Dalata will consider a potential sale as part of a strategic review being undertaken to "optimise capital opportunities for the group and to enhance value for shareholders."

The group, which has a portfolio of 55 hotels across its Clayton and Maldron brands, said that it faces structural challenges such as its small scale, its relative concentrated shareholder register, and constrained capital base in the context of its growth ambition.

Furthermore, Dalata believes its share price does not reflect its asset base, fundamentals, performance, cash generation, and exciting growth potential.

Shares in Dalata have risen 17.2% in Dublin trade since closing on Wednesday evening to €5.58 at time of writing.

The announcement comes as Dalata reports revenue (+7.3%) and adjusted earnings (+5.1%) growth for 2024.

Dalata has appointed Rothschild & Co. as its financial adviser to assist with a review of its strategic options.

As part of the review, Dalata will consider options including continuing with its existing strategy, taking further actions to improve shareholder value, returning further capital to shareholders, selling the entire issued share capital of the group, or undertaking some other form of merger or comparable corporate action.

John Hennessy, chairman of Dalata, said group leadership was unanimous in their view that availability of capital is key to achieving their strategic targets and that Dalata's share price does not reflect its underlying value.

"We believe that now is the right time to undertake a rigorous and formal strategic review, which will consider options to increase access to capital and also enhance shareholder value," he added.

Under its 2030 Vision strategy, Dalata wants to increase its number of hotel rooms by 80% to 21,000 rooms that are either operational or under construction by the end of the decade.

The group currently has fewer than 12,000 rooms.

"A thorough strategic review will enable us to assess available options to increase our access to capital and enhance shareholder value," said Dermot Crowley, CEO of Dalata.

"During the process, we will remain focused on the underlying business – continuing to take care of our people and continuing to meet the expectations of our customers.

"We have exciting initiatives in place to enhance further our revenues and deliver further productivity – our teams will remain focused on delivering on the objectives that we have set ourselves for 2025.”

Dalata's 2024 results show revenue increased year-on-year from €607.7m to €652.2m while adjusted EBITDA rose from €223.1m to €234.5m.

Profit after tax, however, declined 12.7% from €90.2m in 2024 to €78.7m last year, and earnings per share also declined, 12.1% on a basic basis (35.5c) and 3.1% on an adjusted basis (40.4c).

Revenue per available room, one of Dalata's key performance indicators, increased 1% like-for-like to €115.78 as average room rates rose 0.8% to €143.98 per night.

Occupancy was more or less static at 80.4%. The group had hotel assets of €1.7bn at the end of last year, and the group refinanced ahead of 2025, securing a €600m debt package.

Dalata expects revenue per available room to increase 2.5% in the first quarter of 2025, and the board has proposed a final dividend of 8.4c per share, amounting to €17.8m.

“Since 2021, Dalata has undergone a remarkable transformation. We have grown our portfolio by circa 35% through additions and new openings to almost 12,000 rooms, doubled our UK business, and successfully ventured into Continental Europe," said Crowley

"Our brands and marketing processes have been revolutionised, and sustainability is now deeply embedded in our operations. Both our people and customers report higher satisfaction than ever before."

He added: "Looking ahead, I am confident about Dalata’s prospects.

"We are a modern, international, outward-looking, and innovative hotel company.

"We have a clear strategy, underpinned by our 2030 Vision, and a team of exceptional people with an unwavering focus on delivering on our ambitious growth targets.”

Photo: The Clayton Chalemont Hotel. (Pic: Supplied)