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Buy-and-build group is in a position to start handing cash back to shareholders
Thursday 08 Mar 2018 Author: Lisa-Marie Janes

Ireland’s largest hotel operator Dalata Hotels (DAL) plans to reward shareholders with a dividend from 2018 following strong full year results in 2017.

Dalata operates the Maldron Hotel and Clayton Hotel brands in Ireland and the UK, and manages a portfolio of partner hotels.

The £1bn company says the dividend payout will be based on a percentage of profit after tax, which is anticipated to be between 20% and 30%.

Investment bank Berenberg forecasts 10c dividend in 2018, 11.3c in 2019 and 12.3c in 2020. The 2018 figure implies a 1.6% yield based on the latest share price of 542p.

We note that Investec had previously forecast Dalata to pay a maiden dividend at the end of the 2017 financial year. It now says that forecast was issued in error, blaming a technical issue with its research note template.


Pre-tax profit in 2017 grew by 75.3% to €77.3m and sales jumped 19.9% to €348.5m.

Revenue per available room (RevPAR) rose 10.4% to €88.51.

The company has a pipeline of 2,200 rooms which will be achieved through new hotel openings and extensions, as well as lease agreements.

Dalata has its sights set on the UK for further growth and is currently hunting for new sites in 20 undisclosed target cities. It hopes to launch an extra 1,200 rooms every year.

Investec analyst Ronan Dunphy says Edinburgh, Manchester, Glasgow, Brighton and Bristol are among the top targets, speculating 8,000 rooms could be opened over the next five to seven years.


We believe Dalata is in a good position to take advantage of the fragmented UK hotel market thanks to its strong operating cash flow, which is anticipated to increase in the future.

Operating cash flow is useful for investors by revealing whether a company has enough cash to grow its operations without having to raise new money or rack up debt.

In 2018, Dalata’s operating cash flow is expected to rise from €95m to €106m before jumping to €122m in 2019, according to Berenberg forecasts.

The investment bank expects Dalata’s net debt to fall over the next few years from €244m in 2017 to €236m in 2018 and €144m in 2019.

Ned Hammond, an analyst at Berenberg, is optimistic about Dalata’s outlook, highlighting a strong hotel market in Ireland and an improvement in the UK.

He believes the hotel operator will generate strong RevPAR growth across the business throughout 2018.


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