Hostelworld, the hostel-booking group that targets millennial and Gen-Z backpackers, said it has had a “strong” start to the new year, after posting earnings for 2023 that marginally exceeded its own upgraded guidance as bookings continued to grow following the pandemic.
The Dublin-based company’s adjusted earnings before interest, tax, depreciation and amortisation (ebitda) came to €18.3 million last year, it said in a trading statement on Wednesday. That compared to earnings of €1.3 million in 2022 when the travel industry was recovering from the pandemic and a forecast range of €17.5 million to €18 million that Hostelworld set out in October when it upgraded prior guidance.
Group revenues, mainly generated by charging 15 per cent commission on hostel bookings, rose by 32 per cent to a record €93.7 million as net bednights booked through the company rose by 30 per cent to 22.7 million, amid strong growth across all regions globally.
However, the average booking value fell by 4 per cent on the year to €14.36 million, as a greater proportion of customers travelled to low-cost Asian destinations. Still, this was partly offset by general bed price inflation internationally.
“We have started the new year with strong momentum and I feel very confident that we will continue our track record of continued profitable growth and value creation for our shareholders,” said chief executive Gary Morrison.
Hostelworld has been winning back hostel bookings market share that had been ceded to general online travel agents such as Booking.com before the pandemic, helped by the introduction of a pioneering social network that invites customers into city and hostel chat groups before checking in. Over half of the company’s bookings are now coming from social members, which has helped reduce marketing spend as a percentage of revenue.
Full-year marketing costs fell to 50 per cent of revenues from 59 per cent in 2022 and 79 per cent at the height of the pandemic the previous year.
Hostelworld reached an important milestone last May when it repaid €28.8 million of high-cost loans drawn down from US specialist lender HPS Investments three years ahead of schedule with the help of €17.4 million of much cheaper loans from AIB, some of which has since been paid back.
At the end of December, the group had net debt of €12 million and a closing cash position of €7.5 million, according to the trading statement.
Hostelworld also has about €9.5 million of warehoused employment tax outstanding from a relief programme offered by Revenue to businesses during the height of the pandemic. Businesses have until May to agree phased repayment arrangements on the debt, which is currently carrying a 3 per cent interest rate.
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