Dalata faces 2018 market obstacles with UK, Ireland hotel additions

Clayton Hotel Liffey Valley, Dublin, Ireland

Irish hotel operator Dalata Hotel Group is set to launch 1,281 guestrooms in 2018 as part of its expansion throughout the UK and Ireland. The portfolio additions follow a strong 2017 for the hotel group, which expects its 2017 earnings to match market expectations despite dropping local visitor numbers and the Brexit aftermath. 

According to Davy analysts, Dalata will see a 20-percent year-over-year increase in earnings to €102.5 million this year. While the group's UK and Northern England hotel markets individually recorded low growth levels, together they saw a 10.4-percent increase in revenue. In Dublin, Dalata saw significant performance strength this year. The group's RevPAR in the city rose 9.5 percent for the year-to-date. Outside of Dublin, the group's regional Ireland portfolio recorded an 8.7-percent growth in RevPAR for the 11 months to the end of November. 

As part of the group's expansion through buying out remaining freehold interest, Dalata acquired 62 guestrooms at Clayton Hotel Cardiff Lane in an €8.7-million deal this year. The group also bought another 18 guestrooms at Clayton Hotel Liffey Valley for €2 million. Through these transactions, Dalata now owns 252 guestrooms out of 304 in Clayton Hotel Cardiff Lane and 261 guestrooms out of 361 in Clayton Hotel Liffey Valley. 

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In the UK leg of Dalata's expansion, the group has five hotels in the planning stage. Within Dalata's pipeline, the group inked a 35-year lease agreement with McAleer & Rushe to develop a Glasgow city-center Maldron hotel with 250 guestrooms. This addition expanded Dalata's pipeline in Glasgow following the recent addition of a new 300-room Clayton Hotel in the city, which is slated for a H2-2020 opening. Meanwhile, the company postponed the opening of its new Maldron hotel in Newcastle from late 2018 to February 2019.

Despite its strong growth and performance, Dalata will run up against a few obstacles next year, including heavy competition with Sweden-based Pandox Hotels and Israel's Fattal Hotels Group. The two groups bought Jurys Inn for €908 million and plan to expand the brand throughout Ireland and the UK. 

The hotel group will also have to tackle a drop in local visitor numbers. Although 75 percent of Irish hotels reported a boost in visitors in 2017, only 9 percent of these recorded a rise in British visitor numbers. In response, the Irish Hotels Federation has called for enhanced marketing to attract regional tourists. "The continued fallout from Brexit and the slowdown in visitor growth are worrying as they have a significant regional bias," Joe Dolan, president of the Irish Hotels Federation told the Irish Examiner.