Dalata hotels posts loss of €112m due to Covid while Pat McCann to step down as CEO

Revenue at Irish hotel chain Dalata fell 68 per cent in 2020 leading to a €111.5 million pretax loss for the group due to the impact of Covid-19 restrictions on its business.

In a separate announcement on Tuesday morning, chief executive Pat McCann said he would step down from the company he founded in 2007, with current deputy chief executive Dermot Crowley to replace him in the role.

Mr McCann, who previously ran the Jury’s Doyle group, said he expects to stay on until “towards the end of 2021” and he will remain a member of the company’s board until the next annual general meeting after his executive role. He owns a stake in the business of just under 1 per cent.

Speaking to The Irish Times after the release of the results, Mr McCann said he believes the hotel sector is likely to reopen sometime in May. Domestic tourism will support the industry through the summer, he said.

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“As we get into the fourth quarter, we see some international traffic coming back at that stage,” said Mr McCann. He said this would initially be business travellers and the return of international leisure visitors would not happen until 2022. He said the return of the UK and US markets was crucial and “hopefully Ireland is in a position to welcome them”.

He said its hotels in the UK may come back more quickly than its Irish properties, as the vaccine rollout there is more advanced.

“We are already getting a sense of it. There is a much more definite plan. Regional cities in the UK will also come back quicker than London.”

Mr McCann also said Dalata had about 12,000 bookings so far during the pandemic to provide voluntary quarantine for people including frontline health workers and transport workers.

He said the mooted cost of mandatory hotel quarantine under an incoming State regime, which has been estimated at about €2,000 per traveller into Ireland, was “prohibitively expensive” and will cause the already low number of entrants to the State to tumble further.

On its results, the company said its staff were “unbowed” and its balance sheet “unbroken” after a year of Covid-19 restrictions, with cost reductions and Government support schemes protecting jobs and cash during periods of low occupancies.

Its average occupancy fell last year to 30.9 per cent from 82.6 per cent in 2019.

Among the measures the company took were the agreement of an amended debt facility in July, with an extra €39 million facility and temporary revised covenants. An equity placing in September raised €92 million, further strengthening the balance sheet.

Dalata also agreed the sale and leaseback of Clayton Hotel Charlemont, Dublin in April for €65 million, and accelerated the roll-out of technologies including its property management system and new point-of-sales systems for food and beverages.

The company’s balance sheet currently has hotel assets of €1.2 billion.

“We have ended a very difficult year in a strong financial position with our core teams intact, morale running high and we are ready for the challenges and opportunities ahead. Quite simply, we are unbowed and unbroken. We achieved this by holding firm to the values and beliefs that define us including being fair, transparent, consistent and balanced,” Mr McCann said.

The company’s hotels are closed to the general public, but have remained open to provide accommodation to frontline workers and essential workers, along with people who require quarantine.

Outlook uncertain

Looking ahead, Dalata said the outlook was uncertain for the near-term, with the hospitality industry across Ireland and the UK continuing to be impacted by Covid-19 restrictions. Occupancy was 12 per cent for January and 15 per cent in February, with the group predicting an adjusted Ebitda loss of around €2.5 million for the first two months.

“However, we remain ready and primed to get back to full operating levels once restrictions are lifted. The rollout of vaccines across Europe and globally is very encouraging, with the speed of rollout increasing as we move towards Q2,” the group said in its statement.

Mr McCann called on the Government to continue its commitment to support the “experience economy” as it begins to recover, seeking a commitment to a 9 per cent Vat rate for five years.

“It has been a privilege to lead Dalata,” Mr McCann said. I am immensely proud of everything we have achieved but most of all, I am proud of our people, who continue to demonstrate dedication and resilience, in what has been a difficult year for many of them. I have watched them grow into very skilled and really wonderful people,” he said.

Mr Crowley, who will succeed Mr McCann, was appointed deputy chief executive, business development and finance of Dalata in 2012, and has helped oversee the expansion of the group across the UK and Ireland, playing a key role in its 2014 flotation and the acquisition of the Moran Bewley Hotel Group in 2015.

He previously worked as head of development with Jurys Doyle and as a financial controller within Forte Hotels, and has held roles with PwC, Procter & Gamble, Renault and Ion Equity.

“I am honoured to have been chosen by the board to succeed Pat as CEO. I am very excited about leading the great team that we have in Dalata as we continue to expand the group across the UK and Ireland,” he said, thanking Mr McCann for his support.

“ I am very proud of what we and the Dalata team have achieved over the last number of years. I wish Pat the very best for the future.”