Dalata Agrees New Lease Deal For Four Hotels
Following a headline-grabbing 2015, leading Irish hotel group Dalata has made its second major play of the new year by securing leasehold interest of four hotels for an enterprise value of €40 million.
The four hotels are the Gibson Hotel Dublin, the Croydon Park Hotel in Croydon, London, and the Clarion Hotel Cork and the Clarion Hotel Limerick.
Dalata, which earlier this month made its first move of 2016 by agreeing to purchase the Clarion Hotel Sligo for €13.1 million, this morning (28 January) said that the acquisitions will add 1,171 rooms to its hotel portfolio in Dublin, London, Cork & Limerick.
The leasehold interest comprises of operating leases with an average term of 18 years outstanding. As part of the transaction, Dalata will also take over the management of the Clarion Liffey Valley Hotel in Dublin under a short term management contract.
The four hotels in question are currently operated as part of the Choice Hotel Group.
Dalata reports that underlying EBITDA for the four hotels in 2015 (after adjusting for costs and revenues that will not transfer as part of the transaction) is expected to be €4.1 million. Including revenues from the short term management contract, underlying EBITDA is expected to be €4.7 million, it stated.
The group added that it plans to invest €14 million over the next two years in refurbishing the hotels in Cork, Limerick and Croydon.
Dermot Crowley, Deputy Chief Executive, Business Development and Finance, commented: "We are very excited about the opportunity to secure the leasehold interests of these four hotels and the contract to manage Clarion Liffey Valley Hotel. This transaction gives Dalata a further 960 rooms in the cities of Dublin, Cork and Limerick. All three cities are experiencing strong RevPar growth in the recovering Irish economy. The transaction also allows us to further grow our portfolio in the UK with the addition of 211 rooms in Croydon."
He added: "We will rebrand the four leasehold properties as Clayton hotels over the next year. The addition of these hotels continues the rapid growth of the Clayton brand in Ireland and the UK where on rebranding; we will have 18 Clayton hotels."
(* Pictured is Dalata chief executive Pat McCann speaking at the 2015 National Hospitality Conference in Dublin)