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EasyHotel cautions on political and economic uncertainty

Ongoing political and economic uncertainty is set to impact demand for hotels in the UK over the next year.

The cautionary message came today from easyHotel as it identified continental Europe as a “significant opportunity” for growth.

EasyHotel’s ten owned hotels currently comprise 1,130 rooms. The company has a further 24 franchised hotels with 2,039 rooms.

The group sees potential for about 12,000 owned hotel rooms in the UK, Spain, France and Germany with an additional opportunity for around 15,000 franchised easyHotel rooms across the UK, Europe and the Middle East.

The company is targeted expansion in Europe with an initial focus on France, Spain and Germany after opening its first owned hotel on the continent in Barcelona in September.

Growth plans have been accelerated further following a £50 million share placing in March, including sites secured in Milton Keynes, Cardiff, Chester, Cambridge, Dublin, Blackpool and Bristol.

The company has capacity to finance up to nine additional new projects from a owned hotel development pipeline.

Chairman Jonathan Lane said: “Looking ahead, ongoing political and economic uncertainty is likely to affect hotel demand in the UK over the next 12 months.

“By contrast, the hotel market was much stronger across Europe during 2018 with revpar [revenue per available room] growth balanced between occupancy and rate, suggesting growth should continue into 2019, and beyond.

“The board remains confident that the easyHotel brand will continue to outperform the hotel sector as consumers seek out the best value for money.”

Pre-tax profit for the 12 months to September 30 was unchanged at £870,000 although adjusted earnings [ebitda] grew by 28.6% to £2.96 million in what was described as a “transformational year” for the ultra-budget chain.

Capacity grew by 42% year-on-year as nine new hotels opened, representing 907 rooms.

The company’s pre-tax figure was impacted by the loss of 70 rooms due to disruption at a property in Old Street in London and the closure of a 109-room franchise hotel in Earl’s Court.

Chief executive, Guy Parsons said: “Although we continue to sell a controlled number of rooms via online travel agents, we remain focused on driving bookings via our own website.

“As part of our focus on improving our customers’ journey we launched our new website in January 2018.

“Since then we have seen an average 10% increase in the conversion rate from customer visits to completed bookings.”

He described the past 12 months as being “transformational” for the group.

“We have increased our portfolio of rooms by 42%, in 27 cities across the UK, Continental Europe and the Middle East, making excellent progress towards our target of being the market leader in ‘super budget’ hotels,” Parsons said.

“Despite the wider macro-economic uncertainty that continues to impact consumer confidence, particularly in the UK, we have grown market share for the third consecutive year.

“The continued outperformance of our hotels reflects the growing strength of the easyHotel brand.

“Our simple, stylish but highly affordable offer resonates exceptionally well with today’s cost-conscious traveller, giving us confidence to continue developing owned hotels.”

He added: “We see a number of exciting opportunities for the brand, not only in the UK but increasingly in Europe where we have recently opened our first owned European hotel in Barcelona.

“We have added a further 1,160 rooms to our development pipeline over the course of the year and invested behind our team to expand our presence in Europe, where we believe there is significant opportunity for the brand, particularly in Spain, France and Germany.

“With funds available for future hotel development, we believe easyHotel is well positioned for long-term growth, and will continue to outperform its competitors.”

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