Dalata's pre-tax profits soar by 55%

As CEO Pat McCann says suggestions that Dublin rooms are too expensive are "rubbish"...

Dalata has reported a 55% increase in pre-tax profit to €44.1 million in 2016.

Ireland’s largest hotel operator saw a rise in revenue of 28.8% to €290.6m for the year to the end of December.

It benefited from a net upward property revaluation of €66.6m. 

Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by 35.9% to €85.1m.

The group now plans to add 1,200 rooms to the business. Four hotels are under construction – one in Brunswick Street, Belfast; one in Newcastle, England; and two in Kevin Street and Charlemont, Dublin.

A hotel on Cork's South Mall also at the planning stage.

Despite the uptick in activity, chief executive Pat McCann told Bobby Kerr on Newstalk Breafkast that meeting the Dublin demand for rooms – which he believes is less than the 5,000-figure that has been touted – “will be some feat”.

McCann explained:

"The difficult you have is that up to 2016, the economics on building new hotels simply didn't work. I know that people will smile when they hear that but our room rates were simply too low.

"The next thing that happens then is that sites has moved because you're in competition with offices and residential, and returns on hotels are not as good as either of those.

"The third element then for people is to get funding. Because traditionally what would happen with new build hotels would be that banks would be available for development funding. But that's simply just not the case anymore, so people have to find alternative funding to build and develop hotels and that's not easy."

McCann also dismissed suggestions that Dublin hotel prices are uncompetitive as "rubbish", saying that “you rarely find any kind of negative comment from overseas guests on room rates in Dublin”.

Citing STR's latest stats that have Dublin at number one in occupancy and number 11 in room rates, McCann argued that we compete with "what I would call 'normal' cities like Copenhagen, Amsterdam and Barcelona".

"Where we struggle somewhat is in the domestic market," he said. "We're still, from an international point of view, very competitive. That doesn't mean that we can get complacent in any way."