Dalata Records Loss For 2020; CEO To Step Down
Dalata Hotel Group has released its results for the year that ended on December 31, 2020, revealing that the company experienced a pre-tax loss of €111.5 million last year, and the group has also announced that its current CEO, Pat McCann, will step down following a transition period.
Dalata's 2020 pre-tax loss followed a pre-tax profit of €89.7 million in 2019.
The company's revenue decreased by 68.1% year-on-year last year to €136.8 million while its adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) decreased by 88.5% year-on-year to €18.7 million, its occupancy decreased from 82.6% in 2019 to 30.9% in 2020, its average room rate decreased by 21.5% year-on-year to €88.77, its revenue per available room (RevPAR) decreased by 70.6% year-on-year to €27.45, and the company recorded a basic loss per share of 50.9 cents and an adjusted basic loss per share of 27.2 cents. In 2019, the company experienced earnings per share of 42.4 cents and adjusted earnings per share of 42 cents.
The company's post-tax loss for 2020 was €100.7 million. This followed a post-tax profit of €78.2 million in 2019.
Dalata said that proactive cost reductions and government support schemes protected employment and cash during periods of low occupancies last year, and that it increased liquidity due to a speedy and proactive response to the challenges that it experienced last year as a result of the COVID-19 pandemic.
The company noted the sale and leaseback of the Clayton Hotel Charlemont, Dublin, in April of 2020 for €65 million; that it agreed an amended debt facility in July with an additional €39 million facility and a revised suite of covenants; that an equity placing in September raised net proceeds of €92 million to further enhance the group's balance sheet; and that the group had increased liquidity with cash of €50 million and undrawn committed debt facilities of €248 million at the end of December of 2020.
Additionally, the company said that it has an asset backed balance sheet with hotel assets of €1.2 billion, conservative gearing with net debt to value of 23%, and a pipeline of close to 3,300 rooms across Ireland and the UK.
Dalata stated that, despite the disruption caused by the pandemic, it continued to progress its growth strategy last year with three new agreements for lease being secured in 2020, and in November of 2020, the group opened a 44 bedroom extension at Clayton Hotel Birmingham as well as a new meeting and events Centre at Clayton Hotel Cardiff Lane in Dublin.
Dalata currently has two hotels under construction in Ireland and five in the UK, all of which are scheduled to open between Q3 2021 and Q2 2022. Meanwhile, eight development projects including extensions are currently at the pre-construction phase.
Dalata said that its financial position remains strong with its amended suite of covenants providing flexibility as business recovers, and that it had cash and undrawn committed debt facilities of €290 million at the end of February of 2021.
Addressing its current outlook, Dalata stated, "The hospitality industry in Ireland and the UK continues to be impacted by restrictions to curb the spread of COVID-19. Since the start of 2021, all of our hotels remain operational providing accommodation to front line workers, essential workers and those requiring quarantine but are closed to the general public. The easing of restrictions and reopening of the hospitality industry will be determined by the Irish and UK governments.
"Occupancy as expected has remained muted in January 12% and February 15% with an adjusted EBITDA loss expected to be approximately €2.5 million for the first two months.
"The outlook for the near term remains uncertain at present and it is not yet known when international travel will return to more normal levels. However, we remain ready and primed to get back to full operating levels once restrictions are lifted. The rollout of vaccines across Europe and globally is very encouraging, with the speed of rollout increasing as we move towards Q2.
"As lockdowns and travel restrictions are gradually eased, the group anticipates domestic demand will return in the first instance, as seen in July and August 2020 when restrictions were relaxed in Ireland and the UK, followed by international leisure and business travel. Our teams look forward to welcoming back those customers who have not been able to visit us over the last year.
"The group will continue the measures implemented to combat the impact of COVID-19 on the business. In addition, we are assessing distressed opportunities as they arise. Our reputation as a strong reliable covenant has been enhanced through the course of the pandemic and we are confident that this will assist us greatly in securing further opportunities.
"Our cash and undrawn debt facilities of €290 million at the end of February 2021 leave us in a great position to withstand any further impact of COVID-19 restrictions in 2021 and participate in the recovery of global tourism. The hospitality sector has historically shown tremendous resilience to recover from other demand shocks and crises. As a result, the Board remain convinced that Dalata is well placed to benefit with its strong balance sheet, young, well invested portfolio and experienced teams at hotels and central office."
McCann stated, "2020 has been an extraordinary year, unlike any other I have encountered during my 50 year career in the hospitality industry. The impact of the COVID-19 pandemic has been extremely challenging for our industry, our people and our communities.
"When I reflect on our performance in 2020, I am extremely proud of what we accomplished together. We have ended a very difficult year in a strong financial position with our core teams intact, morale running high and we are ready for the challenges and opportunities ahead. Quite simply, we are unbowed and unbroken. We achieved this by holding firm to the values and beliefs that define us including being fair, transparent, consistent and balanced.
"Our financial position remains robust. We have always managed the business with a strong understanding and awareness of the inevitable ups and downs facing our industry, including shocks, and yet position it for ongoing growth and opportunity. We therefore entered the crisis in a very strong financial position. Our strategy of maintaining an asset backed balance sheet and comfortable gearing ensured Dalata was well placed to confront the challenges which followed.
"Through our proactive response to the pandemic and the tremendous efforts and collaboration by our people and our key stakeholders, we protected our financial position. I would like to take this opportunity to thank all of our people and our stakeholders for their invaluable hard work and support over the last 12 months.
"We have very strong relationships with our banking partners. The amended debt facility agreed in July 2020 with a temporary revised suite of covenants will provide flexibility and support as business recovers. Our institutional landlords also continue to actively support Dalata and remain committed to our long-term partnerships. Our shareholders strongly supported us through the equity placing which raised net proceeds of €92 million in September. These strong relationships with our stakeholders will be fundamental as we move through the recovery and continue to create long term value into the future.
"In addition to our strong financial position, I am very pleased that we have retained our key people. We made a decision early in the pandemic to keep the core management teams in place at our hotels and central office. This approach, together with our decentralised operating model, was absolutely critical to our success during 2020 as it enabled us to react quickly as the level of restrictions in Ireland and the UK changed. It will also be beneficial that our regular guests are greeted by familiar faces when they return.
"When I talk to our teams at the hotels, I am heartened by their optimism in spite of what has been a very challenging year for them. Like myself, our people enjoy the buzz of a busy hotel and are eagerly looking forward to welcoming guests back to our hotels in the year ahead.
"We maintained engagement with our people including those we could not bring into work through our employee app and offering learning and development courses through our newly branded Dalata Academy. Over 92,000 courses were completed during 2020. I am proud to see the strong motivation of our people to continue upskilling and developing. They are the heart and soul of our business and I am delighted that they too are unbowed and looking to the future.
"We are thankful for the support provided by the Irish and UK governments over the last 12 months. Given the scale of our business in Ireland, the Irish support packages are particularly important. The Employment Wage Subsidy Scheme and the commercial rates waiver in Ireland remain in place until 30 June 2021. The on-going support is critical as the industry navigates through this crisis and positions for recovery. The 'Experience Economy', which includes the hospitality sector, employs over 330,000 people in Ireland and is particularly important to the regional economy. I am now calling on the Irish government to continue their commitment to support this vital part of our economy as it starts to recover. One of the key supports after the financial crisis was the reduction in the VAT rate. I am asking the Irish government to commit to a minimum of five years to a VAT rate of 9%. The big beneficiary of this will be to the exchequer itself and it will support getting people back to work.
"ESG (Environmental, Social and Governance) is a key focus for the board and management, and we continue to advance our sustainability initiatives. In January of 2020, we established a new ESG board committee, which is comprised of a majority of non-executive directors. We improved our CDP score from our initial C rating in 2018 to a B rating in 2020. We also continued to invest in training and development to support our people, particularly those who we cannot employ at present by offering tailored development programmes.
"We continue to make good progress on our growth strategy with a pipeline of close to 3,300 rooms. We are excited about other opportunities we are currently looking at. While we remain focused on delivering our growth strategy in our top target cities in regional UK, we are also seeing opportunities in London.
"The outlook for the near-term remains uncertain at present. The roll out of vaccines both here in Ireland and abroad continues, and I remain positive on the medium-term prospects for the group.
"I believe that Dalata's key strengths will differentiate us as business recovers. Our core teams of excellent hotel operators are ready and excited to welcome customers back to our hotels when they re-open. The group's robust financial position with an asset backed balance sheet, strong liquidity and comfortable gearing ensures Dalata is well placed as we head into 2021. Finally, our experienced management team and our record of identifying and securing opportunities in a crisis will help us position the business for a successful recovery and to look for growth opportunities that may arise out of the crisis.
"We are all ready for the challenges and opportunities that 2021 may bring and look forward to the year ahead with energy and enthusiasm. Dalata is unbowed and unbroken."
McCann, who has served as Dalata's CEO since the company was founded in 2007, has informed the Dalata board of his intention to step down as CEO and from the board following a transition period.
The board has announced that current Dalata deputy CEO Dermot Crowley will replace McCann as CEO.
Dalata chairman John Hennessy stated, "Pat has been instrumental in growing Dalata, and its Clayton and Maldron brands, into a leading player in the hotel sector in Ireland and the UK. Having founded the business in 2007, he has successfully transformed Dalata, creating a listed business comprising 44 hotels, 9261 bedrooms and a pipeline of 13 new hotels with 3300 rooms. His leadership and his ability to engage our people has been critical to that success. It has been a pleasure and a privilege to work alongside him since the Group's listing in 2014, and on behalf of the board and the entire Dalata team, I would like to offer my sincere thanks to Pat and to wish him every success in the future.
"I am delighted that Dermot Crowley will succeed Pat as CEO. The board is confident that Dermot is the right person to lead Dalata in the period ahead. He has a proven track record, having played a key role in the development of the business since 2012. Dermot started working with Pat over twenty years ago. He has a clear commitment to continue to grow the business and to maintain the wonderful culture that exists in Dalata today. The board looks forward to working with Dermot in his new role."
McCann commented, "It has been a privilege to lead Dalata. I am immensely proud of everything we have achieved but most of all, I am proud of our people, who continue to demonstrate dedication and resilience, in what has been a difficult year for many of them. I have watched them grow into very skilled and really wonderful people.
"I thank the board for their support over the years and wish Dermot every success in his role as CEO, which I have no doubt he will excel in."
Meanwhile, Crowley said, "I am honoured to have been chosen by the board to succeed Pat as CEO. I am very excited about leading the great team that we have in Dalata as we continue to expand the group across the UK and Ireland.
"I would like to take this opportunity to thank Pat for his guidance and support over the period that we have worked together. I am very proud of what we and the Dalata team have achieved over the last number of years. I wish Pat the very best for the future."
© 2021 Hospitality Ireland – your source for the latest industry news. Article by Dave Simpson. Click subscribe to sign up for the Hospitality Ireland print edition.