Recovery at Ireland’s largest hotel group ‘surpassing expectations’

Ireland’s largest hotel operator expects first half profits to exceed €81 million on the back of a faster than expected recovery from the pandemic.

The bounce back at Dalata Hotel Group over the past four months “continued to surpass expectations”.

Revenue per available room (revpar) in April was up 9% on 2019 levels for the March-April period, with the figure expected to be 18% ahead for May and June.

In a trading update for the second quarter of the year, the company reported a “particularly strong” recovery in Dublin due to a combination of significant demand and reduced supply in the market. 

“Demand has largely returned across all segments led by very strong leisure demand particularly around event dates and weekends,” the company added. 

“The reduction in supply is primarily the result of rooms being utilised to accommodate a substantial increase in refugees requiring emergency accommodation due to the war in Ukraine.” 

Trade was also described as being “very strong” in the UK and regional Ireland where revpari for the May and June is expected to be 7% and 27% ahead of 2019 levels respectively.

However, the group is also experiencing cost inflation across the business. 

Adjusted ebitda [earnings] are expected to be in excess of €81 million for the six months ending June 30, reflecting a strong first half trading performance despite operations being curtailed by Covid restrictions during the first two months of the year. 

The company added: “We note the on-going volatility and uncertainty in the wider macro environment which may impact future performance and the group will remain agile and innovative in responding to any challenges and opportunities that may emerge. 

“However, we have not seen an impact on demand to date and the outlook for the summer months looks very strong at this point.” 

Dalata announced completion of the sale of the Clayton Crown Hotel in London to a company controlled by AG Hotels Group for £21 million. 

Chief executive Dermot Crowley said: “I am very pleased with the manner in which demand has recovered across our markets since Covid restrictions were lifted earlier in the year. 

“Our teams in our hotels and central office have responded incredibly well to the swift recovery. 

“Our focus on the development of our people and our strategy of keeping our core teams in place throughout the pandemic is underpinning our ability to fully operate our hotels despite the backdrop of a tight labour market. 

“Our new hotels in Manchester, Bristol, Dusseldorf and Dublin are also trading very well and we look forward with confidence to the opening of the Clayton Hotel Glasgow City and Maldron Hotel Merrion Road in Dublin in the coming months, adding much needed additional supply to the market.

“I recognise concerns about rising hotel prices in Ireland. Our average room rate in Dublin for the second quarter of 2022 was €160. This is an increase of 20% over 2019 on a like-for-like basis. 

“Dublin’s highly competitive market is experiencing a period of exceptional pent-up post-pandemic demand at a time when supply is temporarily reduced as a direct consequence of the war in Ukraine. 

“In June, our Dublin hotels are expected to reach an occupancy of 93%. Despite widespread cost inflation, we continue to honour longstanding agreed prices, including those in place for over 160,000 coach tour guests we are welcoming over this summer.”

He added: “We will continue to assist the Irish gfovernment in its response to the crisis created by the war in Ukraine by making 5% of our rooms in the Republic of Ireland available to the Department of Children, Equality, Disability, Integration and Youth for the remainder of this year at the rates requested.

“We look forward to the balance of the year with confidence whilst being aware of the potential threats caused by the general economic outlook. 

“We are excited by the potential of our recently opened hotels and by those in the pipeline. We have strong teams in place and we will be agile and innovative in responding to any challenges that may emerge”.

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