The country’s biggest hotel group, Dalata, is considering paying a dividend for the first time since it listed three years ago, as a period of rapid expansion draws to a close.
Dalata yesterday reported pre-tax profits of €44.1m for the year ended December 31 2016 – up 55pc for the same period the previous year.
Revenue was 28.8pc higher at €290.6m, reflecting in part the addition of seven hotels and 1,600 rooms in 2016.
On a like-for-like basis revenues were also higher, ceo Pat McCann said.
Revenue per room, occupancy rates and room rates were all higher, he said.
Dalata has a pipeline of over 1,200 new rooms in development at new build hotels and extensions in Dublin, Cork and Belfast.
That will add to more than 7,100 rooms at 41 hotels owned and operated by the group which trades under the Clayton and Maldron brands.
Having raised €800m in a stock market listing in 2014, a period of growth through acquisitions is now ending, Mr McCann said.
Just €30m of the original has yet to be spent.
“When you look at the Irish market, we’re pretty much done – we’re not pursuing large acquisitions,” he said.
Dalata has more than 20pc of the hotel market in Dublin and Cork, and 10pc nationally.Growth is now focused on Britain, which accounts for around 20pc of the business, and will be through leasing sites from developers, not capital intensive acquisition or construction, he said.
Payment of a shareholder dividend is now on the agenda, as the group is shifting from a phase of equity-funded growth to cash generation.
“The question of a dividend is under constant review. If you look at the investment cycle we are getting close to that point, do we do it now or do we do it in a year’s time?”
He said the business would be very strongly cash generative from next year.
Dalata had canvassed investors’ views regarding a dividend and found opinion was mixed, he said. The bias among the existing shareholders was “overwhelmingly towards growth”, but initiating a dividend would attract a wider pool of investor, he said.
Meanwhile, Mr McCann said Brexit has had no impact on the business.
“Booking patterns are showing no evidence of any kind of negative from Brexit. Nothing has happened,” he said.
“The key issue for us is how the US and UK economies perform. As long as they do well, we do.
“Our business has two segments, the corporate travellers and the more transient leisure business.
“We’ve seen very little change among either.”
That might, in part, reflect Dalata’s concentration in urban markets, including Dublin, he said.
Despite a strong year in 2016 for Dalata and for the hotel sector in general, Mr McCann said he did not believe the special 9pc Vat rate introduced in 2011 should be scrapped.
The special rate was brought in to buoy up the sector at a time when many hotels were closing or carrying huge losses.
“The Vat rate has been one of the best things to happen to the industry. There have been around 40,000 jobs created,” Mr McCann said.
While the reduced rate is, in theory, a cost to taxpayers, it was made up for in higher volumes, he said.
“In reality, the increased volume of business means the reduced rate has cost the State nothing. Why would you tamper with it?”
Proposals to raise the minimum wage would have only a marginal impact on the business, he said.
“People are a critical part of our business, as we grow we look to recruit from within.
“The minimum wage has some effect but it is marginal,” he said.
Dalata employs 4,500 people in all, more than 80pc of them in Ireland.
Current expansion plans will add 500 full-time positions, and 400 temporary construction jobs to the tally.
Shares in Dublin were up slightly to €4.40 each yesterday.
Article Source: http://tinyurl.com/kbwqb42
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