Budget hotel company easyHotel PLC (LON:EZH) (EZH.L) has released final results today for the year to 30 September 2018. In my view, they show that it is making progress with the delivery of its strategy.
Total system sales for the year increased by 25.8%, while revenue rose by 33.7%. Adjusted EBITDA growth of 28.6% reflected the strength of its customer proposition, as well as further market outperformance.
The company’s owned hotels revenue per available room (RevPAR) was up by 11.4%, with its owned hotels recording market outperformance for the third consecutive year. Like-for-like revenue at franchised hotels increased by 12.1%.
easyHotel opened 9 new hotels during the year totalling 907 rooms. They are trading well, while it also opened its first owned hotel in Continental Europe in Barcelona. Its pipeline consists of six new owned hotel sites which were secured during the year. Its development pipeline contains 686 owned rooms and 474 franchised rooms, while it is increasing its resources in Europe where it sees an opportunity for strong growth.
In my opinion, the prospects for the business appear to be relatively bright. It has an ambitious growth strategy which seems to have been delivered during the year. Its expansion into Continental Europe could improve its diversification at a time when consumer confidence in the UK is relatively weak.
Of course, a more price-conscious consumer could be a good thing for easyHotel. Its ‘super budget’ offering may resonate well with consumers at a time when the prospects for the UK economy are uncertain. As a result, I wouldn’t be surprised if it is able to deliver further outperformance of the wider hotel industry over future months.
Although I view it as a relatively small and risky share to hold, I think that in the long run its reward potential could be relatively impressive.