Dalata buys freehold on Limerick hotel for €8.5m

Dalata Hotel Group has agreed a deal to purchase the freehold interest on its Clarion Limerick hotel for €8.5 million, while also closing deals to acquire sites in Cork and Dublin.

The Clarion is a four-star property located at Steamboat Quay in Limerick’s city centre. It has 158 bedrooms, a bar and restaurant, a leisure centre and extensive conference facilities.

In March, Dalata acquired the leasehold interest of the hotel, which is to be rebranded as a Clayton before the end of 2016.

The transaction is expected to complete in June. Dalata said the deal was consistent with its stated strategy of buying the freehold of its leased hotels that have unfavourable open-market rent review clauses.

Dalata has also closed the acquisition of sites at Beasley Street in Cork and Kevin Street in Dublin. It has spent about €10.2 million on the site in Cork, with another €12 million likely to be spent on developing a 121-bedroom Maldron hotel.

The site at Kevin Street in Dublin cost €8.1 million with the total investment on completion of €26 million for the 137- bedroom Maldron.

Dalata also recently announced plans for new hotels in Belfast and at Charlemont in central Dublin. These four new properties should be completed by mid 2018.

Speaking to The Irish Times, Dalata chief executive Pat McCann said the purchase of these sites would probably mark the end of its development spend in Ireland, with its focus now set to turn to securing long-term leases on properties.

His plan is to add 1,000 additional bedrooms in Dublin to its current stock of about 3,500. The new builds announced at Kevin Street and Charlemont, along with extensions planned for existing hotels (including 150 new bedrooms at its Clayton property near Dublin airport) would add about 600 of this figure. “We’d then need a couple of leases to get the number up to 1,000,” he said.

Mr McCann said there were about four lease opportunities in Dublin that were “bubbling” away.

Dalata has a near 20 per cent share of the hotel market in Dublin and Cork, and 14 per cent in Galway and Limerick. “That’s probably enough exposure,” he said, adding that the focus would then switch to the Britain, where it already has six properties and where it would be keen to add leasehold properties.

Dalata is Ireland’s largest hotel operator, with more than 7,700 bedrooms across 42 three- and four-star hotels under the Clayton and Maldrom brands.

Twenty of the hotels are owned by Dalata, with 13 operated under lease agreements and nine under management arrangements.

Dalata reported revenue of €225.7 million in 2015 and a pretax profit of €28.5 million.