easyHotel owned hotels FY like-for-like RevPAR up 7.7%, sales up 28% to £48m

18 October 2019

easyHotel plc has reported that despite the ongoing political and economic uncertainty facing the UK, the Group's owned hotels have continued to outperform the UK Hotel Market on a like-for-like basis, as the company issued a trading update for the financial year ended 30 September 2019.

Total system sales up 28% to £47.8m (30 September 2018: £37.3m). Revenue up 56% to £17.6m (30 September 2018: £11.3m).

Owned hotels like-for-like RevPAR up 7.7%. Franchise like-for-like RevPAR down 1.6%.

The UK Mid-scale and economy segment of the hotel market has continued to be impacted by the ongoing political and economic uncertainty with RevPAR down 0.7% for the period, according to STR Global. Although the London market has continued to perform strongly, with RevPAR growing by 4.5%, the regional UK market's RevPAR has remained weak, down some 2.8%, with a number of regions experiencing double digit RevPar declines during the calendar year.

Whilst the European markets have on the whole continued to outperform the UK, performance has been mixed on a country-by-country basis with RevPar growth slowing during the second half of the financial year. Performance across the Group's franchised hotels has marginally improved during the second half of the financial year, despite market weakness in the Netherlands and Germany.

Delivering continued market outperformance in challenging trading conditions has required an investment in both price and an increased use of online travel agents (OTAs). The Group has maintained a tight control of central costs, in support of delivering its year end targets, but against this more challenging trading environment the Board anticipates that Group adjusted EBITDA will be closer to £4.6m for the year ended 30 September 2019.

Owned Hotel Development Update
During the second half of the period the Group has successfully refurbished and reopened easyHotel Old Street (89 rooms) and let the self-contained 15,500 sq.ft. offices. easyHotel Milton Keynes (124 rooms) opened earlier than planned and both hotels are trading strongly.
On 1 October 2019 the Group completed the acquisition of the 87-room Ibis Palais de Congres in Nice, with the hotel opening for trading immediately on completion.

Although, the Group has experienced planning delays for some of its hotels currently under development, it still expects to open 385 rooms (which includes the 87 rooms for Nice) across four hotels in the next financial year ending 30 September 2020. A further 701 rooms are expected to open in the following financial year.

Franchised Hotel Development Pipeline
During the period the Group opened two franchised hotels, at Zurich (39 rooms) and Amsterdam Schiphol Airport (154 rooms). Malaga (146 rooms) will open in the next financial year.

Although the pipeline for franchised hotels is strong, it is unlikely that the hotels in Bur Dubai, Istanbul, Iran or Sri Lanka will open.

Dividend Policy
Whilst no decision has been made, the Board expects that the Group's current dividend policy will be reviewed prior to the publication of the Company's results for the year ended 30 September 2019. As part of that review the Board will consider whether it is appropriate to continue to pay a dividend whilst the Group's activities and capital allocation priorities remain focussed on investing in and growing its hotel estate.

Commenting, Guy Parsons, Chief Executive of easyHotel plc said: "The hotel markets have remained challenging in the second half of the financial year, particularly in the UK where we are seeing dampened consumer confidence. Whilst our owned hotels have continued to outperform the market, we have not been immune to the weaker regional hotel market and trading across our franchised portfolio has continued to be subdued.

"Whilst we don't foresee any improvement to the trading environment in the medium term, we are focused on our strategic priorities and believe the current economic uncertainties will present attractive investment opportunities to continue to expand our development pipeline in our target destinations, underpinning the long-term growth of the brand."

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