Easyhotel said that it would focus on France and Spain as part of its “ambitious strategy” for growth.
The company, which appointed François Bacchetta as CEO earlier this month, said that it expected to outperform the sector in the coming year.
The group said that it would focus its owned growth in the UK on primary cities only, with the wider regional hotels under the franchise model. Scott Christie, interim CEO, easyHotel, said: “We will significantly increase our focus on Europe, where we believe the opportunity to develop our portfolio in key cities is significant.
“The group's new European development team has been working hard to pursue a number of owned and franchised development opportunities in key primary tourist destinations with an initial focus on France and Spain.
“The group's balance sheet strength and cash generation underpins the funding for future owned hotel growth in these markets. Expansion across mainland Europe beyond these key locations will be achieved through an increased focus on franchised development.”
The comments came as the company reported its results for the year to 30 September. Like-for-like owned hotels revpar was up 4.6%, while like-for-like franchised hotels revpar was down 1.7%, but with an improved performance during the second half of the year after a first-half decline of 3.5%.
Six new owned and franchised hotels opened during the year, totalling 607 rooms. The first owned hotel development site was secured in Paris with a second site, easyHotel Nice, acquired and opened post financial year-end. The company said that it had 2,006 rooms are currently in the development pipeline, including an owned hotel investment pipeline of some £40m.
Christie said: “Looking to the year ahead, whilst the uncertain political and economic landscape will continue to impact consumer sentiment, we remain confident that the easyHotel brand will continue to outperform the sector as consumers seek out the best value for money.”
The company’s current estate comprises 40 hotels with 3,759 rooms, comprising 27 franchised hotels and 13 owned hotels.
Last year saw Guy Parsons leave the company as CEO, shortly after a consortium of Ivanhoé Cambridge, a real estate subsidiary of Caisse de dépôt et placement du Québec, and ICAMAP, a real estate fund manager, announce that they controlled 68.8% of the group.
The group’s 95p per share offer valued EasyHotel’s equity at £138.7m on a fully diluted basis and implied a multiple of 36.7 times the growing company’s Ebitda of £3.4m for the 12 months ended 31 March 2019.
With 27.9% of easyHotel's share capital held by easyGroup, the private investment vehicle of Sir Stelios Haji-Ioannou, the creator and owner of the ‘easy’ family of brands, this left a balance of 3.4% minority shareholders.
Karim Habra, head of Europe, Ivanhoé Cambridge, said: “This investment perfectly illustrates our innovative value-creation strategies through a complex operation. The easyHotel concept is pioneering and visionary. It is already a strong brand and we believe in its growth potential on a pan-European scale at a time when mass tourism is growing rapidly every year.”
Baccetta joined the super-budget hotel brand from sister company easyJet, where he was country director for France and Italy. Bacchetta was at easyJet for 15 years, having previously held a number of senior marketing positions at global cosmetics group L'Oréal, including responsibility for territories in South East Asia, as well as Europe.
Harm Meijer, non-executive chairman, easyHotel, said: “Following a comprehensive search, we are pleased that François is joining us to lead easyHotel in its aspiration to become a European leader in the super-budget hotel segment. He knows the easy brand and understands its values extremely well. He also brings a wealth of experience in developing businesses, strategy, business optimisation, leadership, marketing and revenue management.”
Insight: The easyHotel brand got off to a tricky start, following the model of the budget airline with such rigour that every little extra - clean sheets, for example - came with an extra cost. It wasn’t quite at the level where you cleaned the rooms by hosing them down - how we miss you, easyCruise - but it wasn’t far off.
In came Parsons, with a background in budget hotels, not flights, and the company realised that room cleaning wasn’t a bolt on, but a basic human requirement, and off the brand went. Now, under new majority ownership, it is leaning on the Easy family under Bacchetta and, we are eager to see what his branding knowledge will do for the expansion across Europe of the orange super-budget one. The jitters at OYO are likely to provide some hope, although OYO was seen by many as a last-chance saloon for tired hotels, not the area easyHotel wishes to play in.
Which takes us back to cash and who will be paying for all this. The company is hoping to replicate its strategy in the UK, which saw it bankroll owned hotels to build the brand then step back in favour of franchising. Stelios is not known for his enthusiasm for digging into his pockets and made plenty of abrasive comments about the consortium which failed to take the group private, so it will have to come from them, or possibly the markets.
It may be more than the company bargained for. Pitched at a lower rate than the big budget brands in the UK, easyHotel had a clear run. In France, it is entering Accor land, where the company may be suffering from the agitation of shareholders eager to sell of its luxury brands, but it has budget and economy locked down. Competition may prove expensive.