25th Mar 2020 12:50
(Alliance News) - Irish hotel operator Dalata Hotel Group PLC on Wednesday predicted a 16% slump in revenue for the quarter ended March 31 due to a "material acceleration in the rate of contraction across Europe".
The company expects reduction in demand to continue for as long as the current government restrictions on movement and travel remain.
Dalata has decided to temporarily close several of its hotels in Ireland and the UK over the coming days and has decided to significantly reduce operating capacity at its remaining hotels, as per UK and Irish government guidelines.
In order to conserve cash, the company has implement several cost reduction measures including
suspending final dividend of 7.25 Euro cents per share, temporarily laying off a large number staff who have no work and reducing working hours for some employees as well as progressively cutting basic salary for those whose hours have not been reduced.
Dalata also has delayed uncommitted development capital expenditure and non-essential maintenance capital expenditure for 2020 to free up additional cash resources of EUR60 million.
Total capital expenditure for the remainder of 2020 is estimated to total a maximum of EUR35 million. The company hopes to reduce its capital expenditure f urtehr if development projects are delayed due to the impact of restrictions surrounding the Covid-19 outbreak.
Dalata has significant financial headroom with material cash resources of EUR80 million post disbursement of quarterly rent and interest scheduled to be paid over the next few days. In addition, Dalata has access to further undrawn committed debt facilities of EUR65 million.
Pat McCann, chief executive officer of Dalata, said: "All our people will suffer income loss through either layoffs, reduced working hours or salary cuts. Likewise, our Board is cutting its remuneration. We will be working with our other stakeholders to examine ways in which we can further protect our financial position in a fair and equitable manner".
Shares in Dalata were up 19% at 245.00 pence each in London on Wednesday afternoon.
By Tapan Panchal; [email protected]
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