Judging by the strength of the Irish economy, it is easy to see why investors are keen to book into Jurys Hotel at the moment. Shares in the Dublin- based hotel operator jumped 27.5p to a new peak of 400p following a 26 per cent increase in turnover and a 36 per cent rise in pre-tax profit to IRpounds 10.76m (pounds 9.10m), comfortably above forecasts, for the six months to 31 October.
Now it plans an assault on the UK market, which is also going great guns at the moment. Its next hotel is due to open in fashionable Islington in May. A 190-bed conversion in Edinburgh is due to open this summer, and a proposed 250-bed development in Manchester is awaiting planning permission. When these are completed up to two-fifths of the business could come from the UK.
Turnover benefited from the buoyant hotel sector both sides of the Irish Sea and its rapid opening programme. Margins were fattened by an average 8 per cent rise in room rates on an occupancy rate marginally up on last year at 82 per cent. The figures also benefit from the strength of sterling, which added about pounds 300,000 in the half year and should continue to help profits.
Brokers in Dublin have revised full-year forecasts upwards from IRpounds 16.5m to around IRpounds 17.6m for the year to April followed by IRpounds 19.7m and in 1998- 99. That puts the shares on a prospective p/e ratio of 13 falling to 11. The hotel market is notoriously cyclical but does not look like running out of steam for some while.
Jurys is tightly held, with more than 60 per cent in the hands of the 10 largest holders, which often makes share price movements lumpy. However, the stock does not look expensive. Buy.