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Hostelworld Publishes Trading Update

By Dave Simpson

Hostelworld Group plc has published an update on its on trading to 30 September 2022.

Key Highlights:

  • GMV net of cancellations in September reached 116% of 2019 levels;
  • net bookings in September reached 83% of 2019 levels, driven by the continuing recovery of the Asia and Oceania regions (now at 70% of 2019 levels, up from 43% in June);
  • net revenue in September reached 104% of 2019 levels, reflecting the sustained growth in ABV and normalisation of cancellation rates throughout the year;
  • social strategy is delivering margin growth well ahead of expectations, with marketing as a percentage of net revenue expected to improve from 70% in H1 to approximately 55% in H2; and
  • as a result, Hostelworld now expects to finish the year modestly EBITDA-positive and with a stronger cash position than originally expected.

Since launching its differentiated social-network strategy earlier this year, Hostelworld has seen strong growth, week over week, in the number of customers signing up to its app-based social platform when they make a booking with the group. In particular, as of the end of September, almost 50% of all customers had signed up to the platform (since launching in April), driving a significant increase in the volume of bookings through the group’s apps. This, along with strong net booking and average booking value (ABV) growth, has translated into increased revenues, lower marketing costs, and improved margins.

Hostelworld also reported that through its continued strong cost discipline, and with marketing costs now lower than anticipated, it expects its closing cash balance to be higher than originally expected.

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In summary, all geographies continue to see a strong recovery in demand. Bookings and ABV are trending positively, cancellation rates are in line with expectations, and the group’s marketing spend is significantly reduced, as the benefits of its social features continue to materialise.

Outlook

Based on the current business performance and trajectory, Hostelworld now expects to be modestly EBITDA-positive for the 2022 financial year. Given the group’s continued momentum, the outlook for 2023 is encouraging, and it expects its growth strategy to continue to deliver further significant benefits in FY 2023 and beyond.

Statement By CEO

Gary Morrison, Hostelworld’s group chief executive officer, said, “I am very encouraged by the clear financial and operational progress we have delivered, year to date. In particular, I am very pleased with the positive trends we are seeing from our innovative ‘social’ strategy, which is driving more customers to use our apps, and reduced marketing as a percentage of net revenue.

“In parallel, I am also pleased to welcome new research published by Bureau Veritas, which confirms that hostels produce, on average, 75% less carbon than hotels. We know travellers are increasingly environmentally conscious, constantly looking for ways to minimise their carbon footprint while visiting new destinations. This report confirms that hostels are the sustainable tourism choice.

“While recognising that wider macroeconomic conditions are challenging and highly volatile, I remain very encouraged by the growth outlook for our business, underpinned by our highly differentiated social strategy, data-driven marketing allocation, and disciplined cost control. I want to personally thank the entire Hostelworld team for their efforts in building the strong operating platform we have today, as I look forward with confidence on the journey ahead to continued profitable growth.”

© 2022 Hospitality Ireland – your source for the latest industry news. Article by Dave Simpson. Click subscribe to sign up for the Hospitality Ireland print edition.

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