Hotel chain's £3m headache as town project goes over budget
PUBLISHED: 10:29 25 January 2020 | UPDATED: 10:29 25 January 2020
A major budget hotel chain faced a major writedown after hitting difficulties converting an old listed building in Ipswich.
EasyHotel slipped to a loss for the full year before tax of £3.6m in the 12 months ending September 30, following a £870,000 profit the year before.
The Ipswich job proved more complicated than first been thought, the company said, with builders running into several issues before the hotel opened in January last year.
As a result, easyHotel took a £3m non-cash impairment on the Northgate Street hotel, which opened in January last year.
The hotel chain, which offers rooms from £19, opened another six sites during the year, adding 607 rooms to its portfolio.
These are performing about as well as had been expected, and the business is already planning an extra 2,006 rooms, including a £40m investment in non-franchised new hotels.
It also plans to sell its office space in London's Old Street for at least £15m.
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Overall revenue grew 56% to £17.6m, while adjusted earnings before interest, tax depreciation and amortisation (Ebitda) reached £4.2m - a rise of 42%, the company said.
Interim boss Scott Christie said the chain had demonstrated the strength and resilience of its super-budget model, continuing to outperform a challenging market on a like-for-like basis over the course of the year.
"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," he said.
Mr Christie is set to give way to a permanent chief when Francois Bacchetta joins from easyJet.
The hotel chain was founded in 2005 by easyJet entrepreneur Sir Stelios Haji-Ioannou.
Sir Stelios blocked an attempt by Luxembourg group ICAMAP to take the firm private last year.
The founder still owns 28% of easyHotel and was able to stop the full takeover which would have removed its shares from the London Stock Exchange, but ICAMAP now owns nearly 69% of shares in the business.