EasyHotel reveals solid growth and a "pipeline" to increase brand presence

 
Courtney Goldsmith
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A photo taken on November 7, 2011 shows
EasyHotel offers "super budget" rooms for the economical traveler (Source: Getty)

EasyHotel shares increased over one per cent as the "super budget" hotel brand announced the weak pound has created a strong market for inexpensive tourism in the UK.

The figures

Total system sales have increased 6.8 per cent to £21.3m from £20.0m in 2015, according to EasyHotel's final results for the year ended 30 September

Read more: All eyes on Stelios as EasyHotel profits fall

Profit before tax was up 38.4 per cent to £1.1m.

Of the company's owned hotels, like-for-like revenue grew 13 per cent, while the franchised hotels grew just one per cent.

Basic earnings per share increased to 1.4p from 1.0p.

Why it's interesting

EasyHotel currently has 1,527 new rooms in development, including 951 new franchise rooms and 576 rooms from five new owned hotel projects.

Read more: EasyHotel chief financial officer checks out

Since the year-end results, the company has opened two new franchise hotels in Brussels and Amsterdam, signed a new franchise agreement in Reading and completed acquisition of hotel development in Barcelona.

EasyHotel owns three hotels with locations in London, Glasgow and Croydon with a combined 390 rooms and owns 19 franchised hotels around Europe with 1,643 rooms for a total of 2,033 rooms in both categories.

The budget chain said the weak, post-Brexit pound boosted tourism from abroad and staycations among Brits.

Read more: Profits prove hard to come by as EasyHotel expansion takes toll

Even the uncertainty in the market ahead of Brexit negotiations doesn't worry EasyHotel.

The company believes it will continue to outperform as consumers search for hotels offering the best value for money.

What EasyHotel said

Chief executive Guy Parsons said 2015/16 was a transformational year for the company, which is on track to deliver development plans announced in September.

The board remains confident that by exploiting the strength of the brand, EasyHotel will continue to outperform the budget hotel sector as consumers seek out the best value for money.

With the experienced team we now have in place and the proceeds of our recent fundraising, we are in an excellent position to expand the EasyHotel brand and deliver improving returns for our shareholders

What others said

Paul Hickman, analyst at Edison Investment Research reiterated the company's "transformational" year but warned of a the softening market.

Read more: Accor executive checks himself in to Easyhotel

The real achievement has been creating a pipeline capable of making EasyHotel a more significant force in the market, Hickman said.

Consensus forecasts are for a near doubling of earnings per share for the year to September 2017, he said.

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