While hoteliers across Europe wonder how Brexit will affect travel trends to and from the UK, Ireland's largest hotel group, Dalata, reported "no negative impact" on any of its hotels in the UK or Ireland from concerns centered on Britain's advancing withdrawal from the European Union.
In a recent trading statement, Dalata's Deputy Chief Executive, Dermot Crowley, termed 2018 as a year in which the company expected to complete and deliver a substantial number of guestrooms. "We have delivered these projects on time and within budget. We have opened two new hotels in Dublin and a new hotel in each of Belfast and Newcastle...Early trading indications are very positive. As an example, Maldron Hotel Kevin Street in Dublin opened in July and achieved occupancy levels of over 90 percent in each of September and October. We also completed significant extensions at three of our Dublin hotels and one of our Galway hotels. We look forward to the opening of our new Clayton Hotel City of London in January.
That said, the looming withdrawal did spur Dalata to consider certain financial moves. In November, the company agreed to a new €525-million debt facility, composed of a multi-currency term-loan facility of €200 million and a multi-currency revolving-credit facility of €325 million, with a five-year term expiring in October 2023. During the quarter, the company deemed it "prudent" to complete its refinancing package earlier than originally planned, and now has its debt funding in place until at least late 2023, on what it indicated are improved terms.
"The positive trading impact of hotels opened during 2018 will be significant on a full-year basis in 2019, which in turn will reduce our net debt to EBITDA ratio as we go through next year," Crowley said.
UK and Ireland
Revenue per available room (RevPAR) at Dalata's UK hotels grew by 3.2 percent through November, and its regional hotels in the UK performed particularly well, outperforming the market in each city other than Leeds, where it was "marginally behind," according to the company.
In its Dublin market, which represents the dominant share of its business, Dalata remained "very strong" in second half, and on a like-for-like basis, RevPAR at its hotels in the capital increased 8.8 percent in the first 11 months of the year compared to overall market growth of 7.4 percent.
Dublin accounted for 58 percent of Dalata's €348.5 million revenue and 61 percent of its €102.6 million in EBITDA last year.
New Openings and a Strong Pipeline
Dalata opened three new hotels in Q4: The Clayton Hotel Charlemont in Dublin opened on November 23 (at a reported cost of €40 million), Maldron Hotel Newcastle opened on December 4 and the Maldron Hotel South Mall in Cork opened on December 20.
The company also shared details on its development pipeline:
- Dalata is "very close" to completing the acquisition of Clayton Hotel City of London, which is scheduled to open toward the end of January.
- Demolition work at the Clayton Hotel Manchester site is almost complete with construction starting in Q1.
- Construction of Maldron Hotel Merrion Road, Dublin, and the residential units will begin in Q1.
- Planning permission has been received for Clayton Hotel Glasgow with construction expected to start in Q1.
- Formal planning applications have been lodged for Maldron Hotel Glasgow, Clayton Hotel Bristol and Maldron Hotel Birmingham.
- A formal planning application for Maldron Hotel Manchester is expected to be submitted in Q1.
- Currently, the company's development pipeline includes more than 2,100 rooms across the UK and Ireland.