Investors seem to be taking a slowdown in growth at hotel operator Dalata Hotels (DAL) in their stride as the firm reassures the market that earnings in the year to 31 December will meet expectations.
Growth in revenue per available room (RevPAR), a metric revealing how effectively a hotel fills its rooms, has been slower across all regions in the second half but is at least ahead of the market.
In Dublin, like-for-like RevPAR grew by 8.8% in the 11 months to the end of November, down from a 10.7% rise in the first half but still ahead of market growth of 7.4%.
Like-for-like growth excludes new hotels and extensions in 2018 so overall growth could be higher when the company reports its full year figures.
In regional Ireland, RevPAR increased 5.3% over the same period down from 8.1% in the first half.
The slowdown in the UK was less marked with RevPAR up 3.2% over 11 months compared with a 3.8% rise in the first half. The company's hotels outperformed the market in every location except Leeds.
The consensus forecast for full year earnings before interest, tax, depreciation and amortisation (EBITDA) is €115m according to Refinitiv.
‘NO IMPACT FROM BREXIT’
Deputy chief executive Dermot Crowley says Brexit has had no negative impact on trading in the UK and Ireland, and for now investors seem to be convinced as the shares are trading sideways at 412p.
However, changes to hospitality-services VAT in Ireland and general Brexit uncertainty have weighed on sentiment towards Dalata with the shares falling 25% since the start of the year.
Stockbroker Goodbody says Dalata has ‘very good momentum’ going into 2019 and will benefit from a significant uplift in EBITDA year-on-year as the group benefits from new rooms in 2018 maturing.
