EasyHotel acquires freehold site in Dublin

Superbudget hotel developer and operator easyHotel has acquired a freehold site in central Dublin to develop a purpose-built, freehold hotel, it announced on Friday.

The AIM-traded company said the site, located on the corner of Benburb Street and Wood Lane, already had planning permission in place for a 96-bedroom hotel.

However, the group believed there was potential to extend the development further to a 130-bedroom hotel, and will apply to vary the existing planning permission accordingly.

It said the freehold site had been acquired for €9.0m, with the 130-bedroom hotel expected to have a total investment cost of €18m, to be funded using cash from the group's balance sheet, together with local debt financing.

The investment in Dublin was the group's third new site since its successful fundraising in March.

It also marks easyHotel's second owned hotel investment in Europe, with the group's first owned European hotel, easyHotel Barcelona with 204 rooms, due to open during the summer.

In support of its growth plans, easyHotel said it was continuing to expand its development pipeline of owned hotels in key tourist and city centre destinations across both the UK and Europe.

As it had previously highlighted at the time of its interim results, the group intended to balance the number of owned hotel openings between the UK and continental Europe, where recently the group's franchised hotels had delivered a “particularly strong” performance.

With a strong UK development pipeline already confirmed, easyHotel said it would be appointing a group development director to lead the development in Europe, together with a dedicated team focussed initially on Spain, France and Germany.

It expected that the additional resource would be in place before the end of the current financial year.

The costs associated with the appointments would have a “small” impact on earnings for the current financial year, and were expected to reduce EBITDA by around £0.75m in the 2019 and 2020 financial years.

However, the board said it believed that the additional continental European hotels the team would be targeted to deliver would be “significantly” earnings enhancing from 2021.

As it had previously announced, four new owned hotels totalling 517 rooms were expected to open by the end of the current calendar year.

It said easyHotel Maastricht opened at the beginning of July, taking the total number of hotels in the Group to 28.

There were a further four new franchised hotels totalling 336 rooms nearing completion, and although the official openings had been delayed, they were still expected to open by the end of the current calendar year.

“We are delighted to have secured this excellent site in the vibrant City of Dublin, our third investment since our successful fundraising in March 2018 and our second owned hotel site in Europe,” said chief executive officer Guy Parsons.

“The Dublin site takes our pipeline of owned/leased projects to 1,280 rooms in addition to the 1,782 franchise rooms currently under development.”

Parsons said Europe held a number of “attractive opportunities” for the easyHotel brand, and the board was keen to achieve a balance in its development pipeline between the UK and continental Europe, as it looked to accelerate its presence in those markets.

“The group has a strong owned hotel development pipeline already established in the UK and this additional operational resource announced today will ensure that we are well positioned to take advantage of more opportunities in continental Europe, creating value for our shareholders and underpinning the long-term growth of the easyHotel brand.”