The State's largest hotel group Dalata has sold the company which was leasing the Croydon Park Hotel in London after the hotel made a loss of £20,000 during the first half of the year.
Dalata received approval from the Competition and Consumer Protection Commission in January 2016 to acquire the leasehold interest of four hotels, including Croydon Park, in a deal valued at €40 million.
The other hotels were the Gibson Hotel in Dublin, the Clarion Hotel in Cork and the Clarion Hotel in Limerick.
The leasehold interest comprised of operating leases with an average term of 18 years outstanding.
Dalata said at the time it planned to invest €14 million over the following two years in refurbishing the four properties, before rebranding them all as Clayton hotels.
Following the sale of Kasterlee UK, which was leasing the hotel, Dalata deputy chief executive Dermot Crowley said: “I would like to thank the management and staff of the Croydon Park Hotel for the commitment and dedication showed while the hotel was part of Dalata Hotel Group.”
In a note, Investec said it was “not overly surprised” by the decision to sell the hotel.
“Management had previously flagged that the hotel had a lower EBITDAR margin than the average for its UK portfolio, while today the group says that the hotel made a small loss of £20,000 in the six months to end-June 2017,” it said.
“In addition, it had not been rebranded to one of Dalata’s core brands. With 211 bedrooms, the Croydon Park Hotel accounted for only about 2.5 per cent of Dalata’s stock of managed rooms.”
Investec reiterated its recommendation to buy shares in the company at a price target of €6.10.
“Our positive stance on the group is supported by the solid outlook for its home market and the strong prospects for the group to successfully expand its franchise into the UK market,” it said.
Kasterlee’s liabilities exceeded its assets by €1.2 million in 2015, according to the latest accounts filed. It said the directors expected to wind the company up during 2017.
Dalata has a current portfolio of 37 three and four star hotels with over 7,500 rooms. The company operates the State’s two largest hotel brands, the Clayton and the Maldron hotels across Ireland and the UK, as well as managing a portfolio of partner hotels.
Some 21 of the hotels are owned by Dalata, while 12 hotels are operated under lease agreements and four are operated under management agreements.
For the full year 2016, Dalata reported revenue of €290.5 million. The company is listed on the main market of the Irish Stock Exchange (DHG) and the London Stock Exchange (DAL).
