Wednesday 25 September 2019 12:43 pm

Revenues rise at hostel chain Safestay after strong summer

DARWIN, AUSTRALIA – OCTOBER 15: Traveller Craig Weather from Canada walks through a dormitory corridor as he arrives at a backpackers hostel October 14, 2005 in Darwin, Australia. The backpacking industry in Darwin, the capital of the Northern Territory is thriving as many travellers decide to begin their jouneys from there. Some backpackers take organised trips to places of interest like Kakadu National Park and the Katherine Gorge while others take local work in the hospitality industry or picking fruit to subsidise their travelling expnses. The popularity of backpacking in the region has not been affected by the publicity of the Falconio murder trial, which begins next week. The case centres around British travellers Peter Falconio and his girlfriend Joanna Lees who were allegedly abducted on a remote road while travelling through the Northern Territory in 2001. The body of Peter Falconio was never found. (Photo by Ian Waldie/Getty Images)

Hostel chain Safestay reported a jump in revenue following “positive summer trading”, but pre-tax losses climbed following the introduction of a new accounting standard.

Safestay revenue rose 24 per cent from £6.5m to £8.1m during the sixth months ending 30 June, while like-for-like sales grew four per cent.

The company’s pre-tax loss widened 14.4 per cent to £904,000. Safestay said £300,000 of the loss related to the introduction of the new IFRS 16 accounting standard, and a further £300,000 related to expansion projects.

The company forecasted full-year revenues exceeding £17m.

Shares in the hostel operator rose following the publication of the results, and were 4.76 per cent up just after midday.

Safestay reported a six per cent increase in its average bed rate to £19.50, up from £18.40 for the same period in 2019.

The chain now operates 16 hostels (including four under development) across four UK and nine European cities, with approximately 4,000 beds.

Safestay completed an extension of its Elephant & Castle hostel during the first half, which it said had increased the branch’s valuation by over £10m.

Earlier this month it announced the acquisition of a hotel in Glasgow for £3.15m, which Safestay said has the potential to be converted into a 200-bed hostel.

Chairman Larry Lippman said Safestay is in “an enviable position to continue its positive growth trajectory, building a portfolio of well positioned hostels under a premium, contemporary hostel brand”.

Main image credit: Getty