Dalata Hotel Group, Ireland’s biggest hotel operator, has hired investment bank Rothschild to help with a strategic review of the business, which may lead to a formal sale a little over a decade after the company floated on the Dublin Stock Exchange.
Shares in the company soared as much as 15.5 per cent in early trading to €5.50, its highest level since late 2019, to give it a market value of €1.16 billion.
The company, perhaps best known for its Clayton Hotels brand, operates a portfolio of 55 hotels in mostly central locations. Dalata’s portfolio includes hotels that the group owns, which are valued at €1.7 billion including assets under construction, 73 per cent of which are in Dublin and London.
It also operates 22 leased hotels, the majority of which are on long-term institutional agreements with a weighted average lease length of 29 years, it said. Dalata also operates three managed hotels.
Since 2021, the company has grown its portfolio by 35 per cent to 11,990 rooms, with a further 1,624 rooms in the pipeline. It aims to have 21,000 rooms in operation or under construction by 2030.
“We are unanimous in the view that the key to achieving that vision is the availability of capital and that the share price does not reflect the underlying value of the company,” said chairman John Hennessy.
“We believe that now is the right time to undertake a rigorous and formal strategic review, which will consider options to increase access to capital and also enhance shareholder value.”
Davy and Berenberg are also advising Dalata.
Dalata, which floated on the stock market in 2014, had seen its share price increase by only 6 per cent in the four years to Wednesday’s market close, even as it grew its portfolio at pace. That left the stock trading at a discount of about 25 per cent to its inherent value, or net asset value.
The company, led by Dermot Crowley, reported on Thursday that its adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) rose by 5.1 per cent to €234.5 million in 2024 as revenues grew 7.3 per cent to €652.2 million.
It said that trading “has commenced strongly” in 2025, with group revenue per available room (RevPAR) expected to be about 2.5 per cent ahead for the first quarter. RevPAR in Dublin is forecast to rise at double that pace.
As part of the strategic review, the board will consider options available to optimise capital opportunities for the group and to enhance value for shareholders, including, but not limited to, continuing the group’s existing strategy, further actions to improve shareholder value, returning further capital to shareholders, or selling the entire business, Dalata said.
It confirmed that there are currently no potential suitors circling the company.
“A thorough strategic review will enable us to assess available options to increase our access to capital and enhance shareholder value,” said Mr Crowley.
In a note issued on Thursday, analysts at Goodbody Stockbrokers said all eyes are on the strategic review, and initial speculation will be that the group will be sold as a result of it.
Analysts from US investment bank Jeffries, meanwhile, said the company might be valued at as much as €2 billion, given that Dalata’s pipeline of new rooms could add “further upside” to the existing external valuation of its owned properties at €1.64 billion.
