Clayton Hotels owner could burn through €12m per month in worst case scenario - analyst

Clayton Hotels owner could burn through €12m per month in worst case scenario - analyst

The owner of the Clayton and Maldron hotel chains, the Dalata Hotel Group, could burn through €12m of cash per month in the second half of the year if the Covid-19 disruption lingers and the business fails to generate any revenue, Goodbody has claimed.

However, it sees this as being an unlikely worst-case scenario - with the majority of hotels being able to reopen on July 20 - but a manageable one, given Dalata’s ample cash resources.

“Post the sale and lease back of the Charlemont Hotel [in Dublin] Dalata has approximately €200m of liquidity to navigate through this crisis. We estimate that cash burn, even in a zero-revenue scenario, is approximately €12m in the second half,” said Goodbody analyst Paul Ruddy.

New industry-wide figures show that revenue per available room – or RevPAR – fell by almost 90% in Dublin hotels on a year-on-year basis in April, with occupancy standing at just 12.6%.

Regional hotel RevPAR was down 75%, with occupancy at just 27%.

“April was always going to be an exceptionally difficult period for Irish hotels given they are only allowed to accept bookings for essential workers and the majority of hotels are closed…For now, given hotels are largely closed, the trajectory of the recovery remains far more important than current RevPAR data,” said Mr Ruddy.

Dalata has already factored in the prospect of generating virtually no further revenue for the rest of the year and sees it being at least three years before business returns to the levels seen in 2019.

Meanwhile, the Irish Hotels Federation has welcomed the establishment of a tourism recovery taskforce to identify measures to spearhead the sector’s recovery.

The IHF will be represented by its president Elaina Fitzgerald Kane and wants a continuation of the job subsidy scheme, a permanent reduction in tourism Vat, and tailored liquidity measures.