Despite the ongoing political and economic uncertainty that is affecting consumer confidence, particularly in the UK, the Group has continued to outperform both its competitive set and the wider hotel market:
- Total system sales up 31%
- Revenue up 60%
- Owned hotels like-for-like Revpar* up 11.2%, outperforming their competitive set by 5.2%
We are now in our 4th year of market outperformance (as measured by STR) for our owned hotels. The Board however believe that that the 2019 financial year will be more challenging than 2018 and have taken the decision to continue to drive revenue growth and brand recognition, at the expense of gross margin, through increasing the use of online travel agents (OTAs) as compared with prior periods.
Our franchised hotels performed particularly well across the UK. However, results across the wider European market were more varied, and the easyHotels in Holland performed less strongly than they had in 2018.
New Hotel Openings
Our hotels opened during the last quarter of last year are trading well, exceeding our occupancy targets. Already in the period we have opened three new hotels; a new 89-bedroom owned hotel in Ipswich and two franchised hotels (201-bedrooms) in Lisbon and Bernkastel Kues.
Owned Hotel Development
The Group has continued to extend its pipeline during the period with new hotel developments added both in the UK and mainland Europe.
In October 2018 a freehold site in central Bristol was acquired for the development of a 145-bedroom easyHotel which, subject to planning permission, is expected to open in 2020.
In December 2018 the Group also confirmed that it had submitted a planning application for the development of a 209-room leased easyHotel, close to Paris-Charles de Gaulle Airport, France. The new-build hotel is anticipated to open in the 2020/21 financial year.
The £7m full refurbishment of the Group’s freehold property at 80 Old Street is also now underway. The building is expected to reopen as an 89-bedroom hotel in the second half of 2019 with 15,500 sq. ft of separate airconditioned office accommodation available for let.
The construction of the 124-bedroom easyHotel Milton Keynes is well advanced and the hotel will open later this financial year.
Other new owned hotels projects currently in development include Oxford (180 rooms) Cambridge (100 rooms), Chester (109 rooms), Cardiff (120 rooms), Dublin (130 rooms) and Blackpool (103 rooms). All are anticipated to open in the Group’s 2020/2021 financial year.
Franchised Hotel Development
The Group currently has a further seven franchised hotels currently under development including openings in 2019 in Malaga (146 rooms), Zurich (150 rooms, across more than one hotel), Basel (24 rooms) and Amsterdam Schiphol Airport (154 rooms) – all planned in 2019 – and Bur Dubai (300 rooms), which will open in 2020.
The Board have been delighted to welcome Gary Burton as Chief Financial Officer, during the period. This has allowed Marc Vieilledent to assume his new role as Group Development Director. The European development team, announced in July is now in place to take advantage of the growing opportunities in France and Spain, in particular.
Given the market and economic uncertainties, the Board has accelerated the decision to appoint an experienced Trading Director. Ian Coles has recently joined the business from Virgin Trains, having previously worked at British Airways. Ian will focus on maintaining the brand’s market outperformance and increasing the percentage of direct, rather than OTA, bookings.
The Group now has a very experienced Executive team in place to drive the agreed strategy and deliver long-term shareholder value. These additional senior appointments have contributed towards our increased central costs of £1.2m year on year with a total annualised cost of c£5m.
Commenting, Guy Parsons, CEO of easyHotel plc, said:
“Whilst we are not immune from the ongoing political and economic challenges and their impact on the hotel sector, our robust business model means that we have continued to outperform our markets in the period.
“These current uncertainties are presenting us with opportunities, which might not otherwise be possible, to acquire sites on good terms in central locations in our core target cities, such as Dublin, Bristol and Paris Charles de Gaulle.
“Well publicised uncertainties and frequent regulatory delays can postpone completion of our hotels and how quickly they reach maturity. However, we are making good progress with our strategic priorities and are confident that the appeal of easyHotel’s super budget brand will deliver long-term growth.”
* Like-for-like Revpar calculated for those hotels open 12 months or more during the period.