European hostel group Safestay has signed a new site in Budapest, Hungary as it makes 2024 the year of significant growth for its brand. In recent months, the group has added Brighton, UK to its roster, along with sites in Cordoba and Calpe in Spain.
In Budapest, it has agreed to lease a five storey site in the heart of the city from owner Curzon Capital. Subject to regulatory approval, a refurbishment of the property is planned, to create a hostel with around 150 beds. The addition joins the existing trading Safestay portfolio of 3,580 beds across 18 European sites.
A mix of tenures
Safestay is adopting a pragmatic approach to finding new sites, combining a mix of tenures. In Brighton, it acquired a property that will convert to a 220 bed hostel, from seller the University of East Sussex. Refurbishment will take place ahead of a planned opening in 2025. In the Spanish city of Cordoba, it acquired an existing hotel that will be modified to the hostel format, with a capacity of around 100 beds.
In contrast, Safestay has taken on the hostel in Calpe, on Spain’s Costa Brava, on the basis of a management contract. This is the group’s first such contract, that will see it manage the property, sharing the upside with the owner.
Safestay, in common with many modern hostel brands, offers a mix of rooms. For those on a tight travel budget there are larger shared dormitory rooms; other rooms suit groups travelling together, including families; while some rooms are more akin to hotel accommodation, with their own ensuite bathrooms.
The group achieved total revenues of GBP22.5m in 2023, up 18% on the previous year. Occupancy improved to 71.4%, up from an average 63% in 2022, while the average bed rate improved modestly. The group reoported forward bookings significantly ahead for 2024, boosted by strong demand from school and college groups. Adjusted ebitda improved by 15% to GBP6.8m, while an impairment on a property in Bratislava led to a declared net loss for the full year of GBP1.3m.
A return to Edinburgh
In October 2023, the group acquired a property in Edinburgh, which is undergoing conversion work to create a 225 room hostel in the Scottish capital. The opening of this hostel marks a return to the city for Safestay, after it was forced to sell its previous hostel there to raise funds during the pandemic.
Safestay has also revealed its plans for a hostel in Vienna have fallen by the wayside, due to regulatory problems in the city. An agreement to lease a hotel there has been terminated, after a licence to reformat the property as a hostel was not forthcoming from city authorities. Safestay said working the asset as a hotel could not achieve a profitable outcome, and so it has, temporarily, given up on plans for a hostel in the Austrian city.
