Dalata to open Maldron hotel in Shoreditch in 2020; strong RevPAR performance in the UK in H1

03 September 2019

Dalata Hotel Group plc has reported revenue growth of 12.2% to €201.9 million for the six month period ended 30 June 2019 driven by strong operational performance and growth from the new and extended hotels. The 1,400 new rooms which opened in the last 18 months in Dublin, Cork, Galway, Belfast, Newcastle and London are performing very well. The hotel group also announced today the acquisition of a site with planning permission for a new Maldron hotel in Shoreditch, London.

Like for like RevPAR increased 0.7% to €87.62. Adjusted EBITDA pre IFRS 16 increased by 18.1% to €60.3 million.

Very strong RevPAR performance in the UK. Significantly outperformed market in four of the six cities in which we operate - Manchester, Birmingham, Leeds and Belfast.

Over 1,400 new rooms opened in the last 18 months which continue to perform very well and have been a significant driver of growth for H1 2019 and will be for the second half. Pipeline of circa 2,400 rooms in excellent locations to be delivered between 2020 and 2022.

"We continue to build an attractive pipeline of rooms located in large cities such as Dublin, Bristol, Manchester, Glasgow, Birmingham and London. Announced today that we have acquired a site in London with planning approval for a new hotel. The new Maldron hotel will have between 130 to 140 rooms and is expected to open in early 2022. The total cost of developing the hotel will be approximately £60 million, including the site cost of £32.05 million.

Outlook
"We remain positive about our ability to exploit the opportunity that exists for us in the UK. Trade at our UK hotels was very strong in both July and August and ahead of our expectations. Despite the ongoing uncertainty surrounding the timing and nature of Brexit, the outlook for the balance of the year looks positive.

RevPAR at our Dublin hotels in July and August was behind last year due to a number of factors, primarily a weaker calendar of events compared to 2018 and the ongoing impact of the VAT increase.

Trading in Regional Ireland was also behind last year in July and August primarily due to the more significant impact of the VAT increase on domestic leisure demand.

The outlook for the balance of the year looks positive in both Dublin and Regional Ireland with a stronger calendar of events and the return of corporate guests after the summer period. Some of our Dublin hotels are forecasting September to deliver the highest ever monthly room revenue for their properties.

We continue to be very happy with the performance of the hotels opened and extensions completed in 2018 and early 2019. They will continue to make a very significant contribution to earnings growth in the second half of the year.

We continue to work closely with developers and fixed income investors on opportunities to further increase our very attractive pipeline in Ireland and the UK and expect to make further announcements in 2019."

Pat McCann, Dalata Group CEO, commented: "I am pleased to report another strong set of results with revenue growth of 12.2% to €201.9 million in the period. Excluding the impact of IFRS 16, Adjusted EBITDA1 increased 18.1% to €60.3 million and Adjusted basic EPS1 increased by 8.4% to 19.3 cent.

We have demonstrated our excellent operating performance and ability to control costs through the growth of our EBITDAR margin1 from 40.0% to 40.4% despite opening six new hotels and four hotel extensions in the past 18 months. This is an example of the intensity and commitment I often speak of in Dalata where we continue to drive performance of our existing portfolio while building our future pipeline of hotels. Our hotels in all regions are performing well and I am particularly happy with the performance of our UK hotels given our exciting growth plans for the region.

Dalata has grown at considerable pace since our IPO in March 2014. We were a small Irish company with big goals and a lot of ambition at the time. Our results for the first six months of 2014 delivered revenue of €35 million, Group EBITDA of €2.4 million and hotel assets of €23.9 million. Five years on, the Group has been transformed, with revenue of €201.9 million and Group EBITDA of €74.2 million for the first six months of 2019. The value of our hotel assets now exceeds €1.3 billion and we are far from finished on our journey. It is extraordinary how fast we have grown in a little over five years and I am pleased with the sustainable and disciplined way in which we have delivered this growth. We have built a portfolio of young, well maintained assets in prime locations across Ireland and the UK. We have also built a great team of people who enable us to grow our portfolio while continuing to be excellent hotel operators.

Dalata remains very ambitious and will continue to grow in 2019 and beyond. Our pipeline of circa 2,400 rooms will open at various stages from 2020 to 2022. Our UK growth strategy continues at pace. The development of the six new hotels located in the centre of Bristol, Birmingham, Glasgow (x2) and Manchester (x2) is progressing well.

Today, we announced that we have acquired a fantastic site in Shoreditch, London for £32.05 million with planning approval for a new hotel. London's first Maldron hotel will have between 130 to 140 rooms and is expected to open in early 2022. The total cost of developing the hotel, including the acquisition of the site, will be approximately £60 million. We have funded the site purchase using debt and will fund the development cost from operating cash flow. The strong performance of our Clayton Hotel City of London which opened in January 2019 reinforces our belief that there is great value in owning and operating a hotel in the centre of the city. Our existing hotel portfolio is generating very strong cash flows and this allows us to take advantage of such great opportunities while keeping our gearing at very comfortable levels.

We continue to invest in our people and our systems to support our growing portfolio. The new Dalata website was launched in August, complementing the Clayton and Maldron websites that went live in 2018 and 2017 respectively. The development of our people continues to be at the top of our agenda. Each of our six new hotels, opened over the last 18 months, are run by internally developed management teams and we are developing the next wave of managers who will go on to operate the hotels in our pipeline. We have 332 people on graduate programmes. We had over 1,100 applicants to our graduate programmes this year which demonstrates that Dalata is becoming the employer of choice in the hospitality industry.

Dalata is committed to remaining lowly geared. Having successfully agreed a new €525 million debt facility on improved terms and with greater flexibility in October 2018, we have since decided to extend this facility by a further year. Our debt package now matures in October 2024. Dalata's strong balance sheet makes us an attractive partner for fixed income investors allowing us to secure superb leased hotels at relatively low yields. We continue to extract good value from our assets with Normalised Return on Invested Capital1 of 12.6% at 30 June 2019.

Our confidence in the prospects for the business is reflected in our interim dividend of 3.5 cent per share, an increase of 16.7% on the 2018 interim dividend.

Despite the challenges of a significant increase in the VAT rate in Ireland and the ongoing uncertainty surrounding the timing and nature of Brexit, 2019 to date, as a whole has been another very successful year. The outlook for the balance of the year looks very positive. We are currently looking at a number of exciting opportunities in the UK and Ireland and we expect to announce further additions before the end of the year.

We continue to grow our portfolio, develop our great people, increase our customer satisfaction and further grow our earnings. We are looking forward to the balance of 2019 with optimism and enthusiasm".