Snoozebox Portable Hotels Born in Misery of Rain at Le Mans
When Ignis Asset fund manager David Clark first heard of Snoozebox (ZZZ), portable hotels made of stackable containers that have housed fans at events such as the Le Mans 24-hour car race, he wanted to kick himself. Instead, he made sure Ignis was the biggest investor.
“When I first came across it I had a ‘duh’ moment,” Clark said in a phone interview. “It doesn’t take a genius to figure out the numbers of places that hold events but don’t have the accommodations for people to stay in.” Ignis now holds 14 percent of Snoozebox Holdings Plc (ZZZ)’s shares.
Snoozebox, which transports rooms equipped with flat-screen TVs, Wi-Fi and running hot water to sporting and music events across the U.K. and beyond, may almost triple its revenue this year, said Simon French, an analyst at Panmure Gordon & Co., who recommends buying the stock. The London-based company may report 5.4 million pounds ($8.3 million) in sales for 2012 when it releases earnings April 23, he said.
The stock rose 7.3 percent to 66.5 pence at 1:18 p.m. in London, for the biggest two-day gain ever. Snoozebox advanced 8.3 percent yesterday, when it announced a contract to accommodate 1,350 personnel at the G8 summit in Northern Ireland in June. Snoozebox has gained 66 percent since its initial public offering in May, outperforming European hoteliers such as Accor SA (AC) and InterContinental Hotels Group Plc (IHG). The MSCI Europe Hotels, Restaurants and Leisure Index (MXEUOHL) has advanced 13 percent.
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Chief Executive Officer Robert Breare said the trick is to transport -- by air, land or sea -- 40 to 400 prebooked rooms that are placed steps from the action.
Breare was in a tent getting shelter from the rain with his children and friends at Le Mans when he first had the idea that would become Snoozebox.
“Wild horses wouldn’t break me away from the Snoozeboxes in Le Mans this summer,” he said in a phone interview. “It’s very, very comfortable in there.”
Snoozebox intends to provide about 80,000 room nights this year at more than 20 events such as the Silverstone Classic car race and the Edinburgh Festival of plays and concerts. It booked more than 20,000 nights in 2012, French estimates.
“These hotel rooms were installed on time despite the wettest summer for 100 years,” demonstrating the “durability of the business model,” he said in a January report.
The company has found an underserved niche market, gaining an advantage over future competitors, French said in an interview. He predicts the stock may rise to 84 pence. The shares reached a record 75.75 pence in January.
“I’d be astonished if in the long run they’re not at every single Formula One event on the planet,” said Caspar Trenchard, fund manager at Standard Life Investments, the third-largest Snoozebox investor.
“I’ve always said I could do that,” said Breare, who enlisted Formula One champ David Coulthard as honorary president of Snoozebox.
The 60-year-old CEO founded the Great Eastern and Malmaison boutique hotel chains and sold them to Wyndham International Inc. (WYN) He was non-executive chairman of clothing retailer Ted Baker Plc (TED) for almost 11 years before stepping down in January.
Snoozebox plans expansion, from bookings in western Europe in 2014 to events in Asia and North America, including Nascar races under franchises. “You need to keep one team and not spread it too thinly,” Breare said.
“If anything they’re sort of undersupplying the market” Trenchard said, as rapid growth is limited by funding required to add to a 600-strong fleet of containers. “In time, they’ll need to commit capital to extend the fleet.”
While there are other event accommodations, from tents to local inns to “glamping,” which combines camping with hotel- like amenities, Snoozebox’s appeal is being the closest to the event in serviced, air-conditioned rooms.
Three nights in a Snoozebox for two adults and one child at this summer’s Formula One British Grand Prix race costs 795 pounds. That compares to 60 pounds per adult for pitch-your-own- tent camping for three days, with on-site toilets and a shuttle.
Snoozebox has lower running costs than a hotel staffed year-round that has to contend with empty rooms, said Sylvie Cartiser, managing director at Unfold Consulting in London who has worked with chains such as Hilton. “Effectively, you’re running at 100 percent of occupancy all the time.”
But while rooms are filled, Snoozebox is exposed to gaps in the calendar because most U.K. outdoor events are in the summer. An agreement for rooms from spring through autumn at Thorpe Park, a London-area theme park, is encouraging, French said, and international expansion is needed for further cover.
Any logistical planning difficulties and the consequent reputational damage are also key risks, French said.
“They have a lot left to do domestically, we’re not going in with our eyes closed,” said Clark at Ignis. “But the risk/reward ratio is very much in favor of reward.”
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