Crowe Horwath research, room occupancy fell 10% from 70% to 60% Average selling price of a room dropped by 25%. Revenue per available room, the industry’s number one KPI fell by 36%Internet selling …. Dublin vs rest …. Panic …… Tom?Bank pricing myth?
Returning to the Irish market context, rough thumbnail sketch, maybe over simplification - not major distortionCentral bank €7bn; assume 20% equity => guesstimate <€9bnProperties available at 20/25% of their original price or cost of construction=>sector value around €2bnEquity wiped; debt needs to be massively written downFabric of the sector has been torn asunderThink about who held the equity ……Emotive subject…….. Inexperience / inheritance ……… fairness, etcAnyone hazard a guess at what percentage of the hotel debt is in NAMA?Crowe Horwath estimate 300 hotels need investment / restructuring – 300 of 900I have no evidence but looking at picture – double that? Tom?
Pat McCann - The Future for an Over-Supplied Hotel Market May 2013
Bank of IrelandBuilding Business Momentum ConferencePresented by: Pat McCannChief ExecutiveDalata Hotel Group LtdDate: 24 May 2013
2Hospitality – The Future for anOver Supplied Hotel Market
3Dalata Hotel Group Ltd• Largest hotel group in Ireland• 30 hotels• Over 5000 bedrooms• Over 3000 employees
4Maldron Hotels• Formed in 2007• Purchase of ten, mainly leasehold, assets• Re-branded to Maldron Hotels in 2008• Maldron Hotel Cardiff (new build) opened in May2011• Maldron Hotel Belfast added in February 2013• Twelve Maldron Hotels with over 1500 bedrooms
5Partner Hotels• Started our first management contracts in 2009• Eighteen hotels with over 3500 bedrooms(thirteen in Receivership)• Extremely valuable part of the business providinggood cash flow• Management contracts high intensity with highmaintenance• Short-term in nature• Need to remain unbranded
6The Hotel Sector in Ireland• Number of hotel rooms in Ireland:1999 30,0002005 45,000Today 60,000• Average hotel size:Pre-2000: 35 bedroomsToday: 67 bedrooms• Estimated over capacity:10,000• Growth in other forms of accommodation
7Growth in Number of Hotel RoomsSince 2005• Largest growth– Meath 68%– Laois 56%– Carlow 51%– Roscommon 49%• Dublin City Centre/Cork City/Galway City/ Kerrymay not be over supplied
8The Demand Side• The decline in the British market• Over reliance on the Irish market outside theurban areas• Reliance on food and beverage• Based on current growth projections, estimatedover capacity in 2015 still at 7000 bedrooms
9The Distribution Model(i.e. How hotels get their business)• The power of the internet (seismic shift in ten years)– own website– third party sites– Google– social media– visibility of pricing– not just bedrooms business– the big brands– revenue management
10The Business Mix• Each hotel unique• Owned business vs transient business• Yielding off the base• The wedding business• GDS
Irish Hotels 2010 v 2007112007 2010 ChangeRoom Occupancy 70.3% 60.0% (10%)Average Daily Rate (ADR) €97.16 €73.06 (25%)Revenue per available room (RevPAR) €68.31 €43.84 (36%)Source: Crowe Horwath Ireland and Northern Ireland Hotel Industry Survey 2008/11
Impact of the Market Collapse on the Sector900 hotels in Ireland; 60,000 roomsCatalyst forfundamental changein the structure ofthe sector0.01.02.03.04.05.06.07.08.09.0Before AfterBillionsDebt EquityTotal Hotel Sector ValueSource: Central Bank of Ireland/Author’s estimates12
13What Does this all Mean for Hotelsin Ireland?• Sale of hotels• Commercial reality will mean some hotels close• Stand alone hotels will struggle to survive• Urgent need for professional management• Hotels will need to come together for– procurement– Distribution– retail model• Hotels by their nature adaptable and resilient• Hoteliers always positive (“cup half full”)• Recovery has started in Dublin• WE WILL SURVIVE!
14The Future for Dalata Hotel Group• Continue to expand the Maldron brand• Continue the focus on acquiring newmanagement contracts• Become a consolidator in the hotel sector• Develop more sustainable income streams for theGroup• Acquire assets or longer-term managementcontracts• Value creation for shareholders