Dalata shares see 9% bounce on Brexit confidence

Dalata Hotel Group shares surged by nearly 9% after it expressed confidence in riding out continued Brexit uncertainty and the effects of the higher Vat rate on the domestic tourism and hospitality sector.

Dalata shares see 9% bounce on Brexit confidence

Dalata Hotel Group shares surged by nearly 9% after it expressed confidence in riding out continued Brexit uncertainty and the effects of the higher Vat rate on the domestic tourism and hospitality sector.

The stock also climbed on the back of a strong set of first-half financial figures from the largest hotels group in the country. However, Dalata's share value has still plummeted 32% in the past 12 months.

Dalata - which owns the Clayton and Maldron hotel chains - said revenue for the first half of the year was up 12.2% at €201.9m and pre-tax profit rose nearly 7% to €37.8m. After awarding a maiden full-year dividend in February, the group has proposed an interim dividend of 3.5c per share.

While the increase in the hospitality Vat rate - from 9% back to 13.5% - had a worse than expected effect; insofar as revenues from Dalata's existing hotels fell by 0.5%; the group's first half figures were boosted by first-time contributions from last year's new openings.

"Despite the challenges of a significant increase in the Vat rate in Ireland and the ongoing uncertainty surrounding the timing and nature of Brexit, 2019 to date has been another very successful year. The outlook for the balance of the year looks very positive."

Dalata said it remains very hard to predict what will happen with Brexit, but that it remains "positive" about its ability to exploit opportunities in the UK. It said it doesn't have any concern over travel difficulties to the UK affecting customer numbers at its British hotels, after Brexit, but said any negative impact on economic growth from a no-deal outcome would have a bad effect on the hotel industry.

The group has a pipeline of 2,400 more rooms due to come on stream across Ireland and the UK over the next three years and it has aquired a site with planning permission for a Maldron hotel in London - adding that it expects to make further hotel announcements before the end of the year.

While Dalata said, earlier this year, that it could enter the German market within five years; its research has found too much new supply coming on stream. Dalata said, while its mainland European plans are not on hold, it will wait to see how the new additions to the German market pan out before making a move.

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