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Hostel operator Safestay has 'most successful year ever'
Safestay issued its final results for the year ended 31 December on Wednesday, reporting growth of 43% in total revenues to £10.5m, including acquisitions it made in 2017.
The AIM-traded firm said it saw 15% growth in UK revenues to £8.5m, which the board said showed "strong" underlying performance.
Adjusted EBITDA rose to £3.2m from £2.2m year-on-year, which was in line with market expectations.
The company reported a loss before tax of £0.87m, widening from £0.47m, which Safestay put down to to increased finance costs including on leasehold properties.
Reflecting its strong sales growth, like-for-like occupancy in the UK improved by 13.5 percentage points to 74%.
Safestay's UK average bed rate remained stable at £19.80, with scope for future increases in line with increased demand, according to the board.
The firm completed the refinancing of its Elephant & Castle and Edinburgh hostels during the year, raising £11.4m of gross cash proceeds.
It also agreed a new £18.4m, five-year secured debt facility with HSBC, to replace its existing bank loan and two convertible loans, significantly reducing its cost of borrowings.
On the operational front, the board said the number of beds sold increased to 444,480 from 297,276 in the prior year.
Safestay switched its focus on bed rate to a focus on bed profitability during the year, and successfully integrated five newly-acquired European properties in what it described as "key gateway city" destinations.
It received "leading guest scores" in the markets it operated in, which the board said was achieved by developing a strong traction with guests.
The company also made progress with its "well-advanced" capital expenditure programme, with key projects in Madrid, Barcelona, and Elephant & Castle that together would add a further 330 beds to the portfolio.
Safestay also significantly expanded its digital marketing capabilities.
Post year-end, the firm announced the acquisition of a third Hostel in Barcelona for 3m, increasing the number of beds in the city to 594 beds.
"Arguably this has been the most successful year for the company to date, beginning with the refinancing of the company which exemplified the embedded value in the business and providing the capital to support the threefold expansion of the portfolio," said Safestay chairman Larry Lipman.
"This activity came alongside a very strong trading performance from the group with like for like revenues up 15% driven by a particularly strong performance from our uniquely located and Grade 1 listed Holland Park Hostel."
Lipman said 2018 started well from a trading perspective, with the company continuing its portfolio expansion with the acquisition of a third hostel in Barcelona.
"We are looking forward to benefiting from a full year's contribution from the assets that we have acquired and completing the investment projects we have underway."