Safestay Reports Full-Year Results: Revenue and EBITDA Decline Amid Challenging European Market, Balance Sheet Strengthened

Safestay full-year results 2025: weaker hostel trading, but better cash and lower debt

Safestay’s 2025 results are a mixed bag, and the split is pretty clear. Trading was weaker across much of Europe, with revenue, occupancy and profit all moving the wrong way. But management did improve liquidity, cut bank debt and push the business further towards a more asset-light model.

My read is that this was a repair year rather than a growth year. The hostel operator has taken sensible balance sheet action, but the core trading numbers are soft enough that investors should not gloss over them.

Key metric	2025	2024
Group revenue	£20.6 million	£23.0 million
Adjusted EBITDA	£3.7 million	£6.5 million
Loss after tax	£10.1 million	£3.5 million
Cash balances	£2.7 million	£1.4 million
Gross debt excluding lease and property finance liabilities	£14.1 million	£19.5 million
Occupancy	70.0%	75.2%
Average bed rate	£20.06	£21.43
RevPAB	£16.43	£18.56
Net asset value per share	22.21p	43.32p

Why Safestay revenue and EBITDA fell in 2025

Group revenue dropped to £20.6 million from £23.0 million, while revenue from continuing operations fell 8.5% from £22.5 million. Adjusted EBITDA – a profit measure that strips out interest, tax, depreciation, amortisation and one-off items – nearly halved to £3.7 million from £6.5 million.

The underlying reason is not hard to find. Safestay sold fewer bed nights, occupancy fell to 70.0% from 75.2%, and the average bed rate dropped 6% to £20.06 as the company faced a highly competitive pricing environment.

That combination is painful in hospitality. Lower occupancy is bad enough, but when you also need to cut price to attract guests, margins get squeezed from both sides.

UK and overseas both went backwards

UK revenue fell 6% to £8.5 million, while overseas revenue declined to £12.1 million, down 13.5% year on year. The weakness was not isolated to one region, which matters because it suggests this was a wider demand and pricing issue, not just one underperforming site.

Forward bookings also looked weaker. At 1 January 2026, they stood at £3.1 million versus £4.7 million a year earlier, which is not the kind of number that screams momentum.

Why the £10.1 million Safestay loss is ugly – but not entirely cash

The headline statutory loss after tax of £10.1 million looks rough, and it is rough. But a big chunk of that came from non-cash impairment charges of £6.0 million and a £1.4 million loss on disposal of assets.

An impairment is basically an accounting write-down, where the company says an asset is not worth what it previously thought. In Safestay’s case, weaker expected future cash flows led to £4.0 million of goodwill impairment and £2.0 million of fixed asset impairment.

There were also property revaluation losses of £5.7 million in the year. That hit net assets hard, helping drive net assets down to £14.4 million from £28.1 million, and net asset value per share down to 22.21p from 43.32p.

The restatement is worth noticing

One detail investors should not ignore is that 2024 figures were restated. Safestay said a previous goodwill impairment had been understated by £2.6 million, meaning the 2024 loss was worse than first reported.

That does not change the cash position, but it is still not ideal. When a company has to restate prior-year impairment figures, it can dent confidence in the reliability of earlier numbers.

Safestay balance sheet improvement: better cash today, but lease liabilities still matter

The main positive in this RNS is the balance sheet work. Cash rose to £2.7 million from £1.4 million, and gross debt excluding lease liabilities and property finance liabilities fell to £14.1 million from £19.5 million.

That improvement came from a series of actions rather than stronger trading. Safestay sold and franchised its Edinburgh property, completed a sale and leaseback of Brighton, and received a £1.4 million Covid-19-related insurance claim.

A sale and leaseback means the company sells a property, takes the cash, then rents it back so it can keep using it. It is a useful way to raise funds and cut debt, but it also means less property ownership and more lease exposure over time.

That is the trade-off here. Bank debt is lower, which is good, but lease liabilities actually increased to £27.0 million from £23.7 million, and the group still has a £7.2 million property finance liability. So this is not a debt-free story – it is more a reshaped debt story.

Glasgow sale adds another useful cash injection

After the year end, Safestay exchanged contracts to sell its Glasgow freehold property for £5.1 million. The proceeds are earmarked for loan repayments and working capital, which should give the group another leg-up on liquidity.

That looks sensible to me. When trading is tough, protecting cash and keeping lenders comfortable matters more than hanging on to every owned asset.

Safestay strategy update: franchising, Naples expansion and direct bookings

There are still some encouraging strategic signs in this update. Safestay expanded its footprint to 22 properties in 2025, including Naples and two franchise sites in Kitzbühel, Austria, although the adjusted total stands at 20 after the Glasgow and Berlin changes in 2026.

Franchising is the interesting bit. It is relatively underdeveloped in hostels, and it gives Safestay a way to grow without spending heavily on property ownership.

The Edinburgh deal shows how that can work in practice. Safestay received £5.35 million in cash proceeds while keeping the brand on site under a 10-year franchise agreement that provides fixed annual income of £75,000 plus performance-based fees.

Direct bookings are another plus. They represented 37.5% of sales, versus a global rate of 26.3%, which means Safestay keeps more of each booking instead of paying as much commission to online travel agents.

Berlin closure, lower guest scores and 2026 headwinds are the big watch-outs

Not everything in the operational detail was encouraging. Overall guest recommendation rates dropped to 72% from 87%, even though location and value-for-money scores improved. That is a warning sign because guest satisfaction drives repeat stays, reviews and pricing power.

Then there is Berlin. Safestay is closing the Berlin Kurfürstendamm property and liquidating the subsidiary after operational pressures, investment needs and a lease termination notice. That should remove a loss-making site, but it also shows some assets were becoming too difficult to justify.

For 2026, the board says average bed rate is marginally ahead of last year, which is a small positive. But occupancy has been affected by changes in consumer behaviour linked to the conflict in the Middle East, plus tourist levies in several European destinations, while cost pressures remain from UK business rates, employment costs and VAT changes in Europe.

What this Safestay RNS means for retail investors

For shareholders, this is a cautious read. The positive case is that Safestay has bought itself breathing room by improving cash, reducing bank debt, opening Naples, and leaning into franchising and direct bookings.

The negative case is that the core business got weaker in 2025. Revenue fell, occupancy fell, pricing fell, guest recommendation scores fell, and net asset value per share was cut almost in half.

So I would not call these results good, but I would call them constructive in one important sense. Management is facing the problem head-on, selling assets where needed, trimming debt and trying to build a more flexible model. The challenge now is proving that the trading line can recover, because balance sheet repairs only get you so far if beds are not filling up properly.