Safestay plc, one of Europe’s largest hostel groups, has announced the £5.35 million sale of its Safestay Edinburgh Cowgate property, with the hostel set to continue operating under the Safestay brand through a new 10-year franchise agreement. Completion is expected on 1 December 2025.
The buyer, a private investor, will take on the freehold property while Safestay retains brand presence and operational influence through its sales, marketing and IT systems. As part of the franchise deal, Safestay will receive a fixed annual payment of £75,000 plus additional performance-based fees tied to direct bookings and overall trading.
The move forms part of Safestay’s wider strategy, first signalled in June 2025, to explore the sale of selected UK assets to reduce debt and strengthen the Group’s balance sheet. The company says proceeds from the Edinburgh transaction will be used for debt repayment, working capital and long-term growth plans.
Safestay Edinburgh Cowgate opened in June 2024 following a £1.2 million refurbishment, generating £0.95 million in audited revenue and £0.125 million profit before tax in its first seven months. The company purchased the building in October 2023 for £4.3 million.
The franchise agreement in Edinburgh becomes Safestay’s second, following the August 2025 deal covering two rebranded Austrian hostels in Kitzbühel.
Trading Pressures Continue
Alongside the sale announcement, Safestay issued a trading update highlighting challenging market conditions across Europe. The company says price pressures that affected peak summer months have persisted, and FY2025 revenue is now expected to be lower than FY2024.
To navigate these conditions, the Board is maintaining a focus on occupancy, cost control and strategic options that may include additional asset disposals, sale-and-leaseback deals or an equity raise.
‘An attractive model for both parties’
Chairman Larry Lipman said the Edinburgh freehold sale “reflects the quality of the property in the Group’s portfolio and strengthens Safestay’s balance sheet”, adding that the franchise model offers continued brand exposure in a prime city-centre location while providing reliable fixed income for the Group.
He also acknowledged the wider trading difficulties facing the European hostel sector, noting that the Board is considering ways to support sustainable growth and enhance shareholder value.
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