Having shrugged off the threat of Airbnb and the challenges posed by construction costs in Dublin, Irish aparthotel group Staycity has its eyes on much bigger prizes: turnover of €300 million by 2022 and a possible stock-market flotation.
The Dublin-based company has just opened properties in Lyon, Marseille and York, on the back of considerable revenue growth in recent years. Turnover has jumped from just €25 million in 2013 to €48 million for 2016, according to cofounder Tom Walsh.
He formed the business back in 2004 with his brother Ger, having spied a “structural shortage” of aparthotel or serviced apartment-type properties in Ireland and across Europe.
Staycity started building its own properties, finding the opportunities, linking up with investors such as pension funds and insurance companies to put up the money, and developers to build the properties, which they then lease back.
“We take on the leasing and operating risk – that’s our business model,” Mr Walsh said.
It’s a strategy that will help them grow from their current portfolio, of about 2,000 rooms to 15,000 by 2022, with a particular focus on Dublin, the UK and Germany.
Staycity has another 2,500 rooms opening soon, and expects its Dublin portfolio to grow from about 190 at present to 1,500 over the next five years.
“That’s the business plan,” Mr Walsh said, adding that such growth would see the company take on another 120 staff, to bring its headcount up to about 570.
In Dublin, Staycity expects to bring about 650-700 apartments to the market in the short-term. It has linked up with Tetrarch Capital, an Irish investment group, for two developments on Pearse Street, in Dublin city centre, of about 140 and 200 units each. Construction is expected to commence in the autumn.
It will also apply for planning permission this month on a site near the fruit markets on Capel Street, where it hopes to build about 300 units with Broadhaven.
But it’s not so long ago that the rapid emergence of Airbnb caused some flutters. Mr Walsh concedes that Airbnb probably led to a “tapering-off in the growth rate, but it didn’t cause a contraction in the business”.
How is Staycity building new apartments when developers everywhere are bemoaning the cost of construction?
“We conform more to hotel regulations,” Walsh said. “I would say that if we were trying to wrap our product over standard residential rules, it would be next to impossible [to build]”.
Of the future, Walsh said: “Personally I’d like to thing that we’d not trade sale it, although you can’t predict the future.”
He hints that Staycity could make a good IPO candidate. “But we’ve a hell of a lot of work to do before that.”