Published on : Wednesday, January 8, 2020
Staycity Group has agreed €22.5m in new financing to fund its growth target of 15,000 apartments by 2024. The company plans to open around 1,800 keys over the next two years, moving into new territories as well as the resort sector.
CFO Wayne Arthur said that the year was a challenging one, particularly in the U.K. where confidence has been fragile due to Brexit uncertainty. Despite these challenges we delivered a record like-for-like occupancy of 87.3% and are delighted to have signed a new €22.5m loan facility with Dunport Capital, after five years of fantastic support from Proventus, which has secured Staycity with a flexible, seven-year loan as well as significant interest savings and a supportive Dublin-based partner.
The group, which currently operates nearly 3,000 apartments across 12 European cities, expanded into Germany last year, with a site in Berlin, as well as into Italy, with a property in Venice. In September last year it opened a resort-style offering with a 284-key aparthotel in the Val d’Europe area near Disneyland Paris. Facilities include an outdoor swimming pool, café, lounge, restaurant, children’s play area and gym as well as gardens and lakes.
The group said that turnover for the year to December was expected to have grown by 14% to €78m, with Ebitda rising around 11%. The group had previously reported a softening in demand for corporate travel.
Staycity co-founder and CEO Tom Walsh added that he is delighted with the progress made in 2019, not only did we deliver industry-leading occupancy levels, we’ve also gained our strongest ever guest satisfaction scores. They are on target to deliver revenues of over €100m in 2020 along with continued profit growth.
This year the group planned to open a 224-apartment property in Manchester’s Northern Quarter in March 2020, to be followed in November by a 142-apartment building on Dublin’s Mark Street. By 2021 Staycity expects to have over 1,000 apartments operating in Dublin.
The end of last year saw Lambert Smith Hampton report that serviced apartments and aparthotels were the fastest-growing segment of the UK’s hospitality accommodation market, set to move up from 3% of current room stock.
In the U.S, the sector has a 9% market share, suggesting that there was considerable room for growth in the UK. The current pipeline should see approximately 6,000 new units open over the next two years. While London has historically been the main focus for operators, key target markets for apart-hotel operators also included regional centres such as Manchester, Glasgow and Liverpool.
Simon Stevens, LSH hotels director said that the apart-hotel sector is currently one of the most exciting parts of the market. While the rise of the Airbnb sector is sometimes viewed as a threat to more traditional types of accommodation, it is actually benefiting apart-hotels by making consumers more receptive to alternatives to conventional hotels.
With new brands being launched and established operators reinventing their products, serviced apartments and aparthotels will continue to innovate and grow. The sector will remain a melting pot for new ideas; borrowing from alternative concepts such as co-living and co-working to create inventive new hybrids.
In the serviced apartment sector, demand was also being driven by an increased familiarization with Airbnb, with HVS reporting that the development pipeline continued to accelerate across Europe and was set to approach 23,600 additional units by 2022, making it one of the most active sub-sectors in the hotel industry. The UK and Germany represented the vast majority of the total pipeline (similar to the hotel pipeline), although the market continued to experience further diversification in secondary and tertiary cities.
The company said that the sector continues to innovate, with exciting new brands being introduced and traditional brands being reinvented. Alternative concepts such as co-living, co-working, student accommodation and home-sharing are merging with the serviced apartment concept, creating hybrids as a response to changing demand behaviours.