Development and depreciation see easyHotel swing to interim loss

Budget hotel owner, developer and operator easyHotel reported a 25.3% improvement in total system sales in its interim results on Wednesday, to £20.2m.

The AIM-traded firm said revenue was 52.6% higher year-on-year for the six months ended 31 March, at £7.26m, while its adjusted EBITDAR was up 60.7% at £1.8m.

Its adjusted EBITDAR margin was ahead 1.2 percentage points at 24.8%.

EasyHotel explained that adjusted EBITDAR was a non-statutory measure, representing earnings before interest, tax, depreciation, amortisation and rent, adjusted for pre-opening costs related to the development of hotels, share-based payments and other adjusting items such as organisational restructuring costs.

Adjusted EBITDA was 48.2% higher at £1.46m, while the company swung to a loss before tax of £0.12m, from profits of £0.09m in the first half of last year.

Basic losses per share totalled 0.1p, compared to earnings of 0.1p per share a year ago, while the board declared an interim dividend per share of 0.08p, up from the 0.07p it distributed 12 months prior.

Commenting on the performance, easyHotel’s board said the adjusted EBITDA growth of 48.2% reflected the strength of its proposition and continued market outperformance, while the improvement in its adjusted EBITDAR margin of 1.2 percentage points came as central costs represented a lower percentage of total revenue.

Its swinging to a loss before tax of £0.12m was put down to the impact of the temporary closure of its Old Street hotel in London, as well as higher depreciation from new hotels.

A total of £14.2m was invested in new hotel development during the period, with £30.3m of cash and £33.9m of bank financing headroom in committed and uncommitted facilities available, to continue to expand the hotel estate.

EasyHotel said its newly-developed self-contained office accommodation of 15,500 square feet at its property at Old Street had also been pre-let to a single tenant.

“easyHotel has delivered a market outperformance and good profitable growth in the first half of the year against a challenging market,” said easyHotel chief executive officer Guy Parsons.

“The tactical decisions taken early in the period to drive market share through our OTA strategy has underpinned this, and we have continued to benefit from the impact of our ambitious opening programme.”

Parsons said that, over the course of the last two years, the company had added a total of 18 hotels to its portfolio, “significantly” expanding its network in key business and tourist destinations across the UK and Europe.

“Our most recent openings have not only traded in line with our expectations but have also tracked the good performance seen from our new hotels opened in the prior year, which in the current trading environment is very encouraging.

“Our UK network of owned hotels is already well established, with a strong opening programme in place for the next two years.

“The group is now focussed on replicating this success across Europe.”

Parsons said the hotel market outlook remained uncertain, particularly in the UK where the ongoing Brexit negotiations continued to dampen consumer confidence.

“We are by no means immune, but the maturing profile of our hotels and our strong development pipeline will support continued growth and enhance our earnings profile.

“Combined with the careful control of our central costs, these efforts give the board confidence in meeting its expectations for the year ending 30 September.”