The Board of easyHotel plc, the owner, developer and operator of “super budget” hotels, today announces the conclusion of a comprehensive review of options, including the sale or partial sale of the building, for its Old Street hotel which it announced on 30 March 2017.
Following a pre-application meeting with Islington Borough Council on 8 June 2017 to discuss a potential extension to the upper floors of the building (3rd – 5th floors, the hotel is on the lower floors) the Council has indicated that it has no objections in principle, subject to conditions, to an extension to the building for offices. The Board, having taken specialist advice, believes that restoring and extending office use on the upper floors should maximise value from the property. The Group will, therefore, be retaining a smaller 92-bedroom hotel and applying for planning permission to add additional floors to the building, for use as office accommodation. The Group will close the third and fourth floors of the hotel, removing those rooms from inventory from 3 October 2017.
The Group further intends to refurbish the 92-bedroom hotel, to complement the ‘new look’ format hotels it has recently opened in Birmingham and Manchester. This is anticipated to improve Revpar in the hotel, and combined with the additional office space, is expected to drive shareholder value from the site. The refurbishment of the hotel is likely to result in a short term adverse impact to earnings as the works are carried out.
The existing (larger 162-bedroom) Old Street hotel made an EBITDA contribution of approximately £1.7m (before the allocation of central overheads) in the Group’s last financial year ended 30 September 2016.
Commenting, Guy Parsons, Chief Executive of easyHotel plc said:
“After undertaking extensive due diligence and considering all the options available to it, the Board considers the retention of the 92-bedroom hotel, together with an extension to the upper floors for additional office accommodation, to be the best outcome for shareholders.
“We have been delighted with the performance of our newly opened hotels in Birmingham and Manchester, which are trading strongly, and the refurbishment of Old Street will enable us to improve Revpar in the hotel. The Group will submit a full planning application for an extension to the building in due course.”