Safestay losses slim as hostel group’s revenues rebound

Safestay has slashed annual losses by greater than 90 per cent, regardless of Covid-19 restrictions persevering with to maintain its hostels closed for a lot of final 12 months.

The finances lodging chain posted a lack of £599,000 in 2021 in comparison with a £7.5million loss the earlier 12 months, because of the group making a major revenue on the sale of a hostel in Edinburgh.

All the corporate’s premises had been closed for the primary three months of the 12 months, earlier than regularly reopening between April and the top of July.

Downturn: The coronavirus pandemic has inflicted vital monetary harm on Safestay, which operates 20 hostels throughout ten European international locations

Restrictions had been then reimposed following the emergence of the Omicron variant in November, miserable demand for abroad journey and slowing the hospitality sector’s restoration from the pandemic.

Consequently, Safestay’s complete revenues had been nonetheless round two-thirds beneath their pre-pandemic ranges, although it managed to spice up them by a 3rd to £6.4million. 

However resulting from decreasing general employees prices, an absence of goodwill impairments, decrease depreciation and amortisation prices, and the £16million divestment of the Edinburgh hostel, the enterprise efficiently diminished complete losses by 92 per cent.

The AIM-listed enterprise additionally made a £7.5million revenue from the hostel sale and used the proceeds to chop its financial institution debt by £10.2million to £12.7million and improve liquidity.

For the primary 5 months of this 12 months, Safestay stated its revenues had run according to administration forecasts, at about 81 per cent of 2019 volumes.

Chairman and founder Larry Lipman stated: ‘We’re seeing the regular restoration of our market with younger travellers and faculties as soon as once more visiting Europe’s main cities.

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‘From our perspective, we at all times believed this is able to occur and that our hostels would once more show their enchantment to our goal prospects.

‘Occupancy is growing at an encouraging tempo and at robust common mattress charges with bookings for the summer time forward of our inside finances plans. We anticipate momentum to extend as journey returns to regular circumstances.’

Safestay operates 16 hostels throughout 11 European international locations, together with 4 websites within the UK; Holland Park and Elephant & Fortress in London, York and Glasgow, in addition to three in Spain.

The corporate was based eight years in the past by Lipman, a serial entrepreneur who additionally created the self-storage group Safestore, North London-centred property investor Safeland, which rents venues to Safestay, and workplace rental specialist Bizspace.

A possible takeover strategy was made for the enterprise final 12 months by an unnamed get together however failed after sure Safestay shareholders opposed the board’s suggestion to approve the deal.

Safestay shares had been  trading3.6 per cent larger at 14.5p throughout the late afternoon on Monday, though their worth has nonetheless declined by round 28 per cent because the begin of January.