Half Year Results Presentation September 2014 Disclaimer This - - PowerPoint PPT Presentation

Half Year Results Presentation – September 2014

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Disclaimer

This presentation document (hereinafter “this document”) has been prepared by Dalata Hotel Group plc (“Dalata” or “the Company”) for information purposes only. This document has been prepared in good faith but the information contained in it has not been the subject of a verification exercises. No representation or warranty, express or implied, is given by or on behalf of the Company or any of its respective shareholders, directors, officers, employees, advisers, agents or any other person as to the accuracy , fairness, or sufficiency of the information, projections, forecasts, or opinions contained in this presentation. In particular, some of the market data in this document has been sourced from third parties. Save in the case of fraud, no liability is accepted for any errors, omissions or inaccuracies in any of the information or opinions contained in this document. Certain information contained herein constitutes “forward looking statements”, which, can be identified by the use of terms such as “may”, “will”, “should”, “expect”, “anticipate”, “project”, “intend”, “target”, “believe” (or the negatives thereof) or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or actual performance of the Company may differ materially from those reflected or contemplated in such forward looking statements. No representation

• r warranty is made as to the achievement or reasonableness of and no reliance should be placed on

such forward looking statements.

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Half Year 2014 Performance Summary

Successful completion of IPO in March raising €256m net of costs Revenues up 31% on H1 2013 EBITDA up from €0.9m in H1 2013 to €2.4m Projecting EBITDA to be in range of €7.5m to €8.0m for full year 2014 Completed acquisitions of Pearse Street Hotel and Maldron Parnell Square Hotel for €29.7m Announcing today the acquisition of the Tower Hotel in Derry for £4.375m On track with timing and strategy as outlined at IPO

Corporate Background

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Company Overview and History

• Oct 2005: Jurys Doyle Hotel Group taken private – Pat

McCann, CEO

• Jun 2007: Jurys Inn division sold to Quinlan Private,

remaining 4 and 5 star hotels rebranded as the Doyle Collection

• Aug 2007: Led by Pat McCann and some of the Jurys

Doyle management team, Dalata Hotel Group Ltd established to acquire an operating business of 11 leased hotels in Ireland from Choice Hotels Ireland

• Mar 2009: Dalata Management Services Limited set

up to provide operational and management expertise to hotel asset owners and funders

• Mar 2014: Dalata Hotel Group floats on ESM(Dublin)

and AIM (London) and raises €265m to purchase hotel assets.

• Current Portfolio of 39 hotels

— Ireland: 12 in Dublin; 24 in remainder of Ireland spread across 14 counties — UK: Maldron Hotel Cardiff, Maldron Hotel Belfast, Tower Hotel Derry — Total of over 5,800 rooms

Geographical location of hotels in Ireland & UK

Current Hotel Portfolio

Circa 48% of room capacity is in the Dublin area

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Owned Properties Hotel Rooms Maldron Hotel Parnell Square (Dublin) 126 Maldron Hotel Pearse Street 101 Maldron Hotel Limerick 143 Tower Hotel Derry 93 TOTAL 463 % Dublin 49% Lease Agreements Hotel Rooms Maldron Hotel Cardiff Lane (Dublin) 304 Maldron Hotel Smithfield (Dublin) 92 Maldron Hotel Tallaght (Dublin) 119 Maldron Dublin Airport Hotel* 247 Maldron Hotel Cork 101 Maldron Hotel Galway 113 Maldron Hotel Portlaoise 90 Maldron Hotel Wexford 108 Maldron Hotel Cardiff (Wales) 216 Ballsbridge Hotel (Dublin) 392 Clyde Court Hotel (Dublin) 185 TOTAL 1967 % Dublin 68% Management Agreements Receivers Hotel Rooms Maldron Hotel Citywest (Dublin) 129 Cavan Crystal Hotel 85 Citywest Hotel, Conference, Leisure & Golf Resort (Co Dublin) ** 770 Clayton Hotel Galway 195 Diamond Coast Hotel (Co Sligo) 92 Portlaoise Heritage Hotel (Co Laois) 110 The Heritage Golf & Spa Resort (Co Laois)** 98 Whites of Wexford 157 Westlodge Hotel (Co Cork) 90 Clarion Hotel Sligo 162 Clonmel Park Hotel (Co Tipperary) 99 Springhill Court Hotel (Kilkenny) 85 Fels Point Hotel Tralee (Co Kerry) 165 Pillo Hotel Ashbourne (Co Meath) 148 Pillo Hotel Galway 90 Hotel Ballina (Co. Mayo) 87 Dundrum House Hotel (Co Tipperary) 68 Creggan Court (Co Westmeath)** 70 Total 2700 % Dublin 33% Management Agreements - Directly with Owners Hotel Rooms Maldron Hotel Belfast (Northern Ireland) 104 BEST WESTERN PLUS Academy Plaza Hotel (Dublin) 304 Shamrock Lodge Hotel (Co Westmeath) 51 The Belvedere Hotel (Dublin) 92 Nuremore Hotel & Country Club (Co Monaghan) 72 Aghadoe Heights Hotel & Spa (Co Kerry) 74 TOTAL 697 % Dublin 57%

* Operating agreement ** Sale agreed

Strong Underlying Growth

• Total revenue increased by 31% driven by
• Additional management contracts
• Addition of Tallaght (lease) and Dublin Airport

(operating agreement)

• Solid organic growth across the business
• EBITDA increased from €0.9m to €2.4m
• €0.7m from leased and owned hotels
• €1.2m from managed hotels
• €0.4m increase in central overhead
• Underlying growth drivers:
• Increased international visitors to Ireland, up

9.9% Jan to July 2014

• Strong event and corporate activity in Dublin
• Improving domestic consumer sentiment

throughout the country

• Central costs up €0.4m as a result of recruitment of

key staff in Acquisitions and Development, Finance, Operations and Marketing

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Summary

Interim 6 months 30 June 2014 €’000 Unaudited Interim 6 months 30 June 2013 €’000 Unaudited Full year 12 months 31 Dec 2013 €’000 Audited Key Financials Revenue 34,950 26,762 60,617 Segments EBITDAR 12,013 8,601 22,447 Rent (7,983) (6,518) (13,828) Segments EBITDA 4,030 2,083 8,619 Central Overheads (1,615) (1,192) (3,279) EBITDA 2,415 891 5,340

Highlights

Seasonal patterns have a significant impact on the business.

• In 2013 83% of EBITDA was recorded in H2 as the

rate of growth increased

• This year 68% - 70% of full year EBITDA is expected

to be recorded in H2

Leased Hotels Performed Strongly

• Total revenue up 28%
• Like for like revenue up 7.6%
• EBITDAR margin up from 27.6% to 28.4%
• Like for like margin up from 27.6% to 29.5%

driven by improved room rates

• This increase offset by a different business mix

at Tallaght and Airport hotels

• Total rent up €1.5m
• additional rent in Tallaght / Airport
• ffset by restructuring of leases in existing

properties; all historic leases now renegotiated

• n sustainable terms
• Like for like Irish revenue up 5.6%
• Like for like RevPAR up 11.4%
• Food sales down 6%
• Better rooms mix ; movement away from

inclusive packages.

• Refurbishment disturbance at two

properties

• Cardiff performed strongly with revenue up 21%

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Leased and Owned Hotels

Interim 6 months 30 June 2014 €’000 Unaudited Interim 6 months 30 June 2013 €’000 Unaudited Full year 12 months 31 Dec 2013 €’000 Audited Revenue 32,034 25,093 55,447 EBITDAR 9,097 6,932 17,277 Rent (7,983) (6,518) (13,828) EBITDA 1,114 414 3,449 Key Performance Indicators – Ireland (like for like) Occupancy 71.3% 71.7% 76.1% Average Rate €75.32 €67.26 €70.92 RevPAR €53.69 €48.20 €53.94

Highlights

• RevPAR up 11.4% on a ‘like for like’ basis
• Occupancy down 0.5% due to refurbishment

disturbance at two properties

• Average rates up €8 or 12%

Managed Hotels

• Income from managed properties up 75%
• Significant net increase in properties under

management

• Q2 2013 – 5 properties
• Q3 2013 – Acquisition of Fonteyn Property

Holdings (3 properties)

• Q1 2014 – 6 properties
• The number of hotels under management is

expected to decline in the short term with several properties in receivership currently for sale, including three hotel that are now ‘sale agreed’.

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Hotel management services

Interim 6 months 30 June 2014 €’000 Unaudited Interim 6 months 30 June 2013 €’000 Unaudited Full year 12 months 31 Dec 2013 €’000 Audited Key Financials Revenue 2,916 1,669 5,170 Segment EBITDA Contribution to Central Overhead 2,916 1,669 5,170

• No central overhead is allocated directly to

managed services segment. Hotel management services Highlights

Balance Sheet Transformation

• The balance sheet is transformed as a result of

net €256m raised at IPO — Shareholder loans were converted to equity and €9.0m of bank loans were repaid. — Property additions of €18.2m include

• 14 rooms at Maldron Cardiff Lane
• Acquisition of Maldron Parnell Square
• Deposit for Pearse Hotel acquisition

— €0.9m was invested in scheduled refurbishment works

• Movements in Working capital reflect the

addition of Dublin Airport, Tallaght and Pillo Hotels and significant seasonal variation between the months of December and June

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Summary

30 June 2014 €’000 Unaudited 31 Dec 2013 €’000 Audited Non-current assets 31,873 12,927 Current Assets Trade receivables and inventory 10,588 6,580 Cash and cash equivalents 234,623 4,940 245,211 11,520 Total Assets 277,084 24,447 Equity 262,360 (50,248) Shareholder loans & accrued interest 54,725 Bank loans 9,000 Trade and other payables 14,724 10,970 Total Equity and Liabilities 277,084 24,447

Highlights

The Irish Hotel Sector

Over 57,000 hotel rooms in Ireland with Dublin accounting for c. 32% of capacity. Dalata is the largest operator with a 9.4% market share

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Ireland and Dublin: Number of Rooms

1,492 7,821 8,343 770 104 3,776 25,434 25,011 2,700 441 5,000 10,000 15,000 20,000 25,000 30,000 5 star 4 star 3 star 2 star 1 star Dublin Ireland

Operator

• No. Hotels
• No. Rooms

% Share Dalata 36 5,414 9.4% Carlson Rezidor 11 1,665 2.9% Bewley Moran 6 1,656 2.9% Tifco 10 1,369 2.4% Hilton 5 1,172 2.0% Choice Hotels 6 1,130 2.0% Total (Top 6) 74 12,406 21.6% Total (Republic of Ireland) 835 57,362 100.0%

Leading Irish Hotel Operators

Source: Fáilte Ireland

• Irish hotel market very fragmented – Dalata enjoys significant advantage from economies of scale
• Limited presence of large international brands
• 88% of room capacity is in the 3 & 4 star segment, which is Dalata’s target market

Source: AMPM Database, Company estimates

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Irish Market Performance

A 10% increase in visitor numbers (Jan to Jul 2014) and continued improvement in domestic economy is delivering higher RevPars in Irish City Markets

RevPar Growth 2013 RevPar Growth YTD July/Aug 2014 Dublin 11.2% 8.7% (Jul) Belfast 7.2% 10.4% (Jul) Cork 8.3% 9.2% (Aug) Galway 2.1% 7.6% (Aug) Limerick 3.9% 14.4% (Aug)

Dublin: After three years of RevPar Growth, Dublin by end of 2013 was within 10% of peak RevPar and 15% of Peak ADR (2008). 2014 is proving to be another strong year. Belfast: Recovery started in 2012. 21% off 2008 peak at end of 2013 and very strong first half of 2014. Cork: Recovery started in 2013 with recovery in occupancies. Increase in 2014 being driven by both ARR and occupancy. Galway: Modest recovery began in 2013. Solid start to 2014 was followed by a very strong summer performance. Limerick: City is heavily oversupplied due to over development in boom years. City occupancy is slowly recovering and

• utlook helped by closure of some hotel rooms in last 2 years. Strong 2014 growth but against a very low base in 2013.

Source: STR Global & trending.ie

Dublin Hotel Market Dynamics

Although Dublin’s average room rates continued to grow in 2014, rates are still low relative to many other European cities. There has been no significant increase in net supply since 2008 leading the city to having one of the highest occupancy levels in Europe. We see a need for additional supply in the centre of the city

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Selected European Cities: Occupancy and ARR for 2013 Dublin: Annual supply and demand of hotel rooms, RevPAR

Source: STR Global Source: STR Global

Irish Hotel Transactions

Between Individual Hotel Transactions & Loan Sales, hotel sales could reach close to €1bn in 2014

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Individual Hotel Transactions 2006 to June 2014 2014 – Significant Transactions To Date

Source: CBRE Research

€m

Portfolio Transactions

• Ulster Bank currently marketing 8 hotels as part of

Project Nadal

• NAMA expected to launch second portfolio of

hotels to market. Smaller portfolio of 3 hotels currently on market (Project Venue).

• Number of hotels sold as part of IBRC Project Stone

Hotel Purchaser No. Rooms Estimated Price Shelbourne Kennedy Wilson 265 €110m Hilton - Charlemont John Malone 193 €31m Portmarnock Hotel & Golf Kennedy Wilson 138 €29.8m Westin Hotel John Malone 163 €65.0m Maldron – Parnell Square Dalata 126 €15.3m Pearse Hotel Dalata 101 €14.4m Mount Juliet Brehon Partners 57 €15.0m Oriel House, Cork Talbot Hotel Group 78 €8.0m Doonbeg Hotel & Golf Donald Trump 65 €15.0m

200 400 600 800 1,000 1,200 2006 2007 2008 2009 2010 2011 2012 2013 2014

26 10 2 3 8 24 33 27 32

Source: Company Estimates

Dalata Transactions

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Maldron Parnell Square, Dublin

• Hotel Details
• 3 star hotel with 126 rooms, bar, restaurant and 3 meeting rooms
• Centrally located and within walking distance of O Connell Street retail area,

Croke Park, Garden of Remembrance and other historical Dublin landmarks

• Lease Details
• Lease Expiry Date – July 2032
• Current Rent - €1.1m
• Next Rent Review Date - Jan 2017
• Higher of Existing Rent & OMV
• Purchase Price of €15.3m
• Initial yield of 7.2%
• Estimated yield of 10% on reviewed rent in 2017
• Cost per room - €121k

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Maldron Pearse Street, Dublin

• Purchase Price of €14.4m
• Initial yield of 4.9%
• Estimated yield of 10% by third year of operation
• Fully completed cost per room of €145k per room
• Hotel Details
• 3 star hotel with 101 rooms, bar, restaurant and 5 meeting rooms
• Potential to add further 12 rooms within existing envelope
• Plan to spend circa €3m to refurbish hotel to full 4 star property
• 393 sq metres of retail and office space
• Centrally located and within walking distance of Bord Gais Theatre, Convention

Centre, Aviva Stadium, Headquarters of Google, Facebook, O2 amongst others

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Tower Hotel, Derry City

• Derry
• Fourth largest city in Ireland
• Population of 110k
• Relatively low level of hotel supply
• Hotel Details
• 3 star hotel with 93 rooms, bar, restaurant and conference facilities
• Basement car park with 28 spaces
• Centrally located within the old walled city of Derry
• Ideally suited for Maldron rebrand
• Purchase Price of £4.375m
• Initial yield of 9%
• Estimated yield of 13% by third year of operation
• Cost per room of £47k per room – significant discount to replacement cost

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Ballsbridge & Clyde Court Hotels

• Entered into binding contracts with Blackstone to purchase their share and loan

capital in the two companies that own the Ballsbridge & Clyde Court properties: ― 25% of entire share capital for nominal sum ― 21.8% of entire loan capital for €21.8m

• Contract is subject to ‘pre-emption’ rights of the two other shareholder banks
• Ballsbridge Hotel is a 4 star hotel in Dublin 4 with 392 rooms as well as a bar,

restaurant, function room and 13 meeting rooms

• Clyde Court is also a 4 star hotel in Dublin 4 with 185 rooms, a bar, restaurant,

function room and 8 meeting rooms. ― Both hotels have been operated by Dalata under lease since Jan 2012

Well positioned for growth

Positive Irish economic backdrop and strong industry dynamics Largest operator in the Irish market – uniquely positioned to exploit value accretive opportunities Good trading momentum and pipeline of future transactions

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• Key Contacts

Pat McCann Chief Executive pmccann@dalatahotelgroup.com Dermot Crowley Deputy Chief Executive - Business Development & Finance dcrowley@dalatahotelgroup.com Address: Dalata Hotel Group plc 4th Floor, Burton Court Burton Hall Drive Sandyford Dublin 18 Tel: +353 (0)1 206 9400 Fax: +353 (0)1 206 9401 20