easyHotel, the owner, developer and operator of super budget branded hotels, today issues the following trading update for the current financial year to date in advance of its Annual General Meeting to be held later today.
The strong trading experienced in the prior year across the Group’s owned and franchised hotel estates has continued, with the Group’s performance since the financial year ended 30 September 2017 in line with the Board’s expectations.
The Group’s owned hotels have continued to significantly outperform both their competitive set and the wider UK hotel market.
The period saw the opening of a new owned 78 room hotel in Liverpool, and the acquisition and opening of a 104-room hotel in Newcastle. Both hotels are trading in line with the strong performance of the hotels opened during the last financial year.
The Group’s franchised hotels have also continued to trade strongly, particularly in Continental Europe.
Owned Hotel Refurbishment
A £1.5m refurbishment of the hotels in Croydon and Glasgow is now well underway to bring them into line with the updated brand look. The Group expects the refurbishment to be revenue enhancing during the current financial year.
As previously announced the Board plans to retain a 92-room hotel at Old Street, refurbishing the hotel in line with our new brand format. Planning permission is being sought to add an additional floor to the building and increase the Net Internal Area of the building, for use as office accommodation, which should maximise value from this freehold property.
Owned Hotel Development Pipeline
In October 2017 the Group acquired a freehold site in central Cardiff for the development of a 120- room hotel, subject to planning permission. The hotel is anticipated to open in 2019.
On 26 January 2018 the Group announced the conditional acquisition of a 125-year leasehold of part of Norfolk House on Silbury Boulevard, a central site in Milton Keynes. The Group intends to convert its part of the building into a 124-bedroom hotel, which is expected to open by mid-2019.
Other new hotels projects currently under construction include Leeds (93 rooms), Sheffield (131 rooms), Ipswich (89 rooms) and Barcelona (204 rooms) which are all expected to open in 2018.
Franchised Hotel Development Pipeline
In November 2017 the Group announced a further two franchised hotels (162 rooms) under development in The Hague and Maastricht, scheduled to open in the second half of 2018.
Other new franchise hotel projects currently under construction include Lisbon (101 rooms), Bernkastel-Kues (100 room hotel), Belfast (81 rooms), Reading (54 rooms) and Bur Dubai (300 rooms) which are all planned to open in 2018.
The Group also has hotels under development in Istanbul (300 rooms), Iran (500 rooms) and Sri Lanka (200 rooms) for beyond 2018 which will, on completion, enhance its position as the super budget hotel brand of scale in the UK and Middle East.
Commenting, Guy Parsons, CEO of easyHotel plc, said:
“We have been pleased with the Group’s performance to date in the new financial year, reflecting the growing strength of the easyHotel brand. The like-for-like revenue growth trends across both our owned and franchised estates in the prior financial year have continued. Whilst we are very mindful of the wider UK macro-economic uncertainty and the impact this continues have on consumer confidence, we are encouraged by the strong outperformance of our hotels, both in the UK and overseas.
“easyHotel has a committed pipeline of 941 owned rooms under development which will make a significant contribution to system sales, revenue and adjusted EBITDA going forward. The latest addition of Milton Keynes to our committed pipeline completes the deployment of funds from our 2016 equity fundraising and bank loan.
“As previously highlighted, we continue to see a good number of attractive potential development opportunities to further accelerate the growth of our owned hotels. These are both larger and more numerous than we had originally anticipated. It is for this reason that we are currently considering our long-term financing options, including raising new debt and equity capital, to position the Group to take advantage of these opportunities and underpin easyHotel’s long term objective to be the market leader in super-budget sleep.”