It's a company I know well, having first advised buying the shares at 83p at this time last year ('Check in for a profitable booking', 14 Dec 2015) and last reiterated that advice after the company pulled off a £38m share placing at 100p a share in the autumn ('Investors check into easyHotels', 6 Oct 2016). I have exploited some short-term buying opportunities in the interim by taking advantage of the share price volatility of consumer focused companies. For instance, in the summer I rated the shares a buy at 80p ('Time to check in again', 21 Jun 2016), and also at 83p ('Scaling up for a budget opportunity', 16 Aug 2016).
The capital raise was a significant vote of confidence in the ability of the board led by chief executive Guy Parsons, the former chief executive of leading budget hotel chain Travelodge, to scale up the hotel development programme and deliver a 15 per cent targeted return on capital employed on an unleveraged basis. Investors who backed the placing a couple of months ago will have been impressed by the progress being made. easyHotel's revenues increased by almost 9 per cent to £6m in the 12 months to end September 2016, driven by like-for-like sales growth of 13 per cent in the UK owned estate of hotels, a material outperformance of the UK hotel market and one helped by a strategic use of online travel agents, and the implementation of a dynamic pricing strategy to enhance yields. It's therefore well worth noting that the "UK hotel market has performed strongly in the post Brexit period," buoyed by the weakness of sterling against the US dollar and euro, resulting in an increase in "staycations from UK nationals, and a higher level of in-bound tourism".