Studio Stays Hotel Group — Hotels with a difference

Studio Stays Hotel Group (JPJ:SSHG)

Last close As at 11/03/2025

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Research: Consumer

Studio Stays Hotel Group — Hotels with a difference

From a standing start, the management of Studio Stays Hotel Group (SSHG) aims to gradually acquire a number of good-quality (three- or four-star ratings) but underperforming (ie low occupancy) hotels around the UK and then boost occupancy by attracting a customer base beyond the traditional ‘hotel’ customer. It believes the new hybrid model, enabling long stays, along with lower operating costs and the inherent operational gearing, provides an opportunity to meaningfully increase the profitability and valuation of each hotel in a short time frame (ie within 12 months).

Russell Pointon

Written by

Russell Pointon

Director of Content, Consumer and Media

Travel and leisure

QuickView

11 March 2025

Price 70.00p
Market cap £7m
Price Performance
Share details
Code JPJ:SSHG
Listing JP Jenkins

Shares in issue

10.0m

Pro forma net cash/(debt) as at 28 March 2025

£(2.0)m

Business description

The Studio Stays Hotel Group is a hotel chain operator that expects to derive revenues from a hybrid business model of traditional hotel stays, Airbnb and longer stays.

Bull points

  • Innovative business model, playing to structural growth trends in property shortages for students and corporate demand.
  • High operational gearing from expected incremental revenue.
  • Management has strong reputation in building businesses and hotel management

Bear points

  • The hotel industry is highly cyclical and vulnerable to short-term disruption due to external factors such as weather.
  • The company has no operating history to date, albeit the management team has experience of property development and the hotel industry.
  • The company’s growth plan is reliant on its ability to identify and acquire suitable underperforming hotels.

Analyst

Russell Pointon
+44 (0)20 3077 5700

Studio Stays Hotel Group is a research client of Edison Investment Research Limited

New revenue streams and lower operating costs

The core of management’s strategy, after acquiring a new hotel, is to fit a kitchenette into c 30% of the rooms. The addition of a kitchenette, typically not in the prime rooms, immediately presents revenue opportunities from two new sources: short-term rentals, such as Airbnb-type stays; and long-term rentals, which should be attractive to, for example, students and corporates given the flexibility of the commitment versus other options. Naturally, management anticipates that higher occupancy will stimulate demand for the existing food and beverage (F&B) offer. The requirement to service the rooms less frequently is one example of the potential cost-saving opportunities.

From zero to £8.4m in EBITDA in five years

Simplistically, management’s business plan, following the first hotel acquisition expected to complete in April 2025 for £3.75m, is to acquire a similarly valued hotel every six months so that SSHG owns 10 hotels by the end of FY30. Once acquired, management’s plan assumes occupancy increases from c 55% pre-ownership to 84% by the fifth year (ie FY30 for the first hotel), with the greatest gains, to 78%, in the first two years. This, along with expected incremental F&B revenue, leads to a five-year revenue CAGR for the first hotel of c 14% by FY30. Although F&B revenue grows in absolute terms, the greatest revenue growth is expected from the new short- and long-term rentals. The incremental revenue and cost savings/efficiencies drive the EBITDA margin to c 27% in the first year, and compares with PPHE’s 31% in 2024. Taking into account the expected phasing of hotel acquisitions and the maturity profiles of occupancy, management’s plan indicates £8.4m EBITDA on £28.2m of revenue in FY30. Hotel acquisitions will be funded by mortgages at between 60% and 75% of the acquisition cost, and management forecasts positive cash flows in each year except FY27, due to acquisitions.

Valuation

A formal valuation by AAB Group in February 2025 derived a valuation range for SSHG’s equity of £3.8–10.2m, with a central valuation of £6.6m.

Source: SSHG, March 2025. Note: EPS derived using 10m shares in issue.

Management’s business plan

Year end Revenue (£m) EBITDA (£m) PBT (£m) EPS (p) P/E (x) EV/EBITDA (x)
2/26e 4.3 0.6 0.2 1.48 47.3 15.7
2/27e 11.0 2.2 1.4 10.86 6.4 4.1

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