Budget accommodation provider EasyHotel (EZH:AIM) has been downgraded again after delays in the opening of two new hotels in Liverpool and Manchester.

The £44 million cap says following a review it anticipates both hotels will open in ‘late’ 2016. The Liverpool hotel was originally scheduled for a spring 2016 opening and Manchester was expected to open in summer 2016.

Investec has lowered its 2016 revenue forecast from £6.3 million to £5.8 million and its EBITDA (earnings before interest, tax, depreciation and amortisation) forecast from £1.9 million to £1.4 million. It has cut its target price from 117p to 100p.

EasyHotel plunges 12% to 62.5p in early trading, 37% below its peak of 99p in December 2014.

EASYHOTEL - Comparison Line Chart (Rebased to first)

The group expects adjusted EBITDA for the year ending 30 September 2015 to be between £1.4 million and £1.5 million, lower than Investec’s original forecast of £1.6 million. It says reported EBITDA will be impacted by the termination of its South African franchise and earlier management changes – namely the appointment of Guy Parsons as chief executive in August.

Parsons, who replaced Simon Champion, says he’s having a ‘hard look’ at how the group can accelerate growth and improve its core operational disciplines. He has a strong track record of expanding budget hotels, having previously been chief executive of Travelodge.

‘We strongly believe that the operational model is working and will work on a significantly larger scale,’ says Investec analyst Alex Paterson.

EasyHotel is due to open its first site in Belgium in early 2017, which will either by bought by its Benelux franchisee or as a directly owned and managed hotel.

Issue Date: 07 Oct 2015