The hostel operator said year-to-date trading is still below the board's original expectations and liquidity will remain under pressure through the winter. Bank borrowings have fallen by a third since June after two property sales, and further disposals are being considered.

What was announced

Safestay plc (LSE:SSTY) published a trading update on 26 October 2026. It states that the update contains inside information under Article 7 of UK MAR. The company said summer trading was weaker than management had expected, as it disclosed with its interim results. Trading has improved more recently, which the company credits to revenue management and other operational initiatives led by its recently appointed chief operating officer. Even so, year-to-date trading remains below the board's original expectations.

The board also warned that cash flow is seasonally difficult in the fourth and first quarters. It said liquidity remains under pressure through the quieter winter months.

The update gives no figures for revenue, occupancy, average bed rate, EBITDA, like-for-like performance or the size of the year-to-date shortfall.

Debt reduction and disposals

The clearest figure in the update is on debt. Bank borrowings fell from £13.6m at 30 June 2026 to £9.1m at 23 October 2026. On the disclosed figures, that is a reduction of £4.5m, or about 33%. Most of the proceeds from the sale of the Glasgow property, and part of the proceeds from the Holland Park sale, were used to repay debt.

The board is now looking at further property disposals and reviewing the group's existing financing arrangements. It said any proceeds would support working capital, maintain liquidity headroom and fund selective investment in its hostels. The company stressed that there is no certainty on the timing or outcome of any disposal or financing.

Background from the interim results

Safestay's interim results, published on 25 September 2026 under the headline "Strengthened balance sheet; continued challenging trading environment", set out the scale of the pressure. Revenue for the six months to 30 June 2026 fell to £8.4m, from a restated £9.4m. Adjusted EBITDA dropped to £0.6m, from a restated £2.1m. Occupancy fell to 60.8%, from 68.2%, while the average bed rate rose 8.3% to £22.10. The group made a loss after tax of £1.9m, against a profit of £471,000 a year earlier.

The interim statement said the Glasgow sale completed in June 2026 for £5.1m. Contracts to sell the London Kensington Holland Park hostel to Acerhawk Limited for £3.0m in cash were exchanged on 5 August 2026, with completion expected by October 2026. Gross bank debt was cut to £10.7m on 1 July 2026 after a £3.0m repayment. As at 22 September, forward bookings were £3.7m, down 21% from £4.7m a year earlier. The interim report named the new chief operating officer as Davide Caschili, appointed with effect from 10 June 2026.

Safestay (LSE:SSTY) describes itself as one of Europe's largest hostel groups. It operates 19 premium hostels and one hotel across ten countries.

Operations, costs and what to watch

The group is upgrading its estate before next summer's peak season. Refurbishment of the Brussels hostel is nearly complete, and work on the Lisbon hostel has started. Safestay will move its head office into its Elephant & Castle hostel in London in November 2026, which it expects to lower costs. A wider review of head office and operating expenditure is also under way.

Executive chairman Paul Cummins said trading "has shown encouraging signs of improvement more recently" and that the group has "significantly reduced bank debt". He added that the board "remains focused on ensuring the Group has sufficient liquidity to meet its obligations."

The board said it will provide a further update in due course. The main points to watch are whether further property sales are agreed, the outcome of the financing review, and how far the cost measures and recent trading improvement ease the group's liquidity through the winter.