Super budget chain easyHotel suffered a 21% plunge in annual pre-tax profits as it took on costs related to expansion.

Profits fell from £1.09 million to £860,000 for the year to September 30 despite a 39% rise in sales to £29.67 million.

Five new hotels totalling 535 rooms opened during the year trading “exceptionally strongly” with combined occupancy of more than 85%.

Owned hotels outperformed the competition with lie-for-like revenues up by 13.7%, the company said.

Howver, the company is considering fresh finance options as it admitted to being only able to finance one further owned hotel.

CEO Guy Parsons said: “The group’s asset backed balance sheet remains strong but with our current development pipeline we are only able to finance one further owned hotel.

“We continue to see a good number of attractive potential development opportunities to further accelerate the group’s growth.

“Consequently, the board is considering its financing options, which may include new equity and debt, to fund these opportunities.

“Whilst the wider macro-economic uncertainty continues to impact consumer confidence, we believe easyHotel is well positioned.

“The refinements that have been introduced to the business over the course of the last year are further strengthening our brand and ensuring that the easyHotel offering is one that can support delivery of the board’s ambitious long-term strategy for growth.”

He described 2017 as a year of strong progress for the group as it continued to develop the easyHotel brand as a market leader in “super-budget” sleep.

“Impressive like-for-like sales growth has been achieved across our existing network of hotels, underpinned by the smooth implementation of our new booking engine and yield management system across the entire easyHotel network,” said Parsons.

“We continue to accelerate our growth plans for the brand, targeting carefully selected locations to build our portfolio of owned and franchised hotels and applying strict investment criteria.

“Five new hotels were opened over the course of the year, with easyHotel Liverpool opened since the year end.

“All have traded strongly since opening and we have been delighted with the positive customer reaction to our stylish new brand format.”