easyHotel PLC Update on Old Street Hotel, London (6553M)

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RNS Number : 6553M

easyHotel PLC

01 August 2017

1 August 2017

easyHotel plc

easyHotel plc

("easyHotel", the "Group" or the "Company")

Update on Old Street Hotel, London

The Board of easyHotel plc, the owner, developer and operator of "super budget" hotels, today announces the conclusion of a comprehensive review of options, including the sale or partial sale of the building, for its Old Street hotel which it announced on 30 March 2017.

Following a pre-application meeting with Islington Borough Council on 8 June 2017 to discuss a potential extension to the upper floors of the building (3(rd) - 5(th) floors, the hotel is on the lower floors) the Council has indicated that it has no objections in principle, subject to conditions, to an extension to the building for offices. The Board, having taken specialist advice, believes that restoring and extending office use on the upper floors should maximise value from the property. The Group will, therefore, be retaining a smaller 92-bedroom hotel and applying for planning permission to add additional floors to the building, for use as office accommodation. The Group will close the third and fourth floors of the hotel, removing those rooms from inventory from 3 October 2017.

The Group further intends to refurbish the 92-bedroom hotel, to complement the 'new look' format hotels it has recently opened in Birmingham and Manchester. This is anticipated to improve Revpar in the hotel, and combined with the additional office space, is expected to drive shareholder value from the site. The refurbishment of the hotel is likely to result in a short term adverse impact to earnings as the works are carried out.

The existing (larger 162-bedroom) Old Street hotel made an EBITDA contribution of approximately GBP1.7m (before the allocation of central overheads) in the Group's last financial year ended 30 September 2016.

Commenting, Guy Parsons, Chief Executive of easyHotel plc said:

"After undertaking extensive due diligence and considering all the options available to it, the Board considers the retention of the 92-bedroom hotel, together with an extension to the upper floors for additional office accommodation, to be the best outcome for shareholders.

"We have been delighted with the performance of our newly opened hotels in Birmingham and Manchester, which are trading strongly, and the refurbishment of Old Street will enable us to improve Revpar in the hotel. The Group will submit a full planning application for an extension to the building in due course."

Enquiries:

 
 easyHotel plc 
 Guy Parsons, Chief Executive    www.easyhotel.com 
  Officer 
 Marc Vieilledent, Chief         http://ir.easyhotel.com 
  Financial Officer 
 Investec (Nominated Adviser 
  and Broker)                    [phone] 
 David Anderson 
 Houston PR (Financial 
  PR)                            [phone] 
 Kate Hoare 
 

Notes to Editors:

www.easyhotel.com http://ir.easyhotel.com

easyHotel is the owner, developer, operator and franchisor of branded hotels. Its strategy is to target the "super budget" segment of the hotel industry by marketing "clean, comfortable and safe" hotel rooms to its customers.

Operating hotels

easyHotel's five owned hotels currently comprise 590 rooms, and it has a further 20 franchised hotels with 1,750 rooms.

Owned hotels:

Old Street (London), Glasgow, Croydon, Birmingham, Manchester.

Franchise locations:

Belgium (Brussels), Bulgaria (Sofia), Germany (Berlin, Frankfurt), Hungary (Budapest), The Netherlands (Amsterdam: City, Arena & Zaandam, Rotterdam, The Hague), Switzerland (Basel, Zurich), UAE (Dubai), United Kingdom (Edinburgh, London Heathrow, Central London, Luton).

Hotel development pipeline

The Company's committed development pipeline of owned and franchised hotels currently consists of:

Owned hotels:

United Kingdom (Liverpool, Ipswich, Sheffield, Leeds), Spain (Barcelona) Subject to planning consent: United Kingdom (Oxford - lease).

Franchise hotels:

UAE (Dubai), Germany (Bernkastel-Kues), Portugal (Lisbon), Turkey (Istanbul), Nepal (Kathmandu), UK (Belfast, Reading), Iran, Sri Lanka.

This information is provided by RNS

The company news service from the London Stock Exchange

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August 01, 2017 02:00 ET (06:00 GMT)