Dalata Hotel Group PLC: 2023 Half Year Report

Delivering Growth

Adjusted EBITDA1 up 24% to €103 million in H1 2023

ISE: DHG   LSE: DAL

Dublin and London | 29 August 2023: Dalata Hotel Group plc (‘Dalata’ or the ‘Group’), the largest hotel operator in Ireland, with a growing presence in the United Kingdom and continental Europe, announces its results for the six-month period ended 30 June 2023.

CONTINUING EXCELLENT OPERATING PERFORMANCE

• Adjusted EBITDA1 up 24% to €103.4 million in H1 2023
• Hotel revenue1 growth of 29% to €284.8 million in H1 2023
• ‘LFL’ H1 2023 RevPAR1 of €112.09 up 23% on H1 2022
• ‘LFL’ H1 2023 Hotel EBITDAR margin1 of 41.4% up 1.0% on H1 2019 (40.4%)
• H1 2023 Profit before tax of €50.4 million
• H1 2023 Free Cashflow1 of €59.2 million (+5% on H1 2022)
• Announcing today, the Board has declared an interim dividend of 4.0 cent per share, representing dividend payment of c. €8.9 million

CONTINUING TO DELIVER ON OUR AMBITIOUS GROWTH STRATEGY

• Growing asset portfolio - PPE now €1.6 billion, 11% increase since 31 December 2022 (€1.4 billion), 5% of which relates to revaluation uplift on existing properties
• Secured two London owned hotels YTD (one in February, one in July), adding 280 rooms to our UK portfolio for consideration of £97.7 million (€112.3 million). Both hotels commenced trading under Dalata in July 2023, growing London room portfolio by 64%
• Maldron Hotel Shoreditch, London (157 rooms) to be completed in Q2 2024, bringing London room portfolio to 876
• Three further leased hotels (677 rooms) under construction in key UK cities – Liverpool, Brighton, and Manchester, expected to open in Q2 2024
• Experienced and skilled Acquisitions and Development team with a track record of securing opportunities in competitive markets, targeting prime city locations with strong mix of corporate and leisure business principally in the UK and continental Europe

CREATING LONG-TERM SHAREHOLDER VALUE WHILE MAINTAINING FINANCIAL DISCIPLINE

• €0.5 billion of property value growth since IPO
• Low gearing position provides balance sheet strength and ability to drive growth, enabling opportunistic acquisitions
• 11% Net Debt to Value1 (of owned hotel portfolio), with cash and undrawn facilities of €413.9 million
• High quality leased hotel portfolio delivered H1 2023 EBITDA (after rent)1 of €17.5 million at 1.7x rent cover1
• Balance Sheet NAV per share1 of €6.26 at 30 June 2023 (+11% on 31 December 2022: €5.63)
• Normalised Return on Invested Capital1 of 13.3% in the twelve months ended 30 June 2023 (year ended 31 December 2022: 11.6%)
• Well positioned and fully hedged on term loan (£176.5 million), with interest rate swaps in place fixing SONIA benchmark rate between c. 1.3% and 1.4% until 26 October 2023, reducing to c. 1.0% from then on until 26 October 2024

INVESTING IN OUR PEOPLE, OUR GREATEST ASSET

• 519 employees currently on award-winning graduate and development courses, 59,375 Dalata Online courses completed in H1 2023
• 285 internal promotions in H1 2023, growing portfolio creates excellent opportunities for future leaders of the business
• Dalata Employer Brand launched earlier this year to position Dalata as clear employer of choice in each of its markets
• Awarded ‘Investors in Diversity’ Silver accreditation, having received Bronze last year

RELENTLESS FOCUS ON SUSTAINABILITY

• Completed detailed assessment on how we may commit to Science Based Targets initiative (SBTi) under current draft guidance and identified a pathway to deliver on near-term targets (2029 – 2033)
• Aspire to commit to SBTi Building Sector targets, subject to the receipt and form of final guidance expected in Q4 2023 (the direct purchase of new green energy would need to be recognised as an applicable target reduction, as accepted within other sector guidance). Actively engaged in the SBTi draft guidance consultation process
• ESG Risk Rating ranked in top 10% in industry by Sustainalytics (July 2022: 37th percentile) and ‘AA’ rated by MSCI
• 24% reduction in Scope 1 & 2 carbon emissions per room sold achieved in H1 2023 versus H1 2019 (target of 20% reduction on 2019 full year levels by 2026) due to increased sustainability focus and management

OUTLOOK

Following a very successful start to 2023, the Group is optimistic for the remainder of the year and its future growth prospects.

Dalata’s ‘like for like’ Group RevPAR1 is expected to be €140 for the July/August period, an increase of 5% compared to the same period in 2022. ‘Like for like’ RevPAR1 in July/August is expected to be 5% ahead of 2022 levels in Dublin, 8% in Regional Ireland and 5% in the UK. Recent hotel portfolio additions continue to perform well, with Clayton Hotel London Wall and Maldron Hotel Finsbury Park, London opening under Dalata brands in July.

The Group has entered into fixed pricing contracts for approximately 80% of its projected gas and electricity consumption until December 2024. Gas and electricity costs (net of energy supports received) for the first six months of 2023 amounted to approximately €15 million, based on expected consumption levels we expect a reduction in these costs to approximately €14 million for the second half of 2023 given improved pricing.

Recovery of international travel, including resurgent UK Airport traffic statistics and record numbers at Dublin Airport, provides a positive backdrop for the markets in which we operate. While we continue to monitor potential slowdowns in demand as a result of high inflation levels, we are not seeing any such indicators.

As announced previously, the Board has adopted a progressive dividend policy with payment based on a percentage of profit after tax. The Board has declared an interim dividend of 4.0 cent per share payable on 6 October 2023 to all ordinary shareholders on the share register at close of business on the record date of 15 September 2023.

DERMOT CROWLEY, DALATA HOTEL GROUP CEO, COMMENTED: 

“Our performance year to date has been exceptional, thanks to all of our teams throughout the business, whose commitment and dedication are evident in the results announced today and in the continuous delivery of our ambitious growth strategy.

We have continued to expand our asset portfolio with the two recent high-quality acquisitions in London which are both performing well. This speaks to the strength of our balance sheet and our development team’s ability to identify and deliver additional rooms in times of market volatility and uncertainty. Since IPO, we have delivered €0.5 billion in property value growth on our developments and acquisitions. In addition, we have our growing leased portfolio which is currently delivering €17.5 million EBITDA (after rent)1 in H1 2023 equating to a very strong 1.7x rent cover1. As we open our current pipeline and secure new opportunities, I am confident that we will continue to create further value through the combined strength of our development and operating teams supported by our investment capacity. Our firepower potential provides scope to grow our property assets by €750 million in the medium term beyond our currently announced pipeline.

The Group has delivered a record set of financial results and reported excellent customer and employee satisfaction scores. We have responded effectively to the challenge of rising costs through cost and revenue management initiatives, a focus on reducing utility consumption and adopting innovation across all areas of the business. Our ongoing investment in consumer research ensures that customer insights are continuously used to inform and guide decisions, from hotel designs to the food and beverage offerings we serve our customers.  As a result of these efforts, we achieved a ‘like for like’ hotel EBITDAR margin1 of 41.4% in H1 2023, exceeding the equivalent H1 2019 margin by 1.0%. As a company, we have taken a reasonable approach to pricing; our average room rate1 in Dublin during the four-month period from May to August was €177. We remain mindful that the current cost environment is highly dynamic, and our innovation and cost management measures will need to keep pace.

I am delighted to report that Dalata has recently been awarded the ‘Investors in Diversity’ Silver mark, which is one of many areas of focus in our continued efforts to deliver on our commitments to grow responsibly. Sustainability continues to be central to our strategy, and we achieved a 24% reduction on our Scope 1 & 2 carbon emissions per room sold in H1 2023 versus H1 2019, remaining on-track to exceed our short-term target of a 20% reduction on 2019 full year levels by 2026.

I look forward to the remainder of the year with confidence in our ability to continue to create opportunities, to grow and to create value for our shareholders whilst ensuring that our hotels continue to provide an excellent customer experience and a great place to work.”

ENDS

ABOUT DALATA

Dalata Hotel Group plc was founded in August 2007 and listed as a plc in March 2014. Dalata is Ireland’s largest hotel operator, with a growing presence in the UK and continental Europe. The Group’s portfolio comprises 52 three and four-star hotels with 11,239 rooms and a pipeline of over 1,100 rooms. The Group currently has 31 owned hotels, 18 leased hotels and three management contracts. Dalata successfully operates Ireland’s two largest hotel brands, the Clayton and the Maldron Hotels. For the six-month period ended 30 June 2023, Dalata reported revenue of €284.8 million and a profit after tax of €42.0 million. Dalata is listed on the Main Market of Euronext Dublin (DHG) and the London Stock Exchange (DAL). For further information visit: www.dalatahotelgroup.com

CONFERENCE CALL AND WEBCAST DETAILS

Management will host a conference call and webcast for analysts and institutional investors at 08:30 BST today 29 August 2023.

• For conference call details, please register here
• The webcast will be available here

Please allow sufficient time for registration.

Contacts

NOTE ON FORWARD-LOOKING INFORMATION

This Announcement contains forward-looking statements, which are subject to risks and uncertainties because they relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Group or the industry in which it operates, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements referred to in this paragraph speak only as at the date of this Announcement. The Group will not undertake any obligation to release publicly any revision or updates to these forward-looking statements to reflect future events, circumstances, unanticipated events, new information or otherwise except as required by law or by any appropriate regulatory authority.

HALF YEAR 2023 FINANCIAL PERFORMANCE