herald

Friday 17 August 2018

'City needs another 5,000 rooms but I can't see that happening' - Dalata boss

 

Dalata chief Pat McCann
Dalata chief Pat McCann

Ireland's biggest hotel group is being asked by rival firms to help finance the construction of new sites in the city, says its chief executive.

Dalata boss Pat McCann said "part of the problem" was the dysfunctional state of the money market for hotel construction.

The cost of building hotels in Dublin has risen significantly over the years.

Dalata's 188-bedroom Clayton Charlemont Hotel on the city's southside was being built at a cost of €225,000 a room, said Mr McCann.

"You wouldn't do it for less than €300,000 per room today," he said.

Mr McCann said difficulties for other hotel builders in securing finance look set to continue.

"Finance has become less available and costs have risen," he said after Dalata's annual general meeting in Dublin yesterday.

He said property agent Savills has predicted that 5,000 hotel rooms are needed in the capital by 2020.

"I can say with a high degree of certainty that that's not going to happen," said Mr McCann.

He has predicted that only 3,000 rooms will be added in that time.

Difficulties

"If you're an individual developer starting up and wanting to build your own hotel, you will not have the information we have," he said.

"I'm not making statements about difficulties in finding funding for no reason.

"We're aware of some of the challenges some of the potential developers are having. Are people knocking on our door? The answer to that is yes.

"I'm not having any difficulties financing in either Ireland or the UK, but we know of other people who are."

Mr McCann said those developers are looking for Dalata to get involved "because we can raise finance".

He said Dalata has had "tentative" conversations in relation to three or four potential projects where financing has been an issue. Each property would have 200 rooms or more.

Dalata, with a €1.2bn market capitalisation, follows a sale and leaseback model.

Backers include the likes of German investment fund Deka and M&G Real Estate, which is part of Prudential's M&G Investments.

Mr McCann reaffirmed Dalata's commitment to being a leading player in the UK three and four-star hotel market, where it plans to have up to 8,000 extra rooms within five to seven years.

Mr McCann said Dublin is losing out on conference business because there are too few hotel bedrooms.

Shares in Dalata fell yesterday, despite an upbeat trading statement.

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