Dalata Hotel Group January 2018 - ISE: DHG LSE: DAL

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Dalata Hotel Group January 2018 - ISE: DHG LSE: DAL
Dalata Hotel Group January 2018   ISE: DHG LSE: DAL
Dalata Hotel Group January 2018 - ISE: DHG LSE: DAL
Disclaimer

 The presentation contains forward looking statements. These statements have been made by the
 Directors in good faith based on the information available to them up to the time of their approval of this
 presentation.

 Due to inherent uncertainties, including both economic and business risk factors underlying such
 forward looking information, actual results may differ materially from those expressed or implied by
 these forward looking statements. The Directors undertake no obligation to update any forward looking
 statements contained in this presentation, whether as a result of new information, future events or
 otherwise.

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Dalata Hotel Group January 2018 - ISE: DHG LSE: DAL
Dalata | Contents

    Group Overview

    Market Update

    UK Research & Strategy

    2018

                             Page 3
Dalata Hotel Group January 2018 - ISE: DHG LSE: DAL
Group Overview
Dalata Hotel Group January 2018 - ISE: DHG LSE: DAL
Dalata | Strong, Complementary Brand Proposition

                Maldron is all about providing a fun, relaxed time for all      You can always depend on Clayton Hotels to deliver
               who arrive through our doors. Our great-value hotels are          exactly what you need, whether that’s a weekend
                found in convenient locations close to local attractions -     away, a family break or an important business meeting.
  Brand       ensuring there’s always plenty to see and do. With friendly,      From the comfort of our bedrooms to the quality of
                 helpful staff, good food and excellent facilities, it’s the   our facilities and the warm, helpful attitude of our staff
Proposition    perfect place to enjoy good times with family and friends                    - every detail is handled with care

                         Rest assured, it’s a Maldron                                 Where every moment matters
              Generally standard rooms, with family and executive rooms
Bedrooms                           in some locations
                                                                                       Standard, superior and executive rooms

 Food and      Integrated bar and restaurant in some locations. Simple
                                                                                 Modern bar, restaurant and coffee dock. Food and
                                                                               beverage offering based on local influences and freshly
 Beverage              menus made from fresh quality produce
                                                                                           sourced premium ingredients

Conference                      Meeting room facilities
                                                                               Extensive choice of modern meeting rooms and events
 Facilities                                                                                          facilities

  Target        Both leisure and corporate with main focus on leisure          Focus on corporate and conference midweek. Leisure,
Customers                         guests and family                                    functions and weddings at weekend

                                                                                                                                   Page 5
Dalata Hotel Group January 2018 - ISE: DHG LSE: DAL
Dalata | 3 Core Business Segments – H1 2017

         Dublin
         14 Hotels
         3,699 Rooms
         H1 2017 RevPAR: €96.36(+8%)
                                           57% 60% 48%
                                           Group Revenue   Segment EBITDA    EBITDAR Margin

         Regional Ireland
         12 Hotels
         1,643 Rooms
         H1 2017 RevPAR: €60.93(+9%)
                                           21% 15% 24%
                                           Group Revenue   Segment EBITDA    EBITDAR Margin

         UK *
         7 Hotels
         1,557 Rooms
         H1 2017 RevPAR: £63.72(+15%)
                                           21% 23% 38%
                                           Group Revenue   Segment EBITDA   EBITDAR Margin
           * Excludes Croydon Park Hotel

                                                                       Information as at period end

                                                                                            Page 6
Dalata Hotel Group January 2018 - ISE: DHG LSE: DAL
Dalata | Owned & Leased Portfolio at January 2018
Owned Hotels / Freehold Equivalent                 Lease Agreements
                                                   Hotel                                                     Rooms
Hotel                                     Rooms
                                                   Clayton Hotel Burlington Road, Dublin                      502
Clayton Hotel Dublin Airport               504     Ballsbridge Hotel, Dublin                                  400
Clayton Hotel Manchester Airport           365     The Gibson Hotel, Dublin                                   252
Clayton Hotel Leopardstown, Dublin         354     Maldron Hotel Dublin Airport                               251
Clayton Hotel Leeds                        334     Clayton Hotel Cardiff, Wales                               216
                                                   Hotel La Tour Birmingham                                   174
Clayton Hotel Ballsbridge, Dublin          304
                                                   Maldron Hotel Tallaght, Dublin                             119
Clayton Hotel Cardiff Lane , Dublin (1)    304
                                                   Maldron Hotel Galway (Oranmore)                            113
Maldron Hotel Newlands Cross, Dublin       297     Maldron Hotel Smithfield, Dublin                            92
Clayton Hotel Liffey Valley                261     Total                                                     2,119
Clayton Hotel Chiswick, London             227     New pipeline
Clayton Hotel Cork City (2)                201     Hotel                                                     Rooms
Clayton Hotel Galway                       195     Owned
Clayton Hotel Belfast                      170     Clayton Hotel Charlemont, Dublin                           188
                                                   Maldron Hotel Kevin Street, Dublin                         138
Clayton Hotel Sligo                        162
                                                   Maldron Hotel South Mall, Cork                             164
Clayton Whites Hotel, Wexford              160
                                                   Maldron Hotel Belfast City                                 237
Clayton Hotel Limerick                     158     Clayton Hotel Ballsbridge, Dublin                           31
Clayton Crown Hotel, London                152     Clayton Hotel Dublin Airport                               106
Maldron Hotel Limerick                     142     Maldron Hotel Parnell Square, Dublin                        53
Maldron Hotel Parnell Square, Dublin       129     Maldron Hotel Sandyroad, Galway                             64
Maldron Hotel Pearse Street, Dublin        115     Leased
                                                   Maldron Hotel, Newcastle                                    265
Tara Towers Hotel, Dublin                  111
                                                   Clayton Hotel, Manchester                                   300
Clayton Hotel Silver Springs, Cork         109
                                                   Clayton Hotel, Glasgow                                      300
Maldron Hotel Wexford                      108     Total                                                      1,846
Maldron Hotel Sandyroad, Galway            104     Summary by Hotel Category                        Hotels   Rooms
Maldron Hotel Cork                         101     Owned                                             26      5,250
Maldron Hotel Derry                         93     Leased                                             9      2,119
Maldron Hotel Portlaoise                    90     New pipeline                                       7      1,846
                                                   Mgmt Agreement – Owners                            3        308
Total                                     5,250
                                                   Total                                             45      9,523
                                                  (1) Dalata own 252 rooms and lease 52 rooms
                                                  (2) Dalata own 194 rooms and lease 7 apartments                     Page 7
Dalata Hotel Group January 2018 - ISE: DHG LSE: DAL
Dalata | Strong Balance Sheet providing covenant for growth

All figures €m                  30 June   31 Dec   Objective is to maintain a strong balance sheet with
                                 2017      2016    appropriate level of gearing, leading to a strong covenant
                                                   for potential landlords/investors
Non-current assets
  Tangible assets                829.5    825.7    Decrease in Net Debt to Amended EBITDA to 1.91x from
                                                   2.40x
  Goodwill and intangibles       54.7      54.3
  Other                          11.7      6.6     £174.4m (€198.3m) of borrowings in Sterling as a natural
Current assets                                     hedge against value of Sterling assets and Sterling
                                                   denominated earnings
  Trade receivables,             25.9      17.7
  inventory and other                              Combination of strong cashflow, cash balance, undrawn
  Cash                           88.9      81.1    facilities and low gearing provides a Balance Sheet to
                                                   comfortably fund current expansion plans
Total assets                    1,010.7   985.4

Equity                           652.8    620.4
Bank loans                       267.5    280.4
Trade and other payables         58.6      53.1
Other non current liabilities    31.8      31.5
Total equity and liabilities    1,010.7   985.4

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Dalata Hotel Group January 2018 - ISE: DHG LSE: DAL
Dalata | “The Difference with Dalata”
Our decentralised operational approach
         Dalata’s decentralised structure is core to our management philosophy
         Hotel General Managers are critical players – we continually develop them
         A strong multi-functional team at the centre setting direction, seeking growth opportunities,
         supporting the hotels, and reporting to our stakeholders
         We grow our own – training and development a major focus as there is a need to have a strong pipeline
         of key people coming through
         Having people we know taking up key roles de-risks our business

We focus on what we are good at
         Operating 3 star and 4 star modern well-maintained hotels in cities with strong mix of corporate and
         leisure demand
         Executing transactions to grow our owned and leased portfolio
         Identifying strong locations and developing new hotels on them
         Decentralised revenue management – our revenue managers are informed by systems but always make
         the decisions themselves
         Investing in systems to support our approach to cost control
Owner/Operator Model
         Control of our brand standards
         Security of tenure allows us to build a central team to effectively support and scale our decentralised
         structure
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Dalata Hotel Group January 2018 - ISE: DHG LSE: DAL
Drive Portfolio Growth | Ireland

Ireland: Portfolio Objectives

          Complete existing development pipeline of 744 rooms and deliver on earnings potential when they
          open in 2018

          Reach the optimum market share in each of the key urban centres – Dublin, Cork, Limerick and Galway

                                                                                                        Page 10
Dalata | Over 1,840 new rooms across Ireland and UK
                           Property                          New      Extension   Rooms   Planning   Construction   Completion
Dublin
                                                                                          Granted      Started
    2 New Hotels           Clayton Hotel Charlemont               x                188       x            x          Nov 2018
       3 Extensions        Maldron Hotel Kevin Street             x                138       x            x         June 2018
                           Clayton Hotel Ballsbridge                      x        31        x            x          Aug 2018
       516 rooms           Clayton Hotel Dublin Airport                   x        106       x            x          May 2018
                           Maldron Hotel Parnell Square                   x        53         x            x         Dec 2018

Regional Ireland           Property                          New      Extension   Rooms   Planning   Construction   Completion
    1 New Hotel                                                                           Granted      Started
                           Maldron Hotel South Mall, Cork     x                    164       x            x          Dec 2018
       1 Extension         Maldron Hotel Sandyroad, Galway                x        64        x            x         June 2018
       228 Rooms

UK                         Property                          New      Extension   Rooms   Planning   Construction   Completion

     1 New Owned Hotel                                                                    Granted      Started
                           Maldron Hotel Belfast City         x                    237       x            x         Mar 2018
     3 New Leased Hotels   Maldron Hotel, Newcastle*          x                    265       x            x         Feb 2019

     1,102 Rooms           Clayton Hotel, Manchester*         x                    300                               Q3 2020
                           Clayton Hotel, Glasgow*            x                    300                               Q4 2020

*35 year operating lease

                                                                                                                         Page 11
Markets Update
Dalata | Market Review – Dublin

  Savills forecast net additional 3,750 rooms by 2019
                                                                                      2015              2016              2017              2018
                                                                Dublin
                                                                                     Actual 1          Actual1            F’cast            F’cast
  2500                                                  2,250

                                                                Occupancy             82.1%            82.3%             82.7%              82.3%
  2000

  1500                              1,150                       ARR                   111.92           128.49            137.76             142.89

  1000
                                                                RevPAR                 91.90           105.71            113.90             117.64
   500           350
                                                                RevPAR %
     0                                                                                23.0%            15.0%              7.6%               3.3%
                                                                Variance
                2017                2018                2019
                                                                1. 2015 and 2016 numbers differ slightly from those previously reported as STR revised
                                                                their numbers
                                                                                                                                   Source: STR Global

         Total market size of circa 20,885 rooms

         Significant number of rooms expected to open towards the end of 2018 and into 2019 and 2020

         Increase in supply expected to be matched by increase in demand from continued economic growth,
         increased visitor numbers and growing evidence of office relocations from London to Dublin

         7.7% RevPAR year on year growth at October 2017

                                                                                                                                                Page 13
Dalata | Market Review – Regional Ireland and UK

   Continuing strong demand from FDIs, domestic                                                     YTD
                                                          RevPAR Growth         2015     2016
   corporate and domestic leisure customers                                                       Oct 2017
   No increases in supply and very little supply
                                                          Cork                  9.6%     13.3%     13.7%
   pipeline
   Continued strong growth in 2017 for all three cities   Galway                13.3%    10.7%      7.9%
                                                          Limerick              23.4%    16.4%     12.6%

                                                          Source: Trending.ie

                                                                                                    YTD
   Very strong RevPAR growth in London versus H1            RevPAR Growth         2015    2016
                                                                                                  Oct 2017
   2016 which was negatively impacted by new supply
                                                          London                  1.2%    -0.9%      5.8%
   and impact of terrorism. Market has been weaker in
   H2                                                     Manchester              7.5%     5.7%      0.9%
   Re-opening of Waterfront Centre in mid 2016            Birmingham             11.3%     7.7%      2.1%
   together with positive impact of weaker sterling on    Cardiff                14.2%    -1.1%      9.9%
   ROI visitors resulted in a very strong period in
                                                          Leeds                   8.1%     3.7%     -0.9%
   Belfast
                                                          Belfast                11.9%     9.0%     18.5%
   Mixed performance at three UK regional cities
                                                          Source: STR Global

                                                                                                    Page 14
UK Research & Strategy
Dalata | 20 Target Cities Identified From Research

     Following extensive research management have identified 20 provincial UK cities with strong
     opportunities for Maldron or Clayton hotels

        1          Edinburgh                     11          Birmingham
        2          Manchester                    12          York
        3          Glasgow                       13          Cambridge
        4          Brighton                      14          Southampton
        5          Bristol                       15          Milton Keynes
        6          Leeds                         16          Cardiff
        7          Liverpool                     17          Portsmouth
        8          Oxford                        18          Newcastle
        9          Belfast                       19          Bournemouth
        10         Reading                       20          Exeter

                                                                                                   Page 16
Target 20 Cities | 3&4 Star Segment comprises 57% of the
Market

                                  3%

                        40%                                5 Star
                                          35%
                                                           4 Star
                                                           3 Star
                                                           Budget & 2 Star

                                  22%

                                                                        Page 17
Target 20 Cities | Brand Shares

        Fragmented market with only budget brands having a significant share

       12%

                   7%

                             5%
                                        4%         4%          4%
                                                                         3%
                                                                                    3%         3%
                                                                                                          2%

    Premier Inn Travelodge   Ibis   Holiday Inn   Hilton   Holiday Inn   Jurys   Britannia   Marriott   Mercure
                                                            Express               Hotels

                                                                                         Source : AM PM Hotels

                                                                                                                  Page 18
Target 20 Cities | Brand Shares in 3&4 Star Market

                               Very fragmented with no dominant brand

      8%
                 7%

                          6%

                                     5%
                                                5%
                                                           4%
                                                                    4%
                                                                              3%
                                                                                          3%          3%

  Holiday Inn   Hilton   Jurys    Britannia   Marriott   Mercure   Crowne   Novotel   DoubleTree Radisson
                                   Hotels                           Plaza              by Hilton   Blu
                                                                                      Source : AM PM Hotels

                                                                                                           Page 19
Target 20 Cities | Operator Shares in 3&4 Star Market

      Operators with less than 4% market share comprise 70% of the 3&4 star market

        7%

                6%

                       5%

                               4%      4%     4%

                                                      3%

                                                             2%        2%         2%

                                                                  Source : AM PM Hotels

                                                                                       Page 20
Target 20 Cities | Ownership Model in 3&4 Star Market

   Over 70% of the owner operators have 4 hotels or less
   33% of the leased hotel operators have 4 hotels or less

                                   24%
                                                             Owner Operator
                                                             Franchised
                                                      47%    Managed/Franchised
                                                             Managed
                                16%
                                                             Leasehold
                                      4%
                                           9%

                                                             Source : AM PM Hotels

                                                                                     Page 21
Target 20 Cities | International Brands moving away from
operating hotels

                          Worldwide Rooms by Ownership Model

                                                      Marriott/
                                       Hilton                                IHG          Accor
                                                      Starwood
      Franchised                        72%              43%             70%              33%
      Managed                           24%              52%             30%
                                                                                          67%*
      Owned/Leased                      3%               2%                  0%
     *Accor do not disclose separately no. rooms managed, owned and leased
                                                                               Source : AM PM Hotels

                                                                                                       Page 22
Target 20 Cities | Age Profile in 3&4 Star Market

                                                                               24%

                                          20%
           19%
                          18%                             18%

        Not Stated   Under 10 years   10 - 20 years   20 - 40 Years         40 + years

                                                                      Source : AM PM Hotels

                                                                                              Page 23
Target 20 Cities | Fragmented Market offering Compelling
Opportunity

   Dalata’s management team believe that a large structural opportunity has emerged in the 3 and 4 star
   hotel markets in certain regional cities in the UK. Key drivers of this structural opportunity are:

        International brands are increasingly evolving to a franchise model leaving a shortage of operators
        with any scale
        The specific 3 and 4 star market in certain large regional cities is very fragmented and there are no
        dominant brands in this market segment
        Ownership model is also very fragmented
        Close to 50% of the 3 & 4 star market comprises owner/operators and 70% of these operate 4
        hotels or less
        The stock of 3 and 4 star hotels is considerably older than the age profile of the Budget sector

     Opportunity now exists for a hotel operator with a strong balance sheet and operational focus to become
                          the market leader in fragmented 3 and 4 star hotel markets

                                                                                                           Page 24
Target 20 Cities | Clear Competitive Advantage in Fragmented
Market

                                                 Dalata                                    Competition
  Financial resources &     •   Willing to put strong balance sheet behind     •   Large brands won’t own or lease.
  Ability to secure sites       strategy to own or lease                       •   Weak balance sheets for smaller
                            •   Very attractive to developers & property           operators
                                investors
  Depth of                  •   Management and staff avail of comprehensive    •   Difficult for smaller operators or
  Hotel Operational             training & development programmes                  larger Third Party Operators
  Expertise & Resources     •   Highly motivated management teams with             (TPOs) to provide same level of
                                large growing hotel group                          training or opportunity due to
                            •   Support of Central Office functions                lack of tenure (TPOs) or scale
                                                                                   (independent operators)
  Senior Management         •   Existing management platform in place in the   •   Not clear that same level of
  Team                          UK                                                 experience exists within TPOs or
                            •   Senior management team has operated in UK          independent operators
                                hotel market for over [x] years                •   Large brands dependent on
                            •   Senior management team created, rolled out         owners to roll out their brands
                                and operated a new brand in the UK
                                previously – Jurys Inn

                                                                                                                    Page 25
Target 20 Cities | Key Objectives in Target UK 20 cities

     Our objective is to become the leading 3/4 star operator in our target city markets

     Target range of 10% to 15% market share of 3/4 star market in each city

     Translates to additional circa 8,000 rooms (assuming a 12.5% market share in achieved) in 5
     – 7 years

     Further opportunities are likely to exist in the Greater London area and adjacent to UK
     airports but Dalata will look to address those opportunities in a more bespoke manner as and
     when they arise

                                                                                                    Page 26
Target 20 Cities | Early examples of UK expansion strategy

Hotel La Tour (Birmingham) – Existing Asset

•       Bought in July 2017 for £31m
•       Sold Freehold to Deka Immoboilien and entered a 35
        year lease at initial rent of £1.6m p.a.
•       Modern hotel with 174 rooms, restaurant, bar and
        extensive meeting facilities
•       Exploring potential to add a further 40 rooms
•       Have identified significant opportunities to reduce
        costs and increase revenues
•       Rebranded as a Clayton hotel in October

Clayton Manchester – Development asset

    •   Agreement for lease contracts exchanged
    •   Planning application in Q4 2017
    •   Excellent city centre location – Portland Street
    •   Local well regarded developer – Property Alliance
        Group
    •   Rent cover Yr 3 > 1.85X
    •   Will be branded a Clayton
    •   Target opening mid 2020

                                                              Page 27
Target 20 Cities | Early examples of UK expansion strategy

Clayton Glasgow, Clyde Street – Development asset

   •   Agreement for lease contracts exchanged
   •   Planning application in Q1 2018
   •   Circa 300 bedroom new build Clayton
       Hotel
   •   Very close to retail and leisure attractions
   •   International Financial Services District
       within 5 minute walk
   •   Developer partner is Artisan Real Estate
       Investors
   •   Target opening Q4 2020

                                                             Page 28
Outlook
Dalata | Another Busy Year in store in 2018

   Continued focus on operational requirements of our hotels through training/development programmes,
   investment in technology and interaction with our customers

   Confirmed pipeline of 1840 rooms across the three regions – 975 of these to open in 2018

   Planning to commence construction in our two new Clayton hotel projects in Glasgow and Manchester.

   Seeking to secure a further 1200 rooms in our development pipeline

   Planning to complete the current investment programme in technology across our property management,
   revenue management and procurement systems.

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