Safestay to expand hostel portfolio with £18.5m funding

Hostel operator Safestay has secured an £18.5m funding package from HSBC UK to as it targets further expansion.

The London-headquartered business, which owns and operates 17 hostels across Europe, said it planned to invest in its portfolio and open new sites in "key gateway cities".

Safestay made its first post-pandemic acquisition last year when it returned to Edinburgh with the purchase of a six-storey building for £4.3m.

The group operated a 615-room backpacker hostel in the Scottish capital for six years until 2021, when it sold the building at the height of coronavirus restrictions.

It plans to use a portion of the funding from HSBC to invest £1m in refurbishing the new 225-room Safestay Edinburgh Cowgate Hostel ahead of the busy summer period.

Larry Lipman, chairman of Safestay, said: "This funding improves our flexibility and enables additional investment into the development and growth of our business.

"Returning to Edinburgh – with its thriving tourism industry – was an important moment for the business after the pandemic, and completing this deal with HSBC UK is the next step.

"It enables us to make investments across our portfolio and resume our plans for expansion into key gateway cities, achieving economies of scale in regions across Europe."

Safestay's portfolio features 3,476 bedrooms across 17 sites, including four other UK hostels in London, Glasgow and York.

Elizabeth Davies, head of hotels at HSBC UK, said hostels had become "an increasingly exciting, growing segment of the hospitality industry" since the pandemic.