Hostelworld Records Decline In Net Revenue For First Half Of 2021
Dublin-based accommodation booking platform Hostelworld has released its interim results for the half-year period that ended on June 30, 2021, revealing that the company's net revenue declined by 76%...
Dublin-based accommodation booking platform Hostelworld has released its interim results for the half-year period that ended on June 30, 2021, revealing that the company's net revenue declined by 76% to €2.9 million during the period.
Hostelworld released the following financial highlights in a statement published on hostelworldgroup.com:
- "Net revenue of €2.9m in H1 2021, a decline of 76% (H1 2020: €12.0m). On a quarterly basis, net revenue in Q1 2021 was €0.9m (Q1 2020: €12.0m) and in Q2 2021 €2.0m (Q2 2020: €0.0m);
- Total group net bookings decline of 73% (H1 2020: 67%). Net booking volume decline from 1.1m to 0.3m, with cancellations €0.8m (H1 2020: €5.4m). On a quarterly basis, net bookings in Q1 2021 were 0.1m (Q1 2020: 1.1m) and in Q2 2021 0.2m (Q2 2020: 0.0m);
- Net average booking value ('ABV') of €11.72 (H1 2020: €9.45), reflecting favourable geographic mix, and higher number of bed nights per booking;
- Total H1 2021 marketing costs of €2.4m were 64% of net revenue (excluding deferred revenue), (H1 2020: €7.5m, 76%);
- Administrative expenses reduced by 43% to €13.5m in H1 2021 (2020: €23.7m);
- Adjusted EBITDA loss of €9.7m (H1 2020: €8.3m loss);
- Basic loss per share of 17.50 € cent (H1 2020 basic loss per share: 18.60 € cent)."
Balance Sheet And Cash Flow:
Hostelworld also released the following balance sheet and cash flow data in the statement published on hostelworldgroup.com:
- "Closing cash position €33.7m (H1 2020: €32.9m);
- Adjusted free cash flow (101%), (H1 2020: (33%));
- Customer deposits related to bookings made under the free cancellation policy amounted to €1.1m (H1 2020: €0.6m);
- Cash dividends for 2021 remain suspended."
Trading Update And Outlook
Hostelworld said regarding its trading and outlook in the statement published on hostelworldgroup.com, "Similar to the initial recovery observed in Q3 2020, we are seeing swift increases in demand in those destinations where travel restrictions have eased. The recovery started with domestic demand in the US and Australia followed by stronger growth into several European destinations throughout Q2. Overall, we continue to expect the pace to mirror changes in individual markets over the coming months, both positive and negative. Outside of these geographies, demand continues to remain very depressed.
"As the recovery has progressed we have seen several factors impact our trading economics versus the first half of 2019. In particular, average net booking values have steadily recovered to near H1 2019 levels driven by a favourable geographic mix and longer length of stay bookings, which has been partially offset by underlying bed price deflation, higher cancellation rates (in part driven by a higher proportion of free cancellation bookings) and a reduction in blended commission rates (driven by the removal of Elevate in 2020). Marketing costs per net booking however have remained elevated versus H1 2019 driven by lower conversion rates and higher cancellation rates (in part driven by a higher proportion of free cancellation bookings). Consequently, marketing costs as a percentage of net revenue remain significantly higher than H1 2019 levels, although we expect these to gradually normalise as normal travel patterns resume.
"On the supply side, despite the continuing depressed demand during H1 2021 we have only seen a very modest reduction in the number of hostels on our platform compared to levels at the end of 2020, driven by continual sign ups to our platform. In addition, I am also encouraged to see our customers are continuing to book dorms in the majority of cases, with only a modest shift towards private rooms compared to 2019 levels.
"Overall, while bookings continue to trend well below normalised patterns, we expect the recovery to improve further during the second half of the year, albeit that we expect net bookings will remain at significantly reduced levels when compared to 2019. In particular we expect the pace of the recovery to mirror changes in individual markets over the coming months, both positive and negative.
"Whilst significant uncertainty remains, and the recovery is likely to take some time, the board remains confident in the resilience and flexibility of the group’s business model, and its ability to execute on its growth strategy and build market share as demand recovers. In parallel, the Board will continue to evaluate internal and external opportunities that will deliver value for shareholders, in particular the significant potential to enhance future growth through our Meet the World™ growth strategy.
"In light of continued market uncertainty, the group is not in a position to provide full year guidance until such time as the overall impact of COVID-19 on the group becomes clearer."
Hostelworld CEO Statement
Additionally, Hostelworld CEO Gary Morrison said in a statement published along with Hostelworld’s interim results on hostelworldgroup.com, "During the first half of 2021 the COVID-19 pandemic has weighed heavily on the global travel industry. Although global vaccination programmes have continued at pace, new strains of the virus have spread rapidly around the world leading to frequent and swift changes to travel restrictions.
"Despite the challenging macro environment, we are starting to see customer demand returning in geographies where travel restrictions have been eased. In the US we have seen a recovery in domestic demand during Q1 and Q2, followed by a strong recovery in several southern European markets in Q2. As the recovery has progressed we are also seeing the economic benefits of the initiatives we have already taken to strengthen our core platform, driven by improvements in inventory competitiveness, user experience enhancements and improved marketing capabilities.
"As we look ahead, I am very pleased with the positive customer feedback we have received to our Meet The World™ growth strategy tests in the first half of the year which builds on our core business strengths to provide our customers with a wider range of travel products and social features to help them meet other like-minded travellers. Finally, our liquidity position remains very strong, driven by our relentless focus on cost control coupled with the successful term loan facility transaction in February 2021.
"In summary, while the short-term outlook for the travel industry remains extremely challenging, I remain confident that Hostelworld will emerge from the COVID-19 crisis stronger than before. I would like to take this opportunity to thank all of our employees for their continued hard work and commitment, and our customers and shareholders for the support they have shown through these challenging times."
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