Weak pound a boon for business says Generator Hostels' boss Fredrik Korallus
The chief executive of a premium British hostel chain says the weak pound has been a boon for business, driving up occupancy rates at its London branch.
Generator Hostels' boss Fredrik Korallus told the Press Association that the company has seen an uptick in demand from both inbound tourists and Brits opting for "staycations" following the pound's collapse.
"We've seen a double benefit, one is inbound traffic because it's cheaper to come to London, and second, people staying home because it's more expensive to leave, so London has benefited from that," he said.
Tourists have been taking advantage of the weak pound, which has fallen nearly 20% against the US dollar and 15% against the euro since the Brexit vote.
However, Brexit has had "no impact whatsoever" on either the group's European operations or expansion plans.
"I've been here 18 months, the plans have been formulating since I've arrived. We've made no changes to how we operate as a consequence of Brexit. We just keep an eye on it," Mr Korallus said.
Generator Hostels, which operates sites across Europe including Paris, Amsterdam, Stockholm, Rome and Berlin, is set to open its first US site in Miami in October 2017, and is currently exploring additional locations in New York, Boston, Philadelphia, Los Angeles and San Francisco.
New hostels in Cuba, Tel Aviv, Budapest, Warsaw and Edinburgh are also being considered.
It is part of a commitment to double the size of the business over the next five years, Mr Korallus said. But a pending sale by majority shareholder and private equity group Patron Capital could shift Generator Hostels' growth targets.
Mr Korallus confirmed that Patron is actively perusing a deal to sell the business, which could fetch up to £400 million.
"This business needs to continue to grow and we are at a point where that requires new capital," he said.
The chief executive says there has already been "phenomenal interest" in Generator Hostels, prompting "a lot of unsolicited offers."
The business is expected to notch up 72 million euros (£64.8 million) in revenue for 2016, up from 56.7 million euros (£51 million) a year earlier.
Profit is also expected to rise, with EBITDA - a measure of earnings before interest, tax, depreciation and amortisation - set to reach 21 million euros (£18.9 million) versus 12.3 million euros (£11 million) in 2015.
The year-on-year jump follows the opening of the Amsterdam, Stockholm and Rome locations over the past 10 months.
Despite rapid growth, Mr Korallus told the Press Association that a flotation is still at least five years away.
He added: "I think at this stage we're too small, we are also a business that is still ramping up, so many of our assets that have opened in the past five years, are still maturing and stabilising , and so it's not even on the cards right now.
"It would be several years into the future."