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EasyHotel highlights solid progress in extensive trading update
Super-budget hotel owner, developer and operator easyHotel updated the market on its trading for the six months ended 31 March on Wednesday, reporting that it had continued to "significantly outperform" the budget market over the course of the period.
The AIM-traded company said total system sales were up 33.6% to £16.10m, with revenue per available room (RevPAR) at owned hotels ahead 11.2% to £36.60.
Owned hotels RevPAR outperformed its competitive set by 11.7%, the board claimed, citing data from STR Global.
Like-for-like revenue for franchised hotels increased by 13.5%.
"This strong performance reflects the continued impact of easyHotel's new booking engine and yield management systems, the growing strength of the easyHotel brand and continued expansion of the network of hotels in key UK and European destinations," the company's board explained in its statement.
The period saw the opening of a new owned 78-room hotel in Liverpool, and the acquisition and opening of a 104-room leased hotel in Newcastle.
Both hotels traded strongly, in line with the performance trend of the hotels opened during the last financial year, easyHotel said.
The group also expanded its franchise portfolio with the opening of the 87-bedroom easyHotel The Hague, Scheveningen Beach in March 2018.
Those openings increased the group's footprint to 2,430 rooms across 27 hotels in 18 cities.
EasyHotel said the £1.5m refurbishment of its hotels in Croydon and Glasgow was completed in March, bringing both hotels into line with the new easyHotel brand look.
As it had previously announced, the board planned to retain a 92-room hotel at Old Street, refurbishing it in line with the new brand format.
Planning permission was 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 the board said should maximise value from this freehold property.
On Wednesday, easyHotel also announced that it agreed to acquire the freehold of a central site in the city of Chester for the development of a new-build 109-bedroom hotel.
The acquisition was subject to planning permission.
Located on Forest Street, the site was said to be "ideally situated" 500 meters from Chester railway station and close to the centre of the historic walled city.
A popular tourist destination, Chester was well known for its well-preserved Roman forts, walls and amphitheatre with a number of major leisure attractions nearby including Chester Zoo, Chester Racecourse, Chester Castle and Tatton Park.
The city was also a busy shopping destination with a "thriving" business park, well-known as a specialist hub for financial services and biotech businesses.
EasyHotel said the brownfield site would be developed into a purpose-built hotel that was expected to open in 2019.
The hotel was being delivered to easyHotel as a turnkey development, and the total expected cost for acquisition and construction was approximately £7m.
Since 1 October last year, the group said it had added a further 453 rooms to its owned hotel development pipeline with plans for new hotels in Cardiff, Milton Keynes, Cambridge and Chester.
All four hotels were anticipated to open in 2019.
Other new hotel projects currently under construction included Leeds at 93 rooms, Sheffield at 131 rooms, Ipswich at 89 rooms, and Barcelona at 204 rooms, which were all expected to open in the current calendar year.
In November last year the group announced a further two franchised hotels for a total of 162 rooms, currently under development in The Hague, Scheveningen Beach, which opened in March, and Maastricht, scheduled to open in the second half of 2018.
In March, the group also announced that it had signed an agreement for the development of a 146-room hotel in Malaga, Spain.
Other new franchise hotels currently under construction included Lisbon at 101 rooms, Bernkastel-Kues at 100 rooms, Belfast at 81 rooms, Reading at 54 rooms, and Bur Dubai at 300 rooms, which were all planned to open in the current calendar year as well.
The group said it also had hotels under development in Istanbul at 300 rooms, Iran at 500 rooms, and Sri Lanka at 200 rooms beyond 2018 which would, on completion, enhance its position as a super budget hotel brand of scale in the UK, Europe and Middle East.
On 22 February, the group announced a placing of new ordinary shares to raise £50m before expenses.
The company said the proceeds of the placing would primarily be used to fund the acceleration of the group's owned hotel development pipeline.
Since completion of the placing, the group had already announced the acquisition of a 100-bedroom leased hotel in Cambridge and a 109-bedroom owned hotel in Chester - its first two sites to be funded by the proceeds.
"easyHotel has traded strongly over the first half of the financial year, outperforming the wider market in both our owned and franchised hotels," said chief executive Guy Parsons.
"We are mindful that consumers in the UK will continue to be cautious, given the wider macro-economic and political uncertainty, but believe our super budget offer positions us well, as consumers become increasingly discerning and value conscious."
Parsons also said the company was continuing to make "good progress" with its growth strategy.
The Chester transaction marked the firm's second investment following the successful fundraising announced in February 2018, taking the pipeline of owned and leased development projects to 1,150 rooms, in addition to the 1,857 franchise rooms currently under development.
"The proceeds from our successful fundraising will enable us to accelerate our growth and take advantage of the significant opportunities within our markets, creating shareholder value and underpinning the long-term growth of the easyHotel brand."