DAVY VIEW

Dalata issued a full year trading statement this morning. Given Omicron-related restrictions were still in place in the early part of the year, the group has had a remarkable recovery. Like-for-like (LFL) RevPAR for September to November was 21% ahead of 2019 levels, and FY22 revenue will reach an all-time high of >€500m. This run rate is encouraging as the group heads into FY23. FY22 EBITDA is expected to be ahead of our forecast. Management notes that it is cautiously optimistic on the outlook for 2023. Given the strong exit from FY22, the excellent performance of the new hotels (occupancy of 79%) and the number of hotel rooms taken out of the Irish market for emergency accommodation, we see upside to our FY23 forecasts at first glance. This is despite some additional labour inflation. With balance sheet optionality; strong management; a modern, well-invested estate; and good momentum, we believe the group is well placed to outperform.