Dalata Hotel Group January 2018 - ISE: DHG LSE: DAL
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Dalata Hotel Group January 2018 ISE: DHG LSE: DAL
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.
Page 2
Dalata | Contents
Group Overview
Market Update
UK Research & Strategy
2018
Page 3
Group Overview
Dalata | Strong, Complementary Brand Proposition
Maldron is all about providing a fun, relaxed time for all You can always depend on Clayton Hotels to deliver
who arrive through our doors. Our great-value hotels are exactly what you need, whether that’s a weekend
found in convenient locations close to local attractions - away, a family break or an important business meeting.
Brand ensuring there’s always plenty to see and do. With friendly, From the comfort of our bedrooms to the quality of
helpful staff, good food and excellent facilities, it’s the our facilities and the warm, helpful attitude of our staff
Proposition perfect place to enjoy good times with family and friends - every detail is handled with care
Rest assured, it’s a Maldron Where every moment matters
Generally standard rooms, with family and executive rooms
Bedrooms in some locations
Standard, superior and executive rooms
Food and Integrated bar and restaurant in some locations. Simple
Modern bar, restaurant and coffee dock. Food and
beverage offering based on local influences and freshly
Beverage menus made from fresh quality produce
sourced premium ingredients
Conference Meeting room facilities
Extensive choice of modern meeting rooms and events
Facilities facilities
Target Both leisure and corporate with main focus on leisure Focus on corporate and conference midweek. Leisure,
Customers guests and family functions and weddings at weekend
Page 5
Dalata | 3 Core Business Segments – H1 2017
Dublin
14 Hotels
3,699 Rooms
H1 2017 RevPAR: €96.36(+8%)
57% 60% 48%
Group Revenue Segment EBITDA EBITDAR Margin
Regional Ireland
12 Hotels
1,643 Rooms
H1 2017 RevPAR: €60.93(+9%)
21% 15% 24%
Group Revenue Segment EBITDA EBITDAR Margin
UK *
7 Hotels
1,557 Rooms
H1 2017 RevPAR: £63.72(+15%)
21% 23% 38%
Group Revenue Segment EBITDA EBITDAR Margin
* Excludes Croydon Park Hotel
Information as at period end
Page 6
Dalata | Owned & Leased Portfolio at January 2018
Owned Hotels / Freehold Equivalent Lease Agreements
Hotel Rooms
Hotel Rooms
Clayton Hotel Burlington Road, Dublin 502
Clayton Hotel Dublin Airport 504 Ballsbridge Hotel, Dublin 400
Clayton Hotel Manchester Airport 365 The Gibson Hotel, Dublin 252
Clayton Hotel Leopardstown, Dublin 354 Maldron Hotel Dublin Airport 251
Clayton Hotel Leeds 334 Clayton Hotel Cardiff, Wales 216
Hotel La Tour Birmingham 174
Clayton Hotel Ballsbridge, Dublin 304
Maldron Hotel Tallaght, Dublin 119
Clayton Hotel Cardiff Lane , Dublin (1) 304
Maldron Hotel Galway (Oranmore) 113
Maldron Hotel Newlands Cross, Dublin 297 Maldron Hotel Smithfield, Dublin 92
Clayton Hotel Liffey Valley 261 Total 2,119
Clayton Hotel Chiswick, London 227 New pipeline
Clayton Hotel Cork City (2) 201 Hotel Rooms
Clayton Hotel Galway 195 Owned
Clayton Hotel Belfast 170 Clayton Hotel Charlemont, Dublin 188
Maldron Hotel Kevin Street, Dublin 138
Clayton Hotel Sligo 162
Maldron Hotel South Mall, Cork 164
Clayton Whites Hotel, Wexford 160
Maldron Hotel Belfast City 237
Clayton Hotel Limerick 158 Clayton Hotel Ballsbridge, Dublin 31
Clayton Crown Hotel, London 152 Clayton Hotel Dublin Airport 106
Maldron Hotel Limerick 142 Maldron Hotel Parnell Square, Dublin 53
Maldron Hotel Parnell Square, Dublin 129 Maldron Hotel Sandyroad, Galway 64
Maldron Hotel Pearse Street, Dublin 115 Leased
Maldron Hotel, Newcastle 265
Tara Towers Hotel, Dublin 111
Clayton Hotel, Manchester 300
Clayton Hotel Silver Springs, Cork 109
Clayton Hotel, Glasgow 300
Maldron Hotel Wexford 108 Total 1,846
Maldron Hotel Sandyroad, Galway 104 Summary by Hotel Category Hotels Rooms
Maldron Hotel Cork 101 Owned 26 5,250
Maldron Hotel Derry 93 Leased 9 2,119
Maldron Hotel Portlaoise 90 New pipeline 7 1,846
Mgmt Agreement – Owners 3 308
Total 5,250
Total 45 9,523
(1) Dalata own 252 rooms and lease 52 rooms
(2) Dalata own 194 rooms and lease 7 apartments Page 7
Dalata | Strong Balance Sheet providing covenant for growth
All figures €m 30 June 31 Dec Objective is to maintain a strong balance sheet with
2017 2016 appropriate level of gearing, leading to a strong covenant
for potential landlords/investors
Non-current assets
Tangible assets 829.5 825.7 Decrease in Net Debt to Amended EBITDA to 1.91x from
2.40x
Goodwill and intangibles 54.7 54.3
Other 11.7 6.6 £174.4m (€198.3m) of borrowings in Sterling as a natural
Current assets hedge against value of Sterling assets and Sterling
denominated earnings
Trade receivables, 25.9 17.7
inventory and other Combination of strong cashflow, cash balance, undrawn
Cash 88.9 81.1 facilities and low gearing provides a Balance Sheet to
comfortably fund current expansion plans
Total assets 1,010.7 985.4
Equity 652.8 620.4
Bank loans 267.5 280.4
Trade and other payables 58.6 53.1
Other non current liabilities 31.8 31.5
Total equity and liabilities 1,010.7 985.4
Page 8
Dalata | “The Difference with Dalata”
Our decentralised operational approach
Dalata’s decentralised structure is core to our management philosophy
Hotel General Managers are critical players – we continually develop them
A strong multi-functional team at the centre setting direction, seeking growth opportunities,
supporting the hotels, and reporting to our stakeholders
We grow our own – training and development a major focus as there is a need to have a strong pipeline
of key people coming through
Having people we know taking up key roles de-risks our business
We focus on what we are good at
Operating 3 star and 4 star modern well-maintained hotels in cities with strong mix of corporate and
leisure demand
Executing transactions to grow our owned and leased portfolio
Identifying strong locations and developing new hotels on them
Decentralised revenue management – our revenue managers are informed by systems but always make
the decisions themselves
Investing in systems to support our approach to cost control
Owner/Operator Model
Control of our brand standards
Security of tenure allows us to build a central team to effectively support and scale our decentralised
structure
Page 9
Drive Portfolio Growth | Ireland
Ireland: Portfolio Objectives
Complete existing development pipeline of 744 rooms and deliver on earnings potential when they
open in 2018
Reach the optimum market share in each of the key urban centres – Dublin, Cork, Limerick and Galway
Page 10Dalata | Over 1,840 new rooms across Ireland and UK
Property New Extension Rooms Planning Construction Completion
Dublin
Granted Started
2 New Hotels Clayton Hotel Charlemont x 188 x x Nov 2018
3 Extensions Maldron Hotel Kevin Street x 138 x x June 2018
Clayton Hotel Ballsbridge x 31 x x Aug 2018
516 rooms Clayton Hotel Dublin Airport x 106 x x May 2018
Maldron Hotel Parnell Square x 53 x x Dec 2018
Regional Ireland Property New Extension Rooms Planning Construction Completion
1 New Hotel Granted Started
Maldron Hotel South Mall, Cork x 164 x x Dec 2018
1 Extension Maldron Hotel Sandyroad, Galway x 64 x x June 2018
228 Rooms
UK Property New Extension Rooms Planning Construction Completion
1 New Owned Hotel Granted Started
Maldron Hotel Belfast City x 237 x x Mar 2018
3 New Leased Hotels Maldron Hotel, Newcastle* x 265 x x Feb 2019
1,102 Rooms Clayton Hotel, Manchester* x 300 Q3 2020
Clayton Hotel, Glasgow* x 300 Q4 2020
*35 year operating lease
Page 11Markets Update
Dalata | Market Review – Dublin
Savills forecast net additional 3,750 rooms by 2019
2015 2016 2017 2018
Dublin
Actual 1 Actual1 F’cast F’cast
2500 2,250
Occupancy 82.1% 82.3% 82.7% 82.3%
2000
1500 1,150 ARR 111.92 128.49 137.76 142.89
1000
RevPAR 91.90 105.71 113.90 117.64
500 350
RevPAR %
0 23.0% 15.0% 7.6% 3.3%
Variance
2017 2018 2019
1. 2015 and 2016 numbers differ slightly from those previously reported as STR revised
their numbers
Source: STR Global
Total market size of circa 20,885 rooms
Significant number of rooms expected to open towards the end of 2018 and into 2019 and 2020
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
7.7% RevPAR year on year growth at October 2017
Page 13Dalata | Market Review – Regional Ireland and UK
Continuing strong demand from FDIs, domestic YTD
RevPAR Growth 2015 2016
corporate and domestic leisure customers Oct 2017
No increases in supply and very little supply
Cork 9.6% 13.3% 13.7%
pipeline
Continued strong growth in 2017 for all three cities Galway 13.3% 10.7% 7.9%
Limerick 23.4% 16.4% 12.6%
Source: Trending.ie
YTD
Very strong RevPAR growth in London versus H1 RevPAR Growth 2015 2016
Oct 2017
2016 which was negatively impacted by new supply
London 1.2% -0.9% 5.8%
and impact of terrorism. Market has been weaker in
H2 Manchester 7.5% 5.7% 0.9%
Re-opening of Waterfront Centre in mid 2016 Birmingham 11.3% 7.7% 2.1%
together with positive impact of weaker sterling on Cardiff 14.2% -1.1% 9.9%
ROI visitors resulted in a very strong period in
Leeds 8.1% 3.7% -0.9%
Belfast
Belfast 11.9% 9.0% 18.5%
Mixed performance at three UK regional cities
Source: STR Global
Page 14UK Research & Strategy
Dalata | 20 Target Cities Identified From Research
Following extensive research management have identified 20 provincial UK cities with strong
opportunities for Maldron or Clayton hotels
1 Edinburgh 11 Birmingham
2 Manchester 12 York
3 Glasgow 13 Cambridge
4 Brighton 14 Southampton
5 Bristol 15 Milton Keynes
6 Leeds 16 Cardiff
7 Liverpool 17 Portsmouth
8 Oxford 18 Newcastle
9 Belfast 19 Bournemouth
10 Reading 20 Exeter
Page 16Target 20 Cities | 3&4 Star Segment comprises 57% of the
Market
3%
40% 5 Star
35%
4 Star
3 Star
Budget & 2 Star
22%
Page 17Target 20 Cities | Brand Shares
Fragmented market with only budget brands having a significant share
12%
7%
5%
4% 4% 4%
3%
3% 3%
2%
Premier Inn Travelodge Ibis Holiday Inn Hilton Holiday Inn Jurys Britannia Marriott Mercure
Express Hotels
Source : AM PM Hotels
Page 18Target 20 Cities | Brand Shares in 3&4 Star Market
Very fragmented with no dominant brand
8%
7%
6%
5%
5%
4%
4%
3%
3% 3%
Holiday Inn Hilton Jurys Britannia Marriott Mercure Crowne Novotel DoubleTree Radisson
Hotels Plaza by Hilton Blu
Source : AM PM Hotels
Page 19Target 20 Cities | Operator Shares in 3&4 Star Market
Operators with less than 4% market share comprise 70% of the 3&4 star market
7%
6%
5%
4% 4% 4%
3%
2% 2% 2%
Source : AM PM Hotels
Page 20Target 20 Cities | Ownership Model in 3&4 Star Market
Over 70% of the owner operators have 4 hotels or less
33% of the leased hotel operators have 4 hotels or less
24%
Owner Operator
Franchised
47% Managed/Franchised
Managed
16%
Leasehold
4%
9%
Source : AM PM Hotels
Page 21Target 20 Cities | International Brands moving away from
operating hotels
Worldwide Rooms by Ownership Model
Marriott/
Hilton IHG Accor
Starwood
Franchised 72% 43% 70% 33%
Managed 24% 52% 30%
67%*
Owned/Leased 3% 2% 0%
*Accor do not disclose separately no. rooms managed, owned and leased
Source : AM PM Hotels
Page 22Target 20 Cities | Age Profile in 3&4 Star Market
24%
20%
19%
18% 18%
Not Stated Under 10 years 10 - 20 years 20 - 40 Years 40 + years
Source : AM PM Hotels
Page 23Target 20 Cities | Fragmented Market offering Compelling
Opportunity
Dalata’s management team believe that a large structural opportunity has emerged in the 3 and 4 star
hotel markets in certain regional cities in the UK. Key drivers of this structural opportunity are:
International brands are increasingly evolving to a franchise model leaving a shortage of operators
with any scale
The specific 3 and 4 star market in certain large regional cities is very fragmented and there are no
dominant brands in this market segment
Ownership model is also very fragmented
Close to 50% of the 3 & 4 star market comprises owner/operators and 70% of these operate 4
hotels or less
The stock of 3 and 4 star hotels is considerably older than the age profile of the Budget sector
Opportunity now exists for a hotel operator with a strong balance sheet and operational focus to become
the market leader in fragmented 3 and 4 star hotel markets
Page 24Target 20 Cities | Clear Competitive Advantage in Fragmented
Market
Dalata Competition
Financial resources & • Willing to put strong balance sheet behind • Large brands won’t own or lease.
Ability to secure sites strategy to own or lease • Weak balance sheets for smaller
• Very attractive to developers & property operators
investors
Depth of • Management and staff avail of comprehensive • Difficult for smaller operators or
Hotel Operational training & development programmes larger Third Party Operators
Expertise & Resources • Highly motivated management teams with (TPOs) to provide same level of
large growing hotel group training or opportunity due to
• Support of Central Office functions lack of tenure (TPOs) or scale
(independent operators)
Senior Management • Existing management platform in place in the • Not clear that same level of
Team UK experience exists within TPOs or
• Senior management team has operated in UK independent operators
hotel market for over [x] years • Large brands dependent on
• Senior management team created, rolled out owners to roll out their brands
and operated a new brand in the UK
previously – Jurys Inn
Page 25Target 20 Cities | Key Objectives in Target UK 20 cities
Our objective is to become the leading 3/4 star operator in our target city markets
Target range of 10% to 15% market share of 3/4 star market in each city
Translates to additional circa 8,000 rooms (assuming a 12.5% market share in achieved) in 5
– 7 years
Further opportunities are likely to exist in the Greater London area and adjacent to UK
airports but Dalata will look to address those opportunities in a more bespoke manner as and
when they arise
Page 26Target 20 Cities | Early examples of UK expansion strategy
Hotel La Tour (Birmingham) – Existing Asset
• Bought in July 2017 for £31m
• Sold Freehold to Deka Immoboilien and entered a 35
year lease at initial rent of £1.6m p.a.
• Modern hotel with 174 rooms, restaurant, bar and
extensive meeting facilities
• Exploring potential to add a further 40 rooms
• Have identified significant opportunities to reduce
costs and increase revenues
• Rebranded as a Clayton hotel in October
Clayton Manchester – Development asset
• Agreement for lease contracts exchanged
• Planning application in Q4 2017
• Excellent city centre location – Portland Street
• Local well regarded developer – Property Alliance
Group
• Rent cover Yr 3 > 1.85X
• Will be branded a Clayton
• Target opening mid 2020
Page 27Target 20 Cities | Early examples of UK expansion strategy
Clayton Glasgow, Clyde Street – Development asset
• Agreement for lease contracts exchanged
• Planning application in Q1 2018
• Circa 300 bedroom new build Clayton
Hotel
• Very close to retail and leisure attractions
• International Financial Services District
within 5 minute walk
• Developer partner is Artisan Real Estate
Investors
• Target opening Q4 2020
Page 28Outlook
Dalata | Another Busy Year in store in 2018
Continued focus on operational requirements of our hotels through training/development programmes,
investment in technology and interaction with our customers
Confirmed pipeline of 1840 rooms across the three regions – 975 of these to open in 2018
Planning to commence construction in our two new Clayton hotel projects in Glasgow and Manchester.
Seeking to secure a further 1200 rooms in our development pipeline
Planning to complete the current investment programme in technology across our property management,
revenue management and procurement systems.
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