EasyHotel's expansion boosts revenue but dents profit

"Super-budget" hotel brand EasyHotel's rapid expansion has pushed revenue up nearly 40% to £8.4m in 2017, although pre-tax profits dropped 21% as the firm raided its coffers for cash.

The business, run by former Travelodge chief executive Guy Parsons, has six owned hotels in UK cities with 598 rooms, and a further 20 franchised hotels across Europe, the UK and the United Arab Emirates.

The company unveiled total system sales, which included its franchised operations, of just under £30m for the year to 30 September 2017, while company adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) increase by 48% to £2.3m.

However, pre-tax profit dipped by 21% to £860,000, which the company blamed on the increasing costs associated with its expanding development pipeline, the negative impact of the closure of two floors of EasyHotel in Old Street, and the absence of any capital gains from disposals.

EasyHotel boasted that its own hotels "significantly outperformed" its competitive set, with like-for-like revenues up 13.7%. Like-for-like franchise revenues were up 8.6%.

Three new owned hotels in Leeds, Sheffield and Oxford were secured over the year, with 404 owned rooms and 835 franchised rooms added to the development pipeline, which now stands at 921 owned rooms and 1,798 franchised rooms in total.

Parsons said: "2017 has been a year of strong progress for the group as we continue to develop the EasyHotel brand as a market leader in ‘super-budget' sleep. Impressive like-for-like sales growth has been achieved across our existing network of hotels, underpinned by the smooth implementation of our new booking engine and yield management system across the entire EasyHotel network.

"We continue to accelerate our growth plans for the brand, targeting carefully selected locations to build our portfolio of owned and franchised hotels and applying strict investment criteria, ensuring we can continue to deliver a blended return on capital employed [ROCE] target of 15%. Five new hotels were opened over the course of the year, with EasyHotel Liverpool opened since the year end. All have traded strongly since opening and we have been delighted with the positive customer reaction to our stylish new brand format."

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