Hostel group eyes reopenings

Safestay, the stock market listed hostel operator with sites in Edinburgh and Glasgow, has said it plans to reopen over the course of the year but with major changes to the experience for customers.

The firm, which has nearly 5,000 beds at 20 hostels in the UK and across Europe, said it has been closed since 1 April with the majority of staff furloughed or receiving support from governments in the countries that it operates.

In a trading update, the group said: “Check-in will be completed via Whatsapp, hand sanitiser gel, masks and gloves will be made available, common rooms including the restaurant areas will be closed, breakfasts will instead be served in boxes.

“A substantially increased cleaning rota will be introduced and no shared rooms will be sold, and instead rooms will be sold to individuals or groups who are known to each other.”

The firm also pointed to a £5 million overdraft with HSBC and said it was positive that it had sufficient cash to get through the current crisis.

Rents have been suspended or reduced after negotiations with landlords helped to reduce the monthly costs to £600,000-a-month, of which half is deferred.

The company told investors:

“With this as a starting point, the hostels will adapt their operating structures according to market conditions over the course of 2020 with the emphasis on matching operational costs with income. It will require flexibility and careful monitoring across all our markets.

“We believe that Safestay has the infrastructure in place to manage the re-engagement and that ultimately, we will find the route to returning our portfolio of hostels to pre-covid-19 levels.”

The group currently has five sites in the UK, with its flagship Edinburgh hostel by far the biggest, offering 618 beds. Last September, the firm agreed an acquisition of a Glasgow hotel.