Dalata Releases Its Results For FY2021
Dalata Hotel Group has released its results for the year that ended on 31 December 2021.
Operating Performance And Information
Dalata stated that it recorded revenue growth of 40% to €192.0 million for the 12 month period, which was 45% of levels reported in pre-COVID-19 pandemic 2019.
Like for like group RevPAR1 (revenue per available room) increased from 19% of 2019 levels for the first six months of 2021 to 58% in July and 78% in November.
The group recorded adjusted EBITDA1 (earnings before interest, tax, depreciation and amortisation) of €63.2 million for the 12 month period and a loss before tax of €11.4 million, as well as free cash flow1 of €28.0 million (compared to €100.6 million in 2019) after payments for interest, rent and refurbishment capex1 (H2 2021: €49.0 million)
Dalata said that it maintained its core management teams at is hotels and central office throughout the COVID-19 pandemic, which the group said provided stability and enabled it to scale up quickly to meet higher demand and customer expectations as restrictions were reduced.
Recovery And Growth
Dalata stated that it is well positioned for the recovery in demand and to meet the changing needs of its customers with its strong financial position, stable and experienced teams and continued focus on innovation.
The group said that its initial growth will be primarily through the further recovery of its existing portfolio and new hotels funded predominantly by long term leases while cash flow generation returns to pre-COVID-10 pandemic levels
Dalata said that it has set near-term environmental targets to reduce energy emissions, food waste and water consumption, and that it is committed to diverting 100% of waste from landfill by the end of 2022 and collecting carbon emissions from suppliers to support Scope 3 measurement.
Dalata recorded an asset backed balance sheet with €1.2 billion in property, plant and equipment; conservative gearing with net debt to value1 of 24% (compared to 23% at 31 December 2020); and cash and undrawn committed debt facilities of €298.5 million (compared to $298.1 million at 31 December 2020); and its debt facilities have been extended to October of 2025 with covenant flexibly (net debt to EBITDA and interest cover not retested until June of 2023).
2021 Trading Overview
The group said that its trading markedly improved once restrictions eased allowing hotels to fully re-open in May of last year in the UK and in June in Ireland.
Its "like for like" group occupancy1 increased from 20.8% for the first six months of 2021 to 63.9% in Q3 and 59.3% in Q4.
Dalata currently has a pipeline of more than 2,000 rooms, which it said will see its UK footprint surpass Dublin by 2025, and while regional UK and London is the group's primary focus, it said that it is also looking at large European cities for growth opportunities.
Dalata said that it is opening four more hotels this year, comprising over 900 rooms, one of which will be in Bristol, one of which will be in Glasgow and two of which will be in Dublin.
The group also said that construction of a Maldron Hotel in Shoreditch in London is progressing well and that the property is expected to open in H2 2023.
Dalata added that there are four more hotels due to open 2024 in Dublin, Brighton, Liverpool and Manchester, three of which are at the pre-construction phase, and the construction of Maldron Hotel Brighton commenced in early 2022.
Dalata noted that trade at the start of 2022 was disrupted by restrictions following the emergence of the Omicron variant of COVID-19 variant, but that January and February are traditionally its quietest months, and virtually all restrictions in Ireland and the UK were removed at the end of January, which resulted in a rise in bookings, with ‘like for like’ group occupancy1 increasing from 38% in January to 62% in February, and "like for like" group RevPAR1 for February is expected to be 91% of the level achieved in 2019.
The group said that as it looks forward, and in the absence of any further material COVID-19 restrictions, it is optimistic about the ongoing recovery of its business.
Statement By Dalata Hotel Group CEO
Dalata Hotel Group CEO Dermot Crowley stated, "As I look back on 2021, I am extremely proud of the agility and commitment demonstrated by our teams in an environment that was constantly changing. We ended the year with revenue of €192 million, which is a sizeable achievement considering our hotels were not open to the public for much of the first half of the year. Experienced teams at our central office and in each of our hotels enabled us to manage rapid changes in demand levels. Our hotels in regional Ireland, regional UK and Northern Ireland benefitted from strong levels of staycation demand following the easing of restrictions in the summer, while the return of domestic corporates and project work later in the year commenced recovery in our Dublin and London markets. By November 2021, before the onset of Omicron, 'like for like' group RevPAR1 had reached 78% of November 2019 levels.
"Our business has been significantly challenged by COVID-19 over the last two years but we have always sought to behave in a fair and ethical manner. We have communicated openly with all our stakeholders and have always been focused on ensuring the health and safety of our guests, our people and our suppliers.
"I would like to take this opportunity to acknowledge the continued support from all our stakeholders. We agreed extended debt facilities with our banking partners in November which also provides additional flexibility. Our institutional landlords remain committed to our long-term partnerships and our shareholders supported us through the equity placing in September 2020 and are impacted by the continued suspension of dividends.
"I would like to acknowledge the support of the Irish and UK governments in helping the hospitality sector navigate the difficulties caused by the COVID-19 pandemic and the related restrictions. The Employment Wage Subsidy Scheme (EWSS) in Ireland is particularly important as it allows us to keep people in employment. In September 2021, despite room revenue for our Irish portfolio being 50% behind what we achieved in September 2019 on a 'like for like' basis, the number of hours worked reached 85% of the levels for September 2019 showing the value of the EWSS to maintaining employment in one of Ireland’s most important sectors.
"I have spent the last number of months shaping my own team. Carol Phelan was appointed chief financial officer, Des McCann took up the new position of chief operating officer, while Shane Casserly's role was expanded to include responsibility for innovation and information technology. I have made other changes to the way in which the senior executive team works and communicates to ensure that we are best placed to face the challenges and avail of the opportunities ahead.
"As we look forward, it is most definitely a busy and exciting time for Dalata. In the first two months of 2022 we opened two new hotels in Manchester city centre and we took our first steps into continental Europe through a new leasehold interest in Hotel Nikko, a 393-bedroom hotel in Dusseldorf which we now operate. On top of this, there are four more hotels opening over the coming four months. Whilst these new hotels provide an exciting backdrop for the year ahead, we remain focused on the recovery of earnings at our existing hotels as restrictions are eased.
"Our current pipeline comprises over 2,000 rooms and our acquisitions and development team continue to look for further opportunities. Regional UK and London remains our primary focus for growth at this time. However, we are also looking at large European cities that fit our model. Hotel Nikko, Dusseldorf, was our first step into continental Europe and in time we expect to see further opportunities, leveraging our asset backed balance sheet, strong reliable covenant and hotel operational expertise.
"Given the uncertain environment with potential further COVID-19 variants and the current conflict in Ukraine and its potential wider global implication, we continue to remain agile and proactively manage the business as we always have. We remain vigilant in light of the current challenges facing the hospitality industry, particularly inflationary pressures and labour shortages. I am optimistic and truly confident in our abilities to respond to and grow in this emerging environment. We will continue to empower our people, always our greatest asset, through ongoing development and growth opportunities.
"The culture of Dalata is ideally suited to ESG. Over the last year, we have worked hard in formalising and putting a structure in place to report our goals and achievements in how we treat our people, interact with our local communities, reduce our impact on the environment and practice good corporate governance. ESG is a journey, and we have plenty of road to travel. I have set an objective for the teams to achieve performance levels in ESG that makes us a preferred partner with our stakeholders - shareholders, real estate investors, banks, suppliers, customers, and employees. As the world emerges from the shadow of the pandemic, with the climate crisis becoming increasingly important, how people behave will inevitably change. This will impact how we attract, develop and retain our people. It will impact how our customers travel, most notably our corporate customers. We will need to be innovative to adapt to these changes, to respond to the challenges and find new ways to operate our hotels and interact with our customers. I am excited about the challenge and confident that we have the team to deliver a competitive strength in the new world.
"Here at Dalata, we see 2022 as a time to look forward. COVID-19 has changed the world in many ways, yet in Dalata we remain focused on sustainably delivering for all our stakeholders as we always have, and this will guide us in how we adapt to a changing world. Following the removal of restrictions in Ireland and the UK, trade at the hotels has markedly improved reaching 'like for like' occupancy1 of 62% in February. The domestic recovery in Q3 2021 demonstrated the strength of pent-up leisure demand. There is a strong calendar of events for 2022, and as flight capacity increases, I expect a strong return of international leisure travel. As more and more companies return to offices I believe this will provide a catalyst for the recovery of international corporate travel.
"We are looking forward to capitalising from a position of strength as we continue to rebuild our existing hotels and focus on growth opportunities. Our strong financial position and ambitious teams provides us with a platform for growth as we now look forward beyond the pandemic and towards long term recovery and sustainable growth. We are ready for the challenges and opportunities that lie ahead and look forward with enthusiasm."
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