Ireland's largest hotel operator is expanding, but cautiously. Here's how.

(Clarion Liffey Valley Hotel)

Ireland's largest hotel operator, Dalata Hotel Group, has got off to what company chairman John Hennessy is calling "a very encouraging start for 2016." 
Overall, Hennessy said, the company's markets are performing ahead of expectations. "Management is very satisfied with the trading performance of the group's hotel portfolio in the first four months of the year," he said during the company's annual general meeting this week. 

Future Plans

CEO Pat McCann said Dalata would complete its acquisition activity in Ireland by the end of this year, but was not interested in purchasing either the Gresham or the former Burlington hotels in Dublin or Lyrath in Kilkenny, all of which are for sale. “Value-wise,” he said, the deals did not make sense.

Dalata is also looking to re-capitalize some existing properties, and will seek approval to add 150 rooms to the former Bewleys (now Clayton) property near Dublin Airport. McCann also claimed that Dalata would not try to grow its UK footprint within the next two years.  

The hotel group is looking to build another three hotels in Dublin in addition to the Charlemont site, which it acquired for €11.9 million. It also signed a contract for the development of a hotel in Belfast.

Dublin Market

Notably, McCann said that Dublin room rates are still lagging behind other European cities, in spite of Dalata reporting RevPAR growth last year. "The difficulty we have in Dublin is, and why you don't have new hotels being developed, is the economic model doesn't work because RevPAR is essentially too low," he said. 

McCann said that Dublin won't reach the room rates of London, Zurich and Paris, but said the capital should be in or around the likes of Amsterdam and Copenhagen, which would mean a 20-percent increase in room rates.

Dalata spent €500 million on acquisitions last year. Recent acquisitions include the Tara Towers Hotel, the Clarion Hotel Sligo and Choice Hotels' Ireland business made up of leasehold interests at the Clarion Hotels in Cork and Limerick, the Gibson Hotel in Dublin and the Croydon Park Hotel in London as well as a short-term management contract at the Clarion Liffey Valley Hotel in Dublin. 


A photo posted by the gibson hotel (@thegibsonhotel) on

"The integration of the acquired hotels is progressing smoothly and plans for investment in refurbishment and upgrade works at the Tara Towers are being advanced," Hennessy said. "The extension and upgrade works at Clayton Hotel Chiswick, London are close to completion and the maintenance capital expenditure program is proceeding as planned."

Currently, Dalata's portfolio consists of 42 properties with more than 7,700 rooms.

Sources: Irish Times, London Stock Exchange, Irish Independent