Dalata Hotel Group January 2018 ISE: DHG LSE: DAL Disclaimer - - PowerPoint PPT Presentation

Dalata Hotel Group January 2018

ISE: DHG LSE: DAL

Disclaimer

The presentation contains forward looking statements. These statements have been made by the Directors in good faith based on the information available to them up to the time of their approval of this presentation. Due to inherent uncertainties, including both economic and business risk factors underlying such forward looking information, actual results may differ materially from those expressed or implied by these forward looking statements. The Directors undertake no obligation to update any forward looking statements contained in this presentation, whether as a result of new information, future events or

• therwise.

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Dalata | Contents

Group Overview Market Update UK Research & Strategy 2018

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Group Overview

Dalata | Strong, Complementary Brand Proposition

Brand Pr Proposition

Maldron is all about providing a fun, relaxed time for all who arrive through our doors. Our great-value hotels are found in convenient locations close to local attractions - ensuring there’s always plenty to see and do. With friendly, helpful staff, good food and excellent facilities, it’s the perfect place to enjoy good times with family and friends

Rest assured, it’s a Maldron

You can always depend on Clayton Hotels to deliver exactly what you need, whether that’s a weekend away, a family break or an important business meeting. From the comfort of our bedrooms to the quality of

• ur facilities and the warm, helpful attitude of our staff
• every detail is handled with care

Where every moment matters

Bed edrooms

Generally standard rooms, with family and executive rooms in some locations Standard, superior and executive rooms

Food

• od an

and Beverage

Integrated bar and restaurant in some locations. Simple menus made from fresh quality produce Modern bar, restaurant and coffee dock. Food and beverage offering based on local influences and freshly sourced premium ingredients

Conf

• nference

Fac acilities

Meeting room facilities Extensive choice of modern meeting rooms and events facilities

Tar arget Cust ustomers

Both leisure and corporate with main focus on leisure guests and family Focus on corporate and conference midweek. Leisure, functions and weddings at weekend

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Dalata | 3 Core Business Segments – H1 2017

Dublin 14 Hotels 3,699 Rooms H1 2017 RevPAR: €96.36(+8%)

57%

Group Revenue 60% Segment EBITDA 48% EBITDAR Margin

Regional Ireland 12 Hotels 1,643 Rooms H1 2017 RevPAR: €60.93(+9%)

21%

Group Revenue 15% Segment EBITDA 24% EBITDAR Margin

UK * 7 Hotels 1,557 Rooms H1 2017 RevPAR: £63.72(+15%)

21%

Group Revenue 23% Segment EBITDA 38% EBITDAR Margin

Page 6 * Excludes Croydon Park Hotel Information as at period end

Dalata | Owned & Leased Portfolio at January 2018

Own wned d Ho Hote tels / Freehold d Equiv ivalent Ho Hotel Room

• ms

Clayton Hotel Dublin Airport 504 Clayton Hotel Manchester Airport 365 Clayton Hotel Leopardstown, Dublin 354 Clayton Hotel Leeds 334 Clayton Hotel Ballsbridge, Dublin 304 Clayton Hotel Cardiff Lane , Dublin (1) 304 Maldron Hotel Newlands Cross, Dublin 297 Clayton Hotel Liffey Valley 261 Clayton Hotel Chiswick, London 227 Clayton Hotel Cork City (2) 201 Clayton Hotel Galway 195 Clayton Hotel Belfast 170 Clayton Hotel Sligo 162 Clayton Whites Hotel, Wexford 160 Clayton Hotel Limerick 158 Clayton Crown Hotel, London 152 Maldron Hotel Limerick 142 Maldron Hotel Parnell Square, Dublin 129 Maldron Hotel Pearse Street, Dublin 115 Tara Towers Hotel, Dublin 111 Clayton Hotel Silver Springs, Cork 109 Maldron Hotel Wexford 108 Maldron Hotel Sandyroad, Galway 104 Maldron Hotel Cork 101 Maldron Hotel Derry 93 Maldron Hotel Portlaoise 90 Tota tal 5, 5,250 Lease Agreements ts Ho Hotel Room

• ms

Clayton Hotel Burlington Road, Dublin 502 Ballsbridge Hotel, Dublin 400 The Gibson Hotel, Dublin 252 Maldron Hotel Dublin Airport 251 Clayton Hotel Cardiff, Wales 216 Hotel La Tour Birmingham 174 Maldron Hotel Tallaght, Dublin 119 Maldron Hotel Galway (Oranmore) 113 Maldron Hotel Smithfield, Dublin 92 Tota tal 2, 2,119 New w pipe pelin ine Ho Hotel Room

• ms

Own wned Clayton Hotel Charlemont, Dublin 188 Maldron Hotel Kevin Street, Dublin 138 Maldron Hotel South Mall, Cork 164 Maldron Hotel Belfast City 237 Clayton Hotel Ballsbridge, Dublin 31 Clayton Hotel Dublin Airport 106 Maldron Hotel Parnell Square, Dublin 53 Maldron Hotel Sandyroad, Galway 64 Leased Maldron Hotel, Newcastle 265 Clayton Hotel, Manchester 300 Clayton Hotel, Glasgow 300 Tota tal 1, 1,846

(1) Dalata own 252 rooms and lease 52 rooms (2) Dalata own 194 rooms and lease 7 apartments

Page 7 Sum ummary by y Ho Hotel Cate tegor

• ry

Ho Hotels Room

• ms

Owned 26 5,250 Leased 9 2,119 New pipeline 7 1,846 Mgmt Agreement – Owners 3 308 Tota tal 45 45 9, 9,523

Dalata | Strong Balance Sheet providing covenant for growth

Objective is to maintain a strong balance sheet with appropriate level of gearing, leading to a strong covenant for potential landlords/investors Decrease in Net Debt to Amended EBITDA to 1.91 91x from 2.40x £174.4m (€198.3m) of borrowings in Sterling as a natural hedge against value of Sterling assets and Sterling denominated earnings Combination of strong cashflow, cash balance, undrawn facilities and low gearing provides a Balance Sheet to comfortably fund current expansion plans

All figures €m 30 June 2017 31 Dec 2016

Non-current assets Tangible assets 829.5 825.7 Goodwill and intangibles 54.7 54.3 Other 11.7 6.6 Current assets Trade receivables, inventory and other 25.9 17.7 Cash 88.9 81.1 Total assets 1,010.7 985.4 Equity 652.8 620.4 Bank loans 267.5 280.4 Trade and other payables 58.6 53.1 Other non current liabilities 31.8 31.5 Total equity and liabilities 1,010.7 985.4

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Dalata | “The Difference with Dalata”

Our dec decentral alised ope

• perational app

approach Dalata’s dec decentral alised st structure is core to our management philosophy Hotel General Managers are critical players – we continually develop them A strong multi-functional team at the centre setting direction, seeking growth opportunities, supporting the hotels, and reporting to our stakeholders We We grow our own – training and development a major focus as there is a need to have a strong pipeline

• f key people coming through

Having people we know taking up key roles de-risks our business We We focus on

• n what

at we we ar are go good at at Operating 3 star and 4 star modern well-maintained hotels in cities with strong mix of corporate and leisure demand Executing transactions to grow our owned and leased portfolio Identifying strong locations and developing new hotels on them Decentralised revenue management – our revenue managers are informed by systems but always make the dec decisions themselves Investing in systems to support our app approach to to cos

• st control

Owner/Operator Mod

• del

Control of our brand standards Security of tenure allows us to build a central team to effectively support and scale our decentralised structure

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Ir Irel eland: Portfolio lio Obje bjectives Complete existing development pipeline of

• f 744 rooms and deliver on earnings potential when they
• pen in 2018

Reach the optimum market share in each of the key urban centres – Dublin, Cork, Limerick and Galway

Drive Portfolio Growth | Ireland

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Dalata | Over 1,840 new rooms across Ireland and UK

Dublin 2 New Hotels 3 Extensions 516 rooms Reg egional al Ir Irel eland 1 New Hotel 1 Extension 228 Rooms UK UK 1 New Owned Hotel 3 New Leased Hotels 1,102 Rooms

Propert rty Ne New Extensio ion Roo

• oms

Plannin ing Con

• nstructio

ion Com

• mpletion
• n

Granted Started Clayton Hotel Charlemont x 188 x x Nov 2018 Maldron Hotel Kevin Street x 138 x x June 2018 Clayton Hotel Ballsbridge x 31 x x Aug 2018 Clayton Hotel Dublin Airport x 106 x x May 2018 Maldron Hotel Parnell Square x 53 x x Dec 2018 Propert rty Ne New Extensio ion Roo

• oms

Plannin ing Con

• nstructio

ion Com

• mpletion
• n

Granted Started Maldron Hotel South Mall, Cork x 164 x x Dec 2018 Maldron Hotel Sandyroad, Galway x 64 x x June 2018 Propert rty Ne New Extensio ion Roo

• oms

Plannin ing Con

• nstructio

ion Com

• mpletion
• n

Granted Started Maldron Hotel Belfast City x 237 x x Mar 2018 Maldron Hotel, Newcastle* x 265 x x Feb 2019 Clayton Hotel, Manchester* x 300 Q3 2020 Clayton Hotel, Glasgow* x 300 Q4 2020 *35 year operating lease

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Markets Update

Dalata | Market Review – Dublin

350 1,150 2,250 500 1000 1500 2000 2500 2017 2018 2019

Savi avills fore recast net t addi additional 3, 3,75 750 roo

• oms by 2019

2019

Dublin 201 2015 Actual 1 201 2016 Actual1 201 2017 F’cast 201 2018 F’cast Occupancy 82.1% 82.3% 82.7% 82.3% ARR 111.92 128.49 137.76 142.89 RevPAR 91.90 105.71 113.90 117.64 RevPAR % Variance 23.0% 15.0% 7.6% 3.3%

• 1. 2015 and 2016 numbers differ slightly from those previously reported as STR revised

their numbers

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Total market size of circa 20,885 rooms Significant number of rooms expected to open towards the end of 2018 and into 2019 and 2020 Increase in supply expected to be matched by increase in demand from continued economic growth, increased visitor numbers and growing evidence of office relocations from London to Dublin 7.7% RevPAR year on year growth at October 2017

Source: STR Global

Dalata | Market Review – Regional Ireland and UK

RevPAR Growth 20 2015 20 2016 YTD YTD Oct 20 2017

Cork 9.6% 13.3% 13.7% Galway 13.3% 10.7% 7.9% Limerick 23.4% 16.4% 12.6%

Continuing strong demand from FDIs, domestic corporate and domestic leisure customers No increases in supply and very little supply pipeline Continued strong growth in 2017 for all three cities

Source: STR Global Source: Trending.ie

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RevPAR Growth 20 2015 20 2016 YTD YTD Oct 20 2017

London 1.2%

• 0.9%

5.8% Manchester 7.5% 5.7% 0.9% Birmingham 11.3% 7.7% 2.1% Cardiff 14.2%

• 1.1%

9.9% Leeds 8.1% 3.7%

• 0.9%

Belfast 11.9% 9.0% 18.5%

Very strong RevPAR growth in London versus H1 2016 which was negatively impacted by new supply and impact of terrorism. Market has been weaker in H2 Re-opening of Waterfront Centre in mid 2016 together with positive impact of weaker sterling on ROI visitors resulted in a very strong period in Belfast Mixed performance at three UK regional cities

UK Research & Str trategy

Dalata | 20 Target Cities Identified From Research

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1 Edinburgh 2 2 Ma Manchester 3 Gla lasgow 4 Brighton 5 Bristol 6 Lee eeds 7 Liverpool 8 Oxford 9 Bel elfast 10 Reading 11 11 Bir irmingham 12 York 13 Cambridge 14 Southampton 15 Milton Keynes 16 16 Car ardiff ff 17 Portsmouth 18 18 Ne Newcastle 19 Bournemouth 20 Exeter

Following extensive research management have identified 20 provincial UK cities with strong

• pportunities for Maldron or Clayton hotels

Target 20 Cities | 3&4 Star Segment comprises 57% of the Market

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3% 35% 22% 40%

5 Star 4 Star 3 Star Budget & 2 Star

Target 20 Cities | Brand Shares

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12% 7% 5% 4% 4% 4% 3% 3% 3% 2% Premier Inn Travelodge Ibis Holiday Inn Hilton Holiday Inn Express Jurys Britannia Hotels Marriott Mercure

Frag agmented mar arket wi with onl

• nly bu

budget br brands ha having a sig ignificant sha hare

Source : AM PM Hotels

Target 20 Cities | Brand Shares in 3&4 Star Market

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Ver ery fragmented wit with no no do dominant br brand

8% 7% 6% 5% 5% 4% 4% 3% 3% 3% Holiday Inn Hilton Jurys Britannia Hotels Marriott Mercure Crowne Plaza Novotel DoubleTree by Hilton Radisson Blu

Source : AM PM Hotels

Target 20 Cities | Operator Shares in 3&4 Star Market

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Ope Operators wi with less less th than 4% 4% mar arket sha hare com comprise 70 70% of

• f th

the 3& 3&4 sta tar mar arket

Source : AM PM Hotels

7% 6% 5% 4% 4% 4% 3% 2% 2% 2%

Target 20 Cities | Ownership Model in 3&4 Star Market

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Over 70% of the owner operators have 4 hotels or less 33% of the leased hotel operators have 4 hotels or less

Source : AM PM Hotels

47% 9% 4% 16% 24%

Owner Operator Franchised Managed/Franchised Managed Leasehold

Target 20 Cities | International Brands moving away from

• perating hotels

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Source : AM PM Hotels

Hi Hilton Ma Marriott/ Sta tarwood IHG IHG Acc ccor Franchised 72% 43% 70% 33% Managed 24% 52% 30% 67%* Owned/Leased 3% 2% 0% Worldwide Rooms by Ownership Model

*Accor do not disclose separately no. rooms managed, owned and leased

Target 20 Cities | Age Profile in 3&4 Star Market

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Source : AM PM Hotels

19% 18% 20% 18% 24% Not Stated Under 10 years 10 - 20 years 20 - 40 Years 40 + years

Target 20 Cities | Fragmented Market offering Compelling Opportunity

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Dalata’s management team believe that a large structural opportunity has emerged in the 3 and 4 star hotel markets in certain regional cities in the UK. Key drivers of this structural opportunity are: International brands are increasingly evolving to a franchise model leaving a shortage of operators with any scale The specific 3 and 4 star market in certain large regional cities is very fragmented and there are no dominant br brands in this market segment Ownership model is also very fragmented Close to 50% of the 3 & 4 star market comprises owner/operators and 70% of these operate 4 hotels or less The stock of 3 and 4 star hotels is considerably old

• lder than the age profile of the Budget sector

Opportunity now exists for a hotel operator with a strong balance sheet and operational focus to become the market leader in fragmented 3 and 4 star hotel markets

Target 20 Cities | Clear Competitive Advantage in Fragmented Market

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Dalata Competition

Financial resources & Ability to secure sites

• Willing to put strong balance sheet behind

strategy to own or lease

• Very attractive to developers & property

investors

• Large brands won’t own or lease.
• Weak balance sheets for smaller
• perators

Depth of Hotel Operational Expertise & Resources

• Management and staff avail of comprehensive

training & development programmes

• Highly motivated management teams with

large growing hotel group

• Support of Central Office functions
• Difficult for smaller operators or

larger Third Party Operators (TPOs) to provide same level of training or opportunity due to lack of tenure (TPOs) or scale (independent operators) Senior Management Team

• Existing management platform in place in the

UK

• Senior management team has operated in UK

hotel market for over [x] years

• Senior management team created, rolled out

and operated a new brand in the UK previously – Jurys Inn

• Not clear that same level of

experience exists within TPOs or independent operators

• Large brands dependent on
• wners to roll out their brands

Target 20 Cities | Key Objectives in Target UK 20 cities

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Our objective is to become the leading 3/4 star operator in our target city markets Target range of 10% to 15% market share of 3/4 star market in each city Translates to additional circa 8,000 rooms (assuming a 12.5% market share in achieved) in 5 – 7 years Further opportunities are likely to exist in the Greater London area and adjacent to UK airports but Dalata will look to address those opportunities in a more bespoke manner as and when they arise

Target 20 Cities | Early examples of UK expansion strategy

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Hotel l L La Tour ( (Birmingham) – Exis Existing Ass Asset

• Bought in July 2017 for £31m
• Sold Freehold to Deka Immoboilien and entered a 35

year lease at initial rent of £1.6m p.a.

• Modern hotel with 174 rooms, restaurant, bar and

extensive meeting facilities

• Exploring potential to add a further 40 rooms
• Have identified significant opportunities to reduce

costs and increase revenues

• Rebranded as a Clayton hotel in October

Cl Clayton Man anchester – Development as asse set

• Agreement for lease contracts exchanged
• Planning application in Q4 2017
• Excellent city centre location – Portland Street
• Local well regarded developer – Property Alliance

Group

• Rent cover Yr 3 > 1.85X
• Will be branded a Clayton
• Target opening mid 2020

Target 20 Cities | Early examples of UK expansion strategy

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Cl Clayton Glas lasgow, , Cl Clyde St Street – Development as asse set

• Agreement for lease contracts exchanged
• Planning application in Q1 2018
• Circa 300 bedroom new build Clayton

Hotel

• Very close to retail and leisure attractions
• International Financial Services District

within 5 minute walk

• Developer partner is Artisan Real Estate

Investors

• Target opening Q4 2020

Outlook

Dalata | Another Busy Year in store in 2018

Continued focus on operational requirements of our hotels through training/development programmes, investment in technology and interaction with our customers Confirmed pipeline of 1840 rooms across the three regions – 975 of these to open in 2018 Planning to commence construction in our two new Clayton hotel projects in Glasgow and Manchester. Seeking to secure a further 1200 rooms in our development pipeline Planning to complete the current investment programme in technology across our property management, revenue management and procurement systems.

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