Irish hotel operator Dalata said on Wednesday that it expects first-quarter revenue to be down 16% compared to the same period in 2019 after experiencing a significant reduction in bookings following the spread of Covid-19.
In a statement, Dalata noted that the business has been ‘severely impacted’ over the last two weeks. ‘We expect this to continue for as long as the current restrictions on movement and travel remain.’
The group has ‘significant’ financial headroom with material cash resources of €80 mln post disbursement of quarterly rent and interest scheduled to be paid over the next few days. In addition, Dalata can avail of further undrawn committed debt facilities of €65 mln.
Dalata has also proactively engaged with its banking club and as a result of an amendment to the Group Facilities Agreement, Dalata fully expects to be in compliance with covenants in June 2020. Covenants are measured at the end of June and December each year.
Dalata said: ‘Given the uncertainty surrounding the length of the current crisis, and other possible initiatives that may occur, it is too early to predict the financial position at the end of December 2020 at this time. However, the group believes it is very well positioned with a supportive banking club and the extensive cost mitigation plans in place to withstand a significant decrease in its business during 2020 arising from the Covid-19 pandemic.’
The hotel group is also postponing uncommitted development capital expenditure and non-essential maintenance capital expenditure for this year to free up additional cash resources of approximately €60 mln. Despite the planned savings, the company also had to temporarily lay off a large number of employees for whom it currently has no work and also decided to withdraw the proposed final dividend of 7.25c per share.
Pat McCann, CEO of Dalata, said: ’This is an unprecedented situation, and we are working hard to mitigate the implications for our business. Our primary focus is on protecting our people, protecting our business and protecting our cash. We are looking to share the impact of the current crisis fairly between all stakeholders.’
Dalata’s portfolio consists of 30 owned hotels, 11 leased hotels and three management contracts with a total of 9,211 bedrooms. In addition to this, the group is currently developing 11 new hotels and has plans to extend two of its existing hotels, with a total of 2,871 bedrooms due to open over the next three years.
