EasyHotel revenue is up, but profit is flat
EasyHotel increased its revenue by 33.7% this year to £11.3 million, but its pre-tax profit was up only 1.4% to £870,000.
The budget hotel chain said profit was impacted by ‘disruption’ at its Old Street hotel in London, where it lost 70 rooms after Islington Council refused to grant retrospective planning permission for an earlier extension, and the closure of a franchise hotel at Earl’s Court.
Nine new hotels opened in the year to the end of September, which the company said were ‘trading well’.
Another franchised hotel has opened in Lisbon since the end of the financial year, bringing the total portfolio to 34 hotels and 3,169 rooms across 28 cities.
Several more hotels are in the pipeline and the chain has secured sites in Milton Keynes, Cardiff, Chester, Cambridge, Dublin and Blackpool.
EasyHotel said it would accelerate growth in Europe where it sees ‘significant opportunity’, with initial focus on France, Spain and Germany.
Fiona Cincotta, a senior market analyst at City Index, agreed that Continental Europe offers ‘great potential’ for easyHotel, especially Germany, where budget hotels still have a relatively small share of the market, but she warned that it faces stiff completion at home.
"Competitors are eyeing the low-budget space, including market giant Premier Inn, which will open its first Zip branded ultra-budget hotel in Cardiff early next year," she said.
"Premier Inn-owner Whitbread is cashed up after the sale of its Costa coffee chain to Coca-Cola, giving it plenty of firepower to invest in an expansion of its hotel offering. That will put downward pressure on industry margins, and potentially force easyHotel to draw down heavily on its cash balance if it wants to keep pace."
That said, she pointed out that easyHotels operating margins are nearly 30%, despite charging as little as £20 a night for its rooms, indicating that management is ‘successfully keeping a lid on costs’.
EasyHotel’s CEO Guy Parsons said: "This has been a transformational year 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.
"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."
"With funds available for future hotel development, we believe easyHotel is well positioned for long- term growth, and will continue to outperform its competitors."
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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