Overview Financial Performance. Business Review. Growth Strategy. Appendices. Page 3

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June Hampton
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1 Dalata Hotel Group April 2017 ISE: DHG LSE: DAL

2 Disclaimer The presentation contains forward looking statements. These statements have been made by the Directors in good faith based on the information available to them up to the time of their approval of this presentation. Due to inherent uncertainties, including both economic and business risk factors underlying such forward looking information, actual results may differ materially from those expressed or implied by these forward looking statements. The Directors undertake no obligation to update any forward looking statements contained in this presentation, whether as a result of new information, future events or otherwise. Page 2

3 Contents Overview 2016 Financial Performance Business Review Growth Strategy Appendices Page 3

4 Key Messages Very strong operational performance in 2016 Outperformed competition in terms of RevPAR growth Converted additional sales very strongly to the bottom line Strong performance is delivered by the Dalata business model Decentralised approach Importance of developing our own people Targeted refurbishment programme Significant pipeline of over 1,200 rooms on target to open in 2018 Very exciting growth opportunity in the UK supported by a strong balance sheet Page 4

5 Dalata 3 Core Business Segments Dublin 14 Hotels 3,699 Rooms 2016 RevPar: 91.83(+20%) 52% Group Revenue 56% Segment EBITDA 48% EBITDAR Margin Regional Ireland 12 Hotels 1,637 Rooms 2016 RevPar: 63.68(+12%) 24% Group Revenue 17% Segment EBITDA 26% EBITDAR Margin UK 8 Hotels 1,768 Rooms 2016 RevPar: 59.70(+4%) 23% Group Revenue 24% Segment EBITDA 39% EBITDAR Margin Management Fees 1% Group Revenue 3% Segment EBITDA Page 5

6 2016 Financial Performance ISE: DHG LSE: DAL

Dalata Driving Sustained Strong Performance in 2016 100 90 80 RevPAR Revenue Adjusted EBITDA Adjusted Diluted EPS m m 120 0.50 340 0.

7 Dalata Driving Sustained Strong Performance in RevPAR Revenue Adjusted EBITDA Adjusted Diluted EPS m m % +29% % +7% EPS Page 7

8 Dalata Adjusted EBITDA Bridge m Strong conversion of additional revenue on a like for like basis to EBITDAR across all three regions: Dublin 78.2% Regional Ireland 73.3% UK 73.8% Overall Segment EBITDAR % increases from 39.5% to 41.4% as a result Page 8

9 Dalata RevPAR Outperformance in % 19.1% 16.1% 16.4% 13.3% 13.3% 11.2% 10.7% 8.7% 9.1% 5.8% 5.7% 3.7% -1.1% -0.9% Dublin Galway Limerick Cork Leeds Manchester Cardiff London Dalata Market Strong performance versus market in Dublin, Galway, Limerickand Regional UK cities In line with market in Cork because of impact of significant refurbishment works at Clayton Hotel Silver Springs London negatively impacted by refurbishment in first half of year at Clayton Hotel Chiswick -3.1% Page 9

10 Dalata Strong Balance Sheet providing covenant for growth M 31 Dec 2016 Non-current assets 31 Dec 2015 Tangible fixed assets Goodwill and intangibles Other Current assets Trade receivables, inventory and other Cash Total assets Equity Bank loans Trade and other payables Non current liabilities Total equity and liabilities Increase in tangible assets reflects: 133.2m in acquisitions during the year 66.6m net revaluation gain 28.5m capex on existinghotels and new developments Counterbalanced by 15.5m depreciation and 33.3m translation adjustment due to fall in sterling Goodwill and intangibles up by 7.5m following acquisition of the Gibson Hotel leasehold ( 20.5m) offset by goodwill impairment ( 10.3m) following revaluation uplifts and translation adjustments of 2.7m 174.4m ( 203.6m) of borrowings in sterling as a natural hedge against value of sterling assets and sterling denominated earnings. Undrawn facilities of 52.2m at year end Increase in Net Debt to Adjusted EBITDA to 2.40x from 1.63x due to development and acquisition activity. Will increase until mid-2018 when development pipeline is completed. Target to remain at 3.5x or below Objective is to maintain a strong balance sheet with appropriate level of gearing, leading to a strong covenant for potential landlords/investors Page 10

11 Overview of Hotel Markets ISE: DHG LSE: DAL

12 Dalata Market Review Dublin Savills forecast net additional 3,680 rooms by , , Dublin 2015 Actual 2016 Actual 2017 F cast 2018 F cast Occupancy 82.1% 82.5% 83.0% 83.8% ARR RevPAR RevPAR % Variance 22.9% 16.1% 7.6% 7.4% Sources: 2015 & 2016 Actuals per STR Global; 2017 & 2018 PwC Econometric Forecasts Total market size of circa 19,000 rooms Significant number of rooms expected to open towards the end of 2018 New rooms predicted for 2019 subject to doubt due to two primary reasons planning and funding Demand remains strong due to continued economic growth and increased visitor numbers 6.5% RevPAR growth in Q Page 12

13 Dalata Market Review Regional Ireland and UK Continuing strong demand from FTIs, domestic corporate and domestic leisure customers No increases in supply and very little supply pipeline Strong start to 2017 for all three cities Galway impacted by timing of Easter RevPar Growth Q Cork 9.6% 13.3% 8.4% Galway 13.3% 10.7% 3.7% Limerick 23.4% 16.4% 11.6% Source: Trending.ie London had very difficult first half 2016 due to combination of impact of European terrorist attacks and increased supply. City ended 2016 stronger and also very strong start to 2017 Belfast had very strong second half, helped by reopening of Waterfront Conference Centre. That has carried into Q Cardiff impacted by having Rugby World Cup in 2015 Manchester and Leeds continue to perform strongly RevPar Growth Q London 1.2% -0.9% 11.3% Manchester 7.5% 5.7% 2.1% Cardiff 14.2% -1.1% 4.2% Leeds 8.1% 3.7% 1.8% Belfast 11.9% 9.0% 24.5% Source: STR Global Page 13

14 Business Review

15 Building a Leading Hotel Owner/ Operator Leading hotel owner and operator in Ireland & UK with 34 leased/owned hotels 24 owned, 10 leased and 7 managed hotels under two core brands Proven, experienced management team with a strong decentralised structure New platform with best-in-class operating systems and processes Strong balance sheet covenant established for next phase of growth Number Owned & Leased Rooms and Hotels 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, Room numbers Number of hotels Page 15

16 Dalata The Difference with Dalata Our decentralised operational approach Dalata s decentralised structure is core to our management philosophy Hotel General Managers are critical players we continually develop them A strong multi-functional team at the centre setting direction, seeking growth opportunities, supporting the hotels, and reporting to our stakeholders We grow our own training and development a major focus as there is a need to have a strong pipeline of key people coming through Having people we know taking up key roles de-risks our business We focus on what we are good at Operating 3 star and 4 star modern well-maintained hotels in cities with strong mix of corporate and leisure demand Executing transactions to grow our owned and leased portfolio Identifyingstrong locations and developing new hotels on them Decentralised revenue management -our revenue managers are informed by systems but always make the decisions themselves Investingin systems to support our approach to cost control Owner/Operator Model Control of our brand standards Security of tenure allows us to build a central team to effectively support and scale our decentralised structure Page 16

17 Difference with Dalata at Clayton Dublin Airport Currently 469 rooms Installed Dalata General Manager who in turn built up a new team Refurbishment of 160 rooms Revenue has increased by 37% in 2 years EBITDAR up 65% in same period Customer satisfaction ratings continue to improve Rebranded to Clayton, reclassified to 4 star Introduced Dalata revenue management approach Increased level of owned business from 14% to 32% in 3 years Renegotiated price levels on unprofitable Tour Group business. Brought an intensity to maximizing revenue every day Introduction of Alkimii Team system has helped control payroll cost payroll cost % down from 26.3% in 2014 to 22.4% in 2016 KPIs Occupancy 82.7% 87.7% Average Room Rate ( ) RevPAR ( ) Total Revenue 16,524 22,636 EBITDAR 6,829 11,270 EBITDAR % 41.3% 49.8% Construction commences in May on a 140 bedroom extension at cost of 15m which is projected to deliver additional 2m in EBITDAR Page 17

18 Drive Portfolio Growth Over 1,200 new rooms by end 2018 Dublin 2 New Hotels 3 Extensions 543 rooms Property New Extension Rooms Planning Construction Completion Lodged Granted Started Clayton Hotel Charlemont x 180 x x Q Maldron Hotel Kevin Street x 138 x x Mid 2018 Clayton Hotel Ballsbridge x 30 x Mid 2018 Clayton Hotel Dublin Airport x 140 x Q Maldron Hotel Parnell Square x 55 x Q Regional Ireland 1 New Hotel 1 Extension 197 Rooms Property New Extension Rooms Planning Construction Completion Maldron Hotel Beasley Street, Cork Maldron Hotel Sandy Road, Galway Lodged Granted Started x 150 x Q x 47 x x Mid 2018 UK 1 New Hotel 1 New leased Hotel 501 Rooms Property New Extension Rooms Planning Construction Completion Lodged Granted Started Maldron Hotel Brunswick Street, Belfast x 237 x x Q Maldron Hotel, Newcastle* x 264 x x Q *35 year operating lease Page 18

19 Growth Strategy

20 Evolving Strategy Building a portfolio within the Ireland recovery story Identified and exploited cyclical opportunity to acquire hotel assets under replacement cost Invested over 1Bn in acquiring almost 7,000 rooms across Ireland and UK Significant capital refurbishment programme commenced from mid 2014 Built out central management function Maturing into a large hotel company focused on exploiting new growth opportunities Operational excellence through revenue maximisation and driving cost efficiencies +1,200 new bedrooms by end 2018 Maintain Net Debt/EBITDA at or below 3.5x Seek to buy out remaining freeholds of leased assets with open market rent reviews Infill acquisitions in Ireland and targeted leasehold growth in the UK Consolidation phase largely completed Already well underway Page 20

21 Drive Portfolio Growth UK Strategy Become one of the largest hotel operators in the UK through leases and ownership Senior team has extensive experience of rolling out a new brand (Jurys Inn) in the UK: Acquisitions team sourced, financed and developed over 15 new hotels Operations team opened and operated over 20 hotels Opportunity exists in the upper 3 star and 4 star markets in large provincial UK cities: Market is fragmented - only Hilton and Holiday Inn have any significant presence Major brands have moved away from owned/leased to managed and increasingly franchise model can lead to dilution of brand standards Dalata is one of the few hotel operators in the 3 and 4 star markets that has a significant central office management structure to operate a large portfolio of hotels We believe space exists for a fresh new offering Carefully assess opportunities to grow Maldron and Clayton brands Focus on strong locations in the larger cities Strength of location is more important than speed of rollout Page 21

22 Drive Portfolio Growth Ireland Ireland: Portfolio Objectives Complete existing development pipeline of 740 rooms Reach the optimum market share in each of the key urban centres including Dublin, Cork, Limerick and Galway Seek to purchase freehold interests of leased assets with open market review clauses Continue to review existing hotels in portfolio to assess long term suitability Page 22

23 Appendix ISE: DHG LSE: DAL

24 Dalata Strong Full Year Performance Increase in ARR drives 14.9% RevPAR growth Strong conversion of incremental sales leads to segments EBITDAR margin increasing from 39.5% to 41.4% Rent increased due to new leasehold assets and increases in performance rents. Counterbalanced by closure of Clyde Court and purchase of freeholds of previously leased hotels Continued investment in central team reflected in central overheads Other costs include acquisitions related costs & goodwill impairment of 10.3m following upward revaluation of assets Significant increase in depreciation due to acquisition of new hotels and capital refurbishment programme Net finance costs includes exchange losses on sterling balances KPIs Occupancy 82.1% 80.2% Average Room Rate ( ) RevPAR ( ) Key Financials Revenue 290, ,673 Segments EBITDAR 120,308 89,253 Rent (25,453) (19,167) Segments EBITDA 94,855 70,086 Central overheads (10,360) (8,068) Other income / costs (13,411) (15,022) EBITDA 71,084 46,996 Depreciation (15,477) (10,039) Net finance costs (11,496) (8,500) Profit before tax 44,111 28,457 Profit after tax 34,923 21,626 EPS ( ) Adjusted EBITDA 85,132 62,626 Adjusted diluted EPS ( ) Page 24

25 Dublin Full Year Performance Another very strong year for Dublin hotel market with RevPAR up 16.1%. Very limited new supply until late Demand driven by increased corporate demand and continued strength in leisure sector Net 680 rooms added in 2016 through Tara Towers (Jan), Gibson (Mar) and Clayton Hotel Burlington Road (Nov), and Clyde Court closed down end 2015 Outperformed market with RevPAR up 19.9% Food and beverage sales up 1% for the year on a like for like basis (excluding Clyde Court and hotels acquired during 2016) Rent up as a result of addition of Gibson and Clayton Burlington Rd hotels and increased performance rents at Ballsbridge and Maldron Dublin Airport hotels, counterbalanced by closure of Clyde Court Hotel EBITDAR margin up to 48% due to 78.2 % conversion of additional sales to EBITDAR on a like for like basis All figures Revenue Rooms 107,370 82,611 Food and beverage 35,392 30,391 Other 9,183 7,757 Total revenue 151, ,759 EBITDAR 72,992 53,754 Rent (19,520) (14,492) EBITDA 53,472 39,262 EBITDAR % 48.0% 44.5% KPIs Occupancy 85.7% 83.1% Average Room Rate ( ) RevPAR ( ) KPIs include performance of all acquisitions (except Clayton Hotel Burlington Road) for entire of 2016 and 2015 Page 25

26 Regional Ireland Full Year Performance Continuing strong demand from FDIs, domestic corporate and domestic leisure customers with no increases in supply and very little supply pipeline 518 rooms added to portfolio through Clayton Hotel Cork City, Clayton Hotel Limerick and Clayton Hotel Sligo in March RevPAR up 11.7% Food and beverage up 3% for the year on a like-forlike basis (excludinghotels acquired during the year) Significant increase in EBITDAR margin to 26.5% due to 73.3% conversion of incremental revenue on like for like basis and addition of Clayton Cork City which has higher margins on back of very strong RevPAR All figures Revenue Rooms 36,100 20,753 Food and beverage 25,174 17,694 Other 7,193 4,542 Total revenue 68,467 42,989 EBITDAR 18,170 9,695 Rent (1,939) (1,961) EBITDA 16,231 7,734 EBITDAR % 26.5% 22.6% KPIs Occupancy 74.0% 72.2% Average Room Rate ( ) RevPAR ( ) KPIs include full year performance of all Regional Ireland hotels regardless of when acquired. Page 26

27 UK Full Year Performance London had very difficult first half due to combination of impact of European terrorist attacks and increased supply. City ended 2016 stronger and also strong start to 2017 Belfast had very strong second half, helped by reopening of Waterfront Conference Centre. Cardiff impacted by having Rugby World Cup in 2015 while Manchester and Leeds continue to perform well Croydon Park leasehold was acquired in March 2016 leading to an increase in rent RevPAR increased by 4.4% across the 8 hotels Food and beverage sales increased by 2.7% (excluding Croydon Park Hotel) Converted 73.8% of additional sales to EBITDAR line on a like for like basis All figures Revenue Rooms 37,866 28,931 Food and beverage 13,440 10,412 Other 4,176 2,813 Total revenue 55,482 42,156 EBITDAR 21,883 16,068 Rent (3,274) (1,967) EBITDA 18,609 14,101 EBITDAR % 39.4% 38.1% KPIs Occupancy 81.4% 81.3% Average Room Rate ( ) RevPAR ( ) KPIs include full year performance of all UK hotels regardless of when acquired. Page 27

28 Dalata Strong Cashflow to Fund Pipeline & Further Growth Illustration of what the business can generate in cash to fund debt repayment, acquisitions, development activityetc. Maintenance capex averages 4% of turnover Development capital expenditure is excluded as it either relates to new build hotels, extensions, redevelopment or items identified on acquisition required to bring hotels to brand standard Cash conversion is higher in 2015 due to reduction in working capital resulting from more significant acquisition activity in 2015 compared to 2016 All figures Adjusted EBITDA Net cash from operating activities Adjusting cash items Interest on bank loans (excluding fees) (8.7) (9.3) Maintenance Capital Expenditure (11.6) (9.0) Cash generated to fund debt repayment, acquisitions and development activity Cash conversion 72% 80% 1 Stock exchange listing costs of 1.3m, acquisition costs of 2.7m (2015: 15.8m), Ballsbridge site sale 1.9m in 2015 Page 28

29 Dalata FX Effects Sterling exchange rate has significant impact on earnings Average exchange rate for 2016 was Average exchange rate for 2015 was EBITDA would been have 3.3m higher if 2015 average exchange rate had applied however, interest and depreciation would have been higher by 0.8m and 0.7m respectively Page 29

Drive Performance of Existing Assets Revenue maximisation priorities Growing the strength of our brands Continuous focus on improving revenue management Develop food and beverage offering with

30 Drive Performance of Existing Assets Revenue maximisation priorities Growing the strength of our brands Continuous focus on improving revenue management Develop food and beverage offering with rollout of Grain & Grill in Maldron hotels and Red Bean Roastery coffee offering in larger hotels Cost efficiency initiatives Target 75% conversion of incremental ARR to bottom line Use of Alkimii (bespoke system) to gain staffing efficiencies across the Group Upskilling of chefs on food margin management Maximise other revenue including rebranding of all leisure clubs to club vitae and installation of new technology to manage all larger car parks Enhance hotel websites and book direct offerings Implementation of central purchasing system in 2017 to drive economies of scale Focus on reduction of energy and maintenance costs across the Group Page 30

Driving Performance of Existing Assets Investment Over 14.75 million invested in 1,380 room refurbishments in 2015 and 2016 (nearly 20% of total rooms in two years) Forecast 7.

31 Driving Performance of Existing Assets Investment Over million invested in 1,380 room refurbishments in 2015 and 2016 (nearly 20% of total rooms in two years) Forecast 7.9 million in room refurbishments expected in 2017 Standardised room templates for Clayton and Maldron brands driving investment efficiencies Improved product contributing to higher ARR Rooms Refurbished Total ,640 2, FY Results Page 31

32 Strong, Complementary Brand Proposition Brand Proposition Bedrooms Hotels that provide a gateway to a great experience. Situated in unrivalled urban and rural locations perfect for visiting local attractions, attending an event, seeing a show. Service delivered with a smile and a fun attitude Go further at a Maldron Hotel Generally standard rooms, with family and executive rooms in some locations Collection of distinctive hotels each with its own sense of individuality and character providing a home away from home experience. Service delivered by staff who are warm, engaging, inquisitive and empathetic Your Stay, Your Way Standard, superior and executive rooms Food & Beverage Conference Facilities Target Customers Integrated bar and restaurant in some locations. Simple menus made from fresh quality produce Meeting room facilities Both leisure and corporate with main focus on leisure guests and family Modern bar, restaurant and coffee dock. Food and beverage offering based on local influences and freshly sourced premium ingredients Extensive choice of modern meeting rooms and events facilities Focus on corporate and conference midweek. Leisure, functions and weddings at weekend Page 32

33 Dalata Portfolio Owned Hotels / Freehold Equivalent Hotel Rooms Clayton Hotel Dublin Airport 469 Clayton Hotel Ballsbridge, Dublin 304 Clayton Hotel Leopardstown, Dublin 354 Clayton Hotel Cardiff, Wales 216 Clayton Hotel Galway 195 Clayton Whites Hotel, Wexford 157 Clayton Hotel Silver Springs, Cork 109 Clayton Hotel Chiswick, London 227 Clayton Crown Hotel, London 152 Clayton Hotel Leeds 334 Clayton Hotel Belfast 170 Clayton Hotel Manchester Airport 365 Clayton Hotel Cork City (1) 198 Clayton Hotel Limerick 158 Clayton Hotel Sligo 162 Maldron Hotel Parnell Square, Dublin 129 Maldron Hotel Pearse Street, Dublin 115 Maldron Hotel Newlands Cross, Dublin 297 Maldron Hotel Cork 101 Maldron Hotel Limerick 142 Maldron Hotel Sandy Road, Galway 104 Maldron Hotel Wexford 108 Maldron Hotel Derry 93 Tara Towers Hotel, Dublin 111 Total 4,770 (1) Dalata own 191 rooms & lease 7 apartments (2) Dalata lease 281 rooms & own 23 rooms Lease Agreements Hotel Rooms Clayton Hotel Burlington Road, Dublin 502 Clayton Hotel Cardiff Lane, Dublin (2) 304 The Gibson Hotel, Dublin 252 Croydon Park Hotel, London 211 Maldron Hotel Smithfield, Dublin 92 Maldron Hotel Tallaght, Dublin 119 Maldron Hotel Galway (Oranmore) 113 Maldron Hotel Portlaoise 90 Maldron Hotel Dublin Airport 251 Ballsbridge Hotel, Dublin 400 Total 2,334 Management Contracts Hotel Rooms With Receivers 352 Clarion Liffey Valley Hotel 352 Directly with Owners 557 Cavan Crystal Hotel, Co. Cavan 85 Maldron Hotel Belfast 103 The Belvedere Hotel, Dublin 101 Fitzwilton Hotel, Co. Waterford 90 Aghadoe Heights Hotel & Spa, Co Kerry 74 Shearwater Hotel, Ballinasloe, Co. Galway 104 Total 909 Summary by Hotel Category Hotels Rooms Owned 24 4,770 Leased 10 2,334 Mgmt Agreement Receivers Mgmt Agreement Owners Total 41 8,013 Page 33

Dalata Hotel Group January 2018 ISE: DHG LSE: DAL

Dalata Hotel Group January 2018 ISE: DHG LSE: DAL Disclaimer The presentation contains forward looking statements. These statements have been made by the Directors in good faith based on the information