Bright outlook for owner of 'premium' hostels in Edinburgh and Glasgow

Safestay, the hostel operator with sites in Edinburgh and Glasgow, said its forward bookings were “very encouraging” as it provided an upbeat outlook for the year ahead.

One of the rooms in the Safestay Edinburgh hostel. Picture: Contributed

The stock market-listed firm said total revenues had grown by 25 per cent during 2019, to £18.3 million, with like-for-like revenues up by 7 per cent.

Underlying earnings before interest, tax, depreciation and amortisation (Ebitda) jumped 11 per cent, year-on-year, to £3.8m.

Occupancy rates topped 77.3 per cent during the period, up from 75.6 per cent, “reflecting good demand”, Safestay noted. There was also a 5 per cent increase in the average bed rate, to £21.30.

Part of the large Edinburgh hostel which offers more than 600 beds. Picture: Contributed

During 2019, the fast-growing group completed six transactions, adding eight hostels and increasing its portfolio to 21 sites and in excess of 5,100 beds.

Chairman Larry Lipman said, “In 2019 we near doubled the size of the Safestay network. In doing so, the Safestay brand has become Europe’s leading premium hostel network totalling 21 sites, all in sought-after central locations in the UK and Europe’s best known cities.

“The brand is now well established and positioned to sell over a million bed nights in 2020 in unique hostels ranging from Edinburgh to Athens.”

He added: “Trading in 2019 was good, all key indicators were strongly positive, in particular the organic growth performance, and critically we have yet to really benefit from the recent acquisitions agreed towards the end of the year.

“Safestay is therefore well placed to grow substantially in 2020 and take advantage of the increasing popularity of the modern hostel sector.”

Flagship

The group currently has five sites in the UK, with its flagship Edinburgh hostel by far the biggest, offering 618 beds.

Last September, the firm increased its presence in Scotland after agreeing a multi-million-pound acquisition of a Glasgow hotel. The site had been operating as Best Western Glasgow City Hotel and will offer 200 beds following its conversion to a Safestay hostel.

Looking ahead, the group told investors: “The financial performance and the investment made in 2019 has created real momentum going into 2020.

“While still very early in the year, performance in the first month of 2020 and forward bookings for [the first quarter] are very encouraging, a positive signal for the coming year, which will also benefit from the acquisitions made last year.”

During 2019, food and beverage, previously identified as a key growth opportunity for the company, was up 43 per cent and supported by the refurbishment of three restaurants – in Edinburgh, Barcelona and the Elephant & Castle in London.