2018 HALF YEAR RESULTS STRONG H1 PERFORMANCE AS PORTFOLIO GROWTH CONTINUES - Dalata Hotel Group
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2018 HALF YEAR RESULTS STRONG H1 PERFORMANCE AS PORTFOLIO GROWTH CONTINUES
Contents
KPIs & Market Background slide 3
H1 2018 Financial Performance slide 7
Driving Portfolio Growth slide 14
Dalata’s Strategic Priorities slide 20
Outlook slide 25
Appendices slide 27
DISCLAIMER
The presentation contains forward looking statements. These statements have been made by the Directors in good faith based on
the information available to them up to the time of their approval of this presentation.
Due to inherent uncertainties, including both economic and business risk factors underlying such forward looking information, actual
results may differ materially from those expressed or implied by these forward looking statements. The Directors undertake no
obligation to update any forward looking statements contained in this presentation, whether as a result of new information, future
events or otherwise.
GLOSSARY
H1 2018 includes the six month period ended 30 June 2018
H1 2017 includes the six month period ended 30 June 2017
2018 Half Year Results
Strong performance and growth
Slide | 2
New Maldron Hotel Belfast City KPIs & MARKET BACKGROUND Slide | 3
Continuing Our Strong Performance
H1 2018 Revenue
€180.6 million 10.6%
H1 2018 Adjusted EBITDA1
€50.3 million 12.0%
H1 2018 Profit after tax
€30.5 million 7.8%
H1 2018 Adjusted diluted2
EPS 17.2 cent (€) 14.7%
Net Debt to EBITDA First interim
June 2018: 2.5x dividend at
December 2017: 2.4x 3.0 cent per share
H1 2018 uplift 1. Excludes revaluation movements and items considered by management to be non-recurring or unusual in nature
2. Excludes the tax adjusted effects of revaluation movements and items considered by management to be non-
H1 2017 recurring or unusual in nature
2018 Half Year Results
Strong performance and growth
Slide | 4
Group Snapshot – H1 2018
Dublin Regional Ireland United Kingdom
Mixed market performance.
Strong market dynamics with
London and some regional UK
Market opportunities for Dalata to Strong market dynamics
cities challenged. Exciting
deliver more rooms
structural opportunities
RevPAR growth % 10.7% 8.1% 3.8%
EBITDAR margin 46.1% 24.0% 36.0%
Dalata hotels Dalata rooms Share of revenue Share of EBITDA
21% 20%
9 1,968
15
4,146 15%
20% 59% 65%
12 1,706
2018 Half Year Results
Strong performance and growth
Slide | 5
Market Review | Dublin
Savills forecast net additional 4,950 rooms by 2020 STR Global forecast for Dublin
3,000 Dublin
2017 2018 2019 2020
2,500 Actual Forecast Forecast Forecast
2,500
2,000 Occupancy 83.1% 83.3% 80.5% 79.2%
1,500 1,300
1,150 ARR 136.51 143.74 146.25 149.84
1,000
RevPAR 113.37 119.81 117.71 118.63
500
RevPAR %
- Variance
7.7% 5.7% -1.8% 0.8%
2018 2019 2020
Source: STR Global
Total market size of circa 20,000 rooms
Increase in supply expected to be matched by increase in demand from continued economic growth, increased visitor
numbers and growing evidence of office relocations from London to Dublin
2018 Half Year Results
Strong performance and growth
Slide | 6
New Maldron Hotel Kevin Street H1 2018 Financial Performance Slide | 7
Financial Highlights
H1 H1
Key Financials €million Group RevPAR increased 7.1%
2018 2017
Revenue 180.6 163.3 Strong revenue growth of 10.6%
Segments EBITDAR 71.9 66.3
Central overheads decreased versus H1 2017
Rent (16.2) (16.3) due to timing difference on projects and
some expenditure items
Segments EBITDA 55.7 50.0
Central overheads (4.3) (4.8) Depreciation increased by €1.7 million due to
newly acquired hotels, the opening of Maldron
Share-based payment expense (1.2) (0.7)
Belfast city and the completion of extensions
Other income / costs (1.5) 1.0
Other income/costs includes rental income of
Group EBITDA 48.7 45.5
€0.1 million (2017: €0.4 million) and net loss
Depreciation (9.3) (7.6) on revaluation of property assets €1.6 million
(2017: gain of €0.6 million)
Net finance costs (4.0) (5.2)
Profit before tax 35.4 32.7
Profit after tax 30.5 28.3 Group KPIs H1 2018 H1 2017
Basic EPS (cent) 16.6 15.5 Occupancy 82.1% 80.2%
Adjusted EBITDA 50.3 44.9 Average Room Rate (€) 108.88 104.12
Adjusted diluted EPS (cent) 17.2 15.0 RevPAR (€) 89.39 83.50
2018 Half Year Results
Strong performance and growth
Slide | 8
Dublin | Half Year Performance
H1 2018 H1 2017
RevPAR Growth
Number of hotels 15 14
Number of rooms 4,146 3,699
Market 8.9%
Dalata 10.7% All figures €million H1 2018 H1 2017
Total revenue 107.2 93.8
Source: STR and company
EBITDAR 49.4 44.2
Rent (13.6) (14.2)
The Dublin market continues to EBITDA 35.8 30.0
perform strongly with STR now
forecasting a 5.7% increase in EBITDAR margin 46.1% 47.1%
RevPAR for 2018
KPIs1 H1 2018 H1 2017
EBITDAR margin decreased from
Occupancy 86.2% 82.3%
47.1% to 46.1% due to Clayton Hotel
Liffey Valley initially operating at a Average Room Rate (€) 122.38 115.78
lower margin and impact of pre-
opening costs for two new hotels RevPAR (€) 105.47 95.30
1KPIs reflect a full six month performance of Dublin acquisitions regardless of when
acquired.
2018 Half Year Results
Strong performance and growth
Slide | 9
Regional Ireland| Half Year Performance
H1 2018 H1 2017
RevPAR Growth
Number of hotels 12 12
14.8%
13.7% Number of rooms 1,706 1,643
9.4% 9.3%
5.0% 5.9%
All figures €million H1 2018 H1 2017
Cork Galway Limerick Total revenue 35.8 34.2
Dalata Market EBITDAR 8.6 8.0
Source: Trending.ie and company
Rent (0.5) (0.6)
EBITDA 8.1 7.4
Cork, Galway and Limerick markets
continues to benefit from strong EBITDAR margin 24.0% 23.4%
demand from domestic consumers
and FDI companies KPIs1 H1 2018 H1 2017
Our regional hotels increased RevPAR Occupancy 72.1% 71.5%
by 8.1% Average Room Rate (€) 91.98 85.83
EBITDAR margin increased to 24.0% RevPAR (€) 66.30 61.31
due to good conversion of additional 1 KPIs reflect a full six month performance of Regional Ireland acquisitions
room sales regardless of when acquired.
2018 Half Year Results
Strong performance and growth
Slide | 10UK | Half Year Performance
RevPAR Growth H1 2018 H1 2017
Number of hotels 9 7
7.6%
5.8% Number of rooms 1,968 1,557
5.2% 4.7%
4.6%
3.4% 3.1% All figures £million H1 2018 H1 2017
2.0%
0.8%
Total revenue 32.5 29.5
EBITDAR 11.7 11.1
-1.0%-1.4% -1.1%
Rent (1.8) (1.3)
London Manchester Birmingham Cardiff Leeds Belfast
Dalata Market
EBITDA 9.9 9.8
Source: STR and company
EBITDAR margin 36.0% 37.6%
KPIs1 H1 2018 H1 2017
Slow down in London market evident in H1 2018.
Mixed performance across provincial cities in UK Occupancy 83.1% 81.1%
Our UK hotels increased RevPAR by 3.8% Average Room Rate (£) 80.58 79.48
RevPAR (£) 66.93 64.45
Our ability to grow UK EBITDAR margin is
constrained in the short term due to the impact 1 KPIs reflect a full six month performance of United Kingdom acquisitions
of new hotels opening and pre-opening costs regardless of when acquired. New hotels opening during H1 2018 are excluded from
the statistics.
2018 Half Year Results
Strong performance and growth
Slide | 11Balance Sheet | The Engine For Growth
30 June 31 Dec Strong balance sheet with an attractive covenant to
All figures €million secure future leases
2018 2017
Non-current assets Exceptionally well located hotel assets with
market value of over €1 billion
Property, plant and Low level of gearing with net debt to adjusted
1,116.5 998.8
equipment EBITDA of 2.5x
Other non-current assets 62.8 64.1 Loans to Tangible Asset ratio of 26.8%
Net upward property revaluation gain of €58.5
Current assets million
Trade receivables, inventory
36.9 22.5 €196.8 million (£174.4 million) of loans held in
and other
sterling to provide a natural hedge against
Cash 22.7 15.7 fluctuations in the value of sterling.
Total assets 1,238.9 1,101.1
The acquisition of Clayton Hotel Aldgate, London
Equity 822.8 737.4 will increase Net Debt to EBITDA but will still remain
Bank loans 297.1 260.1 below our guided upper level of 3.5x. Projected to
fall again during 2019.
Trade and other payables 73.1 64.9
Other liabilities 45.9 38.7 Other non-current assets include goodwill,
investment property, deferred tax assets and other
Total equity and liabilities 1,238.9 1,101.1 non-current receivables mainly related to operating
leases. Other liabilities include deferred tax
liabilities, current tax liabilities, derivatives and the
provision for self insurance.
2018 Half Year Results
Strong performance and growth
Slide | 12Strong Cash flow to Fund Pipeline and
Further Growth
All figures €million H1 2018 H1 2017
Adjusted EBITDA 50.3 44.9
Add back: non cash item (share based payment expense) 1.2 0.7
Adjusted Cash EBITDA 51.5 45.6
Net cash from operating activities 43.3 37.5
Interest and finance costs paid (4.7) (4.8)
Maintenance capital expenditure (7.2) (6.5)
Free cash flow 31.4 26.2
Free cash flow conversion 61.0% 57.5%
For the first half of 2018 the Group generated €31.4 million which is being used to fund
acquisitions, development activity and debt repayments
Due to the effects of seasonality, cash conversion is lower in H1 compared to H2
Maintenance capital expenditure is calculated as 4% of revenue for the period
2018 Half Year Results
Strong performance and growth
Slide | 13Baskin Suite at Clayton Hotel Dublin Airport Driving Portfolio Growth Slide | 14
Growth Momentum
Opening over 3,400 from 2018 to 2021
1,600
1,507
2018 3 hotels in Ireland with 2 in
1,400 1,316 in Dublin and 1 in Cork. 1
Number of new rooms
1,200 hotel in Belfast,1 hotel in
Newcastle and 1 hotel in
1,000 London. 4 hotel extensions
in Ireland with 3 in Dublin
800
605 and 1 in Galway
600 2020 4 UK hotels in Glasgow (2),
Bristol, Birmingham and
400 1 Dublin hotel
2021 2 hotels in Manchester
200
0
2018 2019 2020 2021
Dublin Regional Ireland UK
2018 Half Year Results
Strong performance and growth
Slide | 15Clayton Hotel Aldgate, London
Acquired new Clayton hotel with 212
rooms for a total consideration of £91.0
million
Key central location for both corporate
customers and leisure guests due to
proximity to the city. Hotel is located
close to the new Liverpool Street and
Whitechapel Crossrail stations, both of
which are scheduled to open in Autumn
2019
Highly attractive strategic asset and
available in a number of months
Although RevPARs have fallen slightly in
the city over the last 12 months, London
remains a key gateway city in Europe that
will continue to benefit from the growth
in international travel
We view this as a catalyst for further
opportunities in the greater London area
Hotel is projected to be EPS enhancing in
2019
2018 Half Year Results
Strong performance and growth
Slide | 16Fragmented Regional UK Market offers
Structural Opportunity
We have identified 20 target cities in the UK which are suitable for Maldron and Clayton
Large structural opportunity exists in the 3 & 4 star segments of these markets for a
number of reasons:
International brands are increasingly evolving to a franchise model leaving a
shortage of operators with any scale
Fragmented market in terms of:
• Brands – largest brand is Holiday Inn at 8% market share
• Ownership – 40% of rooms owned by operators with 4 hotels or less
• Operators – largest operator is Accor at 6% market share
The stock of 3 and 4 star hotels is considerably older than the age profile of the Budget
sector with over 40% of the rooms over 40 years old
2018 Half Year Results
Strong performance and growth
Slide | 17Building our Regional UK city presence
Current room Dalata's secured
City Pipeline Total
numbers market share
Manchester* - 605 605 3.7%
Glasgow - 594 594 6.7%
Bristol - 252 252 4.5%
Birmingham 174 330 504 3.7%
Leeds 334 - 334 5.5%
Newcastle - 265 265 4.3%
Cardiff 216 - 216 4.6%
Belfast 407 - 407 10.5%
Total 1,131 2,046 3,177
* Clayton Hotel Manchester Airport is excluded from the analysis above
Our objective is to roll out the Maldron and Clayton brands and become the leading
4 star operator in our target city markets
Targeting circa 7.5% share of the total market in each city
Translates to circa 5,800 rooms on top of current pipeline in 5 – 7 years
Further opportunities exist in the Greater London area
2018 Half Year Results
Strong performance and growth
Slide | 18Regional UK projects announced in 2018
Maldron | Manchester Maldron| Birmingham Clayton | Bristol
Development Asset Development Asset Development Asset
Agreement for lease Agreement for lease Agreement for lease
signed with CEPF II, a contracts exchanged with contracts exchanged with
fund administered by ES Suffolk Birmingham Artisan Bristol City Wall
Catalyst Capital Limited, a subsidiary of Limited (a subsidiary of
McAleer & Rushe Artisan Real Estate Investors)
Circa 276 bedroom new
build 4 star hotel Circa 330 bedroom new Circa 252 bedroom new build
build 4 star hotel Clayton Hotel with extensive
Ideally located adjacent
Centrally located on conference facilities
to the latest large scale
mixed use development Suffolk Street Ideally located in the centre
in Manchester, Circle Within walking distance of Bristol on Broad Street
Square from key attractions such Close to Bristol’s commercial
Within walking distance as the Mailbox shopping centre and within walking
of the main shopping centre complex, Bullring distance of the main
thoroughfares shopping centre and New shopping areas
Street train station
Target opening Q1 2021 Target opening Q3 2020
Target opening Q4 2020
2018 Half Year Results
Strong performance and growth
Slide | 19Maldron Hotel, Belfast City Dalata’s Strategic Priorities Slide | 20
Strategic Priorities|Difference with Dalata
OUR CUSTOMERS OUR PEOPLE
Listening to Decentralise
Our their
Peoplefeedback responsibility
(decentralise Our customers
responsibility) (listening to
DRIVING their feedback)
SHAREHOLDER
RETURNS
OUR BRANDS
Independent &
fresh
OUR GROWTH
Owned & Leased
model
2018 Half Year Results
Strong performance and growth
Slide | 21Our Customers
We want to know what our customers think
– Received and processed over 72,000 customer reviews
– Customer response rate increased from 48% to 52% in H1 2018
– Developed “pen portraits” that allow us to understand and
market our customers better
We react to feedback
– Over €10.8 million invested in product refurbishment in H1 2018
– Over 3,000 rooms refurbished since 2015
– 86% positive reviews YTD 2018 versus 84% YTD 2017
– Highly commended in areas of service, location, reception and
cleanliness
– Launch of new Clayton websites in September 2018
– Strong take up of ‘Click on Clayton’ and ‘Make it Maldron’
– Training courses and brand standards developed to drive meeting
and events business
2018 Half Year Results
Strong performance and growth
Slide | 22Our Brands
We own all our brands and are the
sole operators to ensure consistency
and control of standards
Clayton and Maldron are Ireland’s two largest hotel brands with a growing presence in the larger cities in the UK
Club Vitae is the largest leisure centre brand in Ireland
Red Bean Roastery Coffee brand has been rolled out to 31 hotels across the portfolio with another 3 hotels planned for
the remainder of 2018
Further standalone Red Bean Roastery coffee shops planned at Clayton Hotel Cardiff Lane, Clayton Hotel Charlemont,
Maldron Hotel South Mall
Grain & Grill restaurant brand has now been rolled out at all our Maldron hotels
2018 Half Year Results
Strong performance and growth
Slide | 23Our People
We want to “grow our own” people to ensure we retain and support succession throughout
the Group and maintain a strong pool of talent to ensure the success of Dalata
•We are open and fair in how we operate
Our culture •Our work ethic is intense
•We deliver on what we say we will do
•82% of employees completed our annual employee feedback survey with very positive results:
Employee ❖“70% of our people feel there is opportunity to grow not just in their hotel but in the wider
Engagement company”
❖“70% of employees are excited about the future of their hotel”
•251 employees on management development programmes in 2018
Training and •151 additional employees across our new hotels, Maldron Hotel Belfast City and Maldron Hotel
development Kevin Street, Dublin
•49 direct promotions to date in 2018 as a result of the 5 new hotel openings
•Raised almost €0.6 million for our charity partners since 2016
“Dalata Digs •Strong participation from employees with fundraisers such as “The Great Dalata Cycle”,
Deep” “Dalata Climb’s Carrauntoohil for Crumlin challenge”, “Dalata Cork City Marathon Challenge”,
“Great Ormond Street Hospital Dinner Dance” and “Yorkshire 3 Peaks Challenge”
2018 Half Year Results
Strong performance and growth
Slide | 24Clayton Hotel Charlemont, Dublin (CGI) OUTLOOK Slide | 25
Outlook
Performance of our Dublin hotels has been strong in July and August. However, we do not
anticipate that the strong RevPAR growth in Dublin seen in the first half of 2018 will continue for
the remainder of the year. This is because there are limited opportunities for our hotels to grow
occupancy in the second half of the year
Trading at our Regional Ireland hotels has been marginally ahead of last year in July and August.
The outlook for the balance of the year remains positive
We remain very positive about the opportunity presented by the fragmented nature of the hotel
market in our target UK regional cities. Trading across our UK hotels has been mixed but broadly in
line with our expectations given the challenging market conditions in some cities. The balance of
the year should be broadly similar to performance levels in the year to date
Clayton Hotel Charlemont Dublin, Maldron Hotel South Mall Cork, Maldron Hotel Newcastle,
Clayton Hotel Aldgate, London and the extension at Maldron Hotel Parnell Square are all scheduled
to open before the end of the year, adding an additional 882 rooms
We continue to explore opportunities in the UK and Irish hotel markets to expand our portfolio
further and remain very confident that we can further build a very attractive pipeline of rooms
The reduction in the VAT rate has been hugely positive for the hotel industry. However should the
rate increase in Ireland from 9% to 13.5% we estimate that this could reduce Group revenues by up
to 2.0% in a full trading year
2018 Half Year Results
Strong performance and growth
Slide | 26Red Bean Roastery Café at Clayton Hotel Leopardstown, Dublin APPENDICES Slide | 27
Current Pipeline – Over 2,800 new rooms
Republic of Ireland Property New Extension Rooms
Planning Construction
Completion
Granted started
3 New Hotels Clayton Hotel Charlemont, Dublin x 189 x x Nov 2018
Maldron Hotel Parnell Square, Dublin x 53 x x Dec 2018
1 Extension Maldron Hotel South Mall, Cork x 163 x x Dec 2018
545 rooms Maldron Hotel Merrion Road, Dublin x 140 x Q3 2020
Planning Construction
UK Property New Extension Rooms
Granted started
Completion
Maldron Hotel, Newcastle* x 265 x x Dec 2018
7 New Leased Hotels
Clayton Hotel Aldgate, London x 212 x x Dec 2018
1 New Owned Hotel Clayton Hotel, Bristol* x 252 Q3 2020
2,258 Rooms Maldron Hotel, Glasgow* x 300 Q4 2020
Clayton Hotel, Glasgow* x 294 Q4 2020
Maldron Hotel, Birmingham* x 330 Q4 2020
Clayton Hotel, Manchester* x 329 x Q1 2021
Maldron Hotel, Manchester* x 276 Q1 2021
*35 year operating lease
2018 Half Year Results
Strong performance and growth
Slide | 28Owned & Leased Portfolio September 2018
Owned Hotels / Freehold Equivalent Lease Agreements
28 owned hotels
Hotel Rooms Hotel Rooms
Clayton Hotel Dublin Airport 608 Clayton Hotel Burlington Road, Dublin 502
Clayton Hotel Manchester Airport 365 Ballsbridge Hotel, Dublin 400
Clayton Hotel Leopardstown, Dublin 357 The Gibson Hotel, Dublin 252 with 5,883 rooms
Clayton Hotel Ballsbridge, Dublin 335 Maldron Hotel Dublin Airport 251
Clayton Hotel Leeds 334 Clayton Hotel Cardiff, Wales 216
9 leased hotels
Clayton Hotel Liffey Valley, Dublin (1) 318 Clayton Hotel Birmingham 174
Clayton Hotel Cardiff Lane, Dublin (2) 304 Maldron Hotel Tallaght, Dublin 119
Maldron Hotel Newlands Cross, Dublin 297 Maldron Hotel Galway (Oranmore) 113
Maldron Hotel Belfast City 237 Maldron Hotel Smithfield, Dublin 92 with 2,119 rooms
Clayton Hotel Chiswick, London 227 Total 2,119
Clayton Hotel Cork City (3) 201
Clayton Hotel Galway
Clayton Hotel Belfast
Maldron Hotel Sandy Road, Galway
195
170
167
New pipeline
Owned Rooms 11 new hotels in
Clayton Hotel Aldgate, London 212
Clayton Hotel Sligo 162 Clayton Hotel Charlemont, Dublin 189 pipeline with 2,803
Clayton Whites Hotel, Wexford
Clayton Hotel Limerick
160
158
Maldron Hotel South Mall, Cork
Maldron Hotel Merrion Road, Dublin
163
140
rooms (including extensions)
Clayton Crown Hotel, London 152 Extension
Maldron Hotel Limerick 142
Maldron Hotel Kevin Street, Dublin 137
Maldron Hotel Parnell Square, Dublin
Leased
53
2 management
Maldron Hotel Parnell Square, Dublin
Maldron Hotel Pearse Street, Dublin
129
118
Maldron Hotel, Birmingham
Clayton Hotel, Manchester
330
329
agreements with
Clayton Hotel Silver Springs, Cork 109 Maldron Hotel, Glasgow 300 264 rooms
Tara Towers Hotel, Dublin 109 Clayton Hotel, Glasgow 294
Maldron Hotel Wexford 108 Maldron Hotel, Manchester 276
Maldron Hotel Shandon Cork City 101 Maldron Hotel, Newcastle 265 (1) Remaining 43 rooms owned by third parties
Maldron Hotel Derry 93 Clayton Hotel, Bristol 252 (2) Dalata own 264 rooms and lease 40 rooms
Maldron Hotel Portlaoise 90 Total 2,803 (3) Dalata own 194 rooms and lease 7 apartments
Total 5,883
2018 Half Year Results
Strong performance and growth
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