Safestay PLC (LON:SSTY) saw its shares rise on Tuesday as the owner and operator of a new brand of contemporary hostel said it performed strongly in 2017, significantly increasing sales and occupancy in line with market expectations.
In a trading update for the 12 months to 31 December 2017, the AIM-listed company said its total revenues, excluding acquisitions made in 2017, rose by 43% to £10.6mln, with 15% growth in UK revenues to £8.5mln, showing its strong underlying performance.
READ: Safestay to capitalise on the transformation of London hostel market
The group said the strong sales growth reflected a 13.5% increase in like-for-like occupancy levels to 74%, up from 65% in 2016, while the UK average bed rate was stable at £20, offering scope for future rises in line with increased demand.
During 2017, Safestay made a series of acquisitions, increasing its portfolio from 4 to 9 operating hostels plus a development site in Paris, 34 apartments in Madrid under development, and commenced the extension of its Elephant & Castle property in London.
The firm said the integration of the new hostels has been successful, with the commercial focus of the European teams being enhanced by adding the group's digital systems, revenue management and branding.
It noted that the European hostels combined contributed total revenues of £2.0mln, for the period under ownership, ahead of projections made at the time of acquisition.
The group said all its four UK hostels grew sales and occupancy, led by its Kensington Holland Park building which saw occupancy increase by 32% to 73% over the previous year.
Global hostel industry growth forecast upped
Safestay noted that, in 2014, revenue from the global hostel industry for 2018 was expected to be US$5.2bn, but this forecast has now been revised up to US$7bn and growth beyond 2018 is now expected to run at a rate of 8% per annum.
Larry Lipman, Safestay’s chairman commented: ”While our 2017 trading performance has been strong and in line with market expectations, we remain focused on growing the portfolio and our marketing platform, both organically and by acting as a consolidator through the acquisition of individual sites and small chains of hostels, as well as procurement of sites for development.”
He added: “We have in place the operational backbone to support a much larger business across multiple geographies and we look forward to making further significant progress in 2018."
In late morning trading, Safestay shares were up 4.3%, or 2p at 49p.