Dalata’s share price in retreat in spite of strong demand

Amid all the political rumblings and anecdotal evidence around hotel room rates, the State’s biggest hotel chain put some factual numbers into the market on Wednesday. In a trading update to the stock market, Dalata said its average room rate in the second quarter of this year was €160 at its Dublin properties, which was 20 per cent higher than in the same period of 2019.

A chunky percentage increase for sure but the rate was not off the scale when you consider that Dalata operates essentially in the four-star segment of the market with its Maldron and Clayton brands in central locations. A number of the hotels are recently built, too, offering modern facilities to guests.

Of course, this is an average figure so some will have been charged higher rates on certain nights while others will have received better value. Swings and roundabouts.

Dermot Crowley, who took over the Dalata reins from veteran hotelier Pat McCann late last year, put the rise down to pent-up demand post the pandemic, and the fact that so many hotel rooms are currently occupied by Ukrainians fleeing the war and other refugees being housed by the State.

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In response to the crisis in Ukraine, Dalata said some 5 per cent of its rooms in the Republic have been made available to the State for the remainder of this year at the “rates requested”.

A busy summer beckons. “In June, our Dublin hotels are expected to reach an occupancy of 93 per cent,” Crowley said.

Dalata’s RevPar (revenue per available room, a key metric in the industry) in Dublin for the May/June period is expected to be 18 per cent in advance of the same period in 2019. It is forecasting healthy Ebitda of more than €81 million for the first six months of this year.

And yet Dalata’s share price fell marginally in Dublin on Wednesday and is down about 15 per cent in the past month. Whatever politicians might think, investors clearly don’t regard Dalata as a cash cow.