Hostel operator Safestay posts loss amid cost pressures

European hostel operator Safestay has revealed the increases to employers’ National Insurance will have an annual impact of £154,000 on the group.

Despite reporting record revenues of £23m in its latest results for the year ended 31 December 2024, the company posted a loss of £0.9m, down from £1.4m in 2023.

Over the past year, the group has committed to doubling the size of its portfolio over the medium term, which stood at 20 sites in the year-end, 17 of which were operational, with the remaining three in development.

It sold over 930,000 bed nights, driven by a strengthened occupancy rate of 75.2%.

Although average bed rates decreased by 10% to £21.43, the group was able to maintain total revenue per available bed at £18.58, slightly shy of £18.93 the previous year.

Safestay has also committed to exploring capital-light expansion through management and franchising, which it said represents “a significant opportunity for the business over the long-term”. The group signed its first management contract with a 120-bed hostel in Costa Blanca, Spain, last year.

At the beginning of 2025, the company also integrated hospitality management platform Cloudbeds into its operations to deliver operational and financial efficiencies.

It added the UK hospitality sector continues to face “a number of cost headwinds” from the National Living Wage, commodity price inflation, foreign exchange rate fluctuations and Brexit, while consumer confidence among Safestay’s core customers remained “under pressure”.

However, because 60% of its turnover is generated from its hostels in mainland Europe, the group was confident the spread of the business could support losses elsewhere.

Larry Lipman, chairman at Safestay, said: “The board remains excited about Safestay’s prospects, with several further expansion opportunities being appraised. We believe that Safestay has a highly relevant customer proposition in a growing market, and as such is well placed to deliver its medium-term ambitions of doubling the size of its portfolio.”

Last week, the hostel operator won a £1.4m Covid business interruption payout from its insurers.