensions to our Clayton Dublin Airport, Clayton Ballsbridge and Maldron Sandy Road, Galway hotels … Trade in our Irish hotels has been very strong in July and August while it has been in line with our expectations in our UK properties".

In June, the company was admitted to AIM, the junior market of the London Stock Exchange and the main market listing of the Irish Stock Exchange.

Shares in Dalata Hotel Group were down 3.05% to 357.50p to 0957 BST.