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Dalata grows despite tough Dublin market

The group maintained margins, despite a VAT hike and oversupply in the Irish capital
February 25, 2020

As the largest hotel operator in Ireland, Dalata Hotel (DAL) was heavily exposed to a 4.5 percentage point increase in value-added tax – from 9 per cent to 13.5 per cent. This, combined with the additional supply of around 1,500 rooms in Dublin, pushed the group’s revenue per available room (RevPAR) down by 3.1 per cent, compared with 3.6 per cent in the wider market. Its RevPAR in regional Ireland fell 1 per cent.

IC TIP: Buy at 405p

However, a tight focus on cost-control allowed the group to maintain its hotel cash margin (ex restructuring/rental costs) at 42.6 per cent in spite of the tough market and drag from six hotel openings that have yet to reach full speed.

Indeed, the group broke the €100m (£82.3m) free cash flow barrier in the year, up from €86.6m in 2018, allowing for an increase in the dividend and continued investments in refurbishments. The group sets aside 4 per cent of revenues for refurbishments each year, and more than 60 per cent of rooms have been built or refurbished within the last four years, deputy chief executive Dermot Crowley said.

Bloomberg consensus estimates point to adjusted EPS of 41¢ in the coming year, up from 39.7¢ in 2019.

DALATA HOTEL (DAL)  
ORD PRICE:405pMARKET VALUE:£750m
TOUCH:385.5-415p12-MONTH HIGH:535pLOW: 377p
DIVIDEND YIELD:2.2%PE RATIO:11
NET ASSET VALUE:579¢NET DEBT:34%*
Year to 31 DecTurnover (€m)Pre-tax profit (€m)Earnings per share (¢)Dividend per share (¢)
201522628.514.6nil
201629144.119.1nil
201734877.337.2nil
2018 (restated)39387.340.910.0
201942989.742.410.8
% change+9+3+4+8
Ex-div:09 Apr   
Payment:06 May   
£1=€1.96 *Includes lease liabilities of €362m