Safestay revenue up by 26% to £18.4m in 2019
29 May 2020
Safestay, the AIM-listed owner and operator of an international brand of contemporary hostels, has reported total revenues increased by 26% to £18.4 million (2018: £14.6 million) with like for like sales up 7%, as it issued its Final Results for the 12 months to 31 December 2019.49% or £9 million of net revenue now coming from mainland Europe versus 43% in 2018 (£6.2 million).
77.3% occupancy achieved over the period, up from 75.6%, reflecting good demand.
5.4% increase in average bed rate to £21.4 (2018: £20.3).
Adjusted EBITDA of £6.1 million and £3.8 million pre-IFRS 16 adjustments (2018: £3.4 million).
Loss before tax of £0.6 million and £0.2 million pre-IFRS 16 adjustments (2018: £0.6 million).
2019 Operational highlights
· Transformational year with the portfolio increasing from:
o 13 to 20 hostels
o 3,200 to 4,900 beds
o 6 to 12 countries
· Added 7 new properties in the key tourist cities of Pisa, Venice, Glasgow, Berlin, Athens, Bratislava and Warsaw
· 43% growth in F&B revenues now representing 14% of total revenues
· 50% increase in number of bookings made via the Safestay website
· £0.9 million was invested in renovation projects to maintain the premium positioning of the Safestay brand
· Elephant & Castle hostel was revalued following the 73 bed extension at £26.8 million, an increase of £10.8 million over the last valuation in 2017, which equates to a NAV increase of 16.7p per share
Post-year end - 2020 year to date highlights
· Agreed to increase debt facility from £17.9 million to £22.9 million with HSBC under the same terms as the previous facility, for a new 5 year term until January 2025
· In response to COVID-19 and the temporary closure of all hostels from 1 April, the Company minimised all costs, agreed a £5 million overdraft with HSBC, utilised available government reliefs and as a result is well placed to weather the current crisis
· Management focus has switched to preparing for a staggered re-opening plan initially just targeting the domestic market in each country
· Under the re-opening plan there will be protective changes introduced to check-in, food service, cleaning rotas and the temporary closure of common spaces with no shared rooms, and instead rooms will be sold to individuals or groups known to each other
Larry Lipman, Chairman of the Company, commenting on the results said: "2019 was a transformational year for Safestay. We added 7 new hostels increasing our number of sites to 20 making us a leading premium hostel operator in Europe. Our financial performance reflected this expansion with revenues up 26% and while we also made a good start to trading in 2020, the sudden spread of COVID-19 has meant we have had to adapt quickly to an unexpected phase.
"We secured the financial stability of the business and we are now working on our plans to re-open our hostels on a staggered basis, over the course of 2020, as and when we believe they can be profitable. Our focus is on ensuring the safety of our guests, initially targeting the domestic markets in each country, and then looking to gradually return to normal trading patterns.
"Navigating the re-engagement of the business will require us to be highly flexible as we test and match demand in individual markets, however, we are confident of being able to do this and making sure that we balance increased operational cost with increased income. From an industry perspective, the hostel market is highly fragmented with a large number of small operators who are under pressure as a result of the pandemic and this may well create unique opportunities for Safestay".
