York hostel sees strong demand for weekend mini-breaks

Safestay bought the Georgian mansion in York in 2014 and ​undertook a​ complete refurbishment of the building. A night's stay typically costs £25 a night, making it a cheap option for budget conscious travellers.

The group said the York site saw a 20 per cent increase in operating revenue in 2016. It said that while weekend occupancy has remained very high, the more challenging mid-week periods are responding well to increased marketing campaigns.

The group overall saw revenue rise from £4m in 2015 to £7.4m in 2016, reflecting demand for Safestay’s contemporary hostel offer and full year contributions from its Edinburgh and Holland Park hostels.

Chairman Larry Lipman said: “In 2016 we sold a total of 297,276 individual bed nights compared to 184,061 in 2015, an increase of 61.5 per cent.

"The business has expanded significantly and the systems and infrastructure to support this growth are in place and are capable of managing current capacity as well as our future plans for expansion."

He said that Safestay is carving out its own unique brand positioning within the premium hostel sector.

"The appeal of the brand is based on offering a combination of safety, style and comfort in good city centre locations. A key indicator is repeat bookings from school and college groups coming every year to visit the UK," he said.

"The recent restructuring and refinancing has transformed the financial base of the business and provided the necessary resources to support our ambitions.”

Analyst Nigel Parson at Canaccord Genuity said: "After a tough 2016, Safestay can look to the future with more confidence.

"Trading is improving slowly but surely, and its recent £18.4m debt restructuring and capital raise of £12.6m via a sale-and-leaseback simplifies and extends its debt and gives it the funds to grow without further recourse to shareholders.

"We restore our 'buy' recommendation and increase our target price to 60p from 42p."

The group is keen to attract more people travelling for work.

​"There is always the potential for business travellers," said Mr Lipman​.

​"I liken us to EasyJet, a low cost airline that found people on its planes wearing suits."

He said that the concept of a premium hostel is becoming more widely recognised.

"For just under £20 per night, an individual can stay in a safe, stylish and comfortable room in a city centre location," he added.

"The Safestay hostels are not only attracting young travellers, but increasingly families and older adults who are recognising its appeal combined with affordability."