Hostelworld’s chief executive said the Dublin-based hostel booking company has had a “very, very strong start” to 2022, after net bookings in each of the past two years ran at a about a fifth of their pre-pandemic level.
Gary Morrison, who has led the company for almost four years, said that current trends suggest net bookings "will continue to recover towards 2019 levels, in the absence of any further escalation of the conflict in the Ukraine or other unforeseen events".
Hostelworld recorded 1.5 million net bookings through its platform last year, level with the outturn for 2020 – and 21 per cent of the figure for 2019.
New revenues picked up by 10 per cent last year to €16.9 million, but remained well off the 2019 level of almost €81 million. While bookings growth had accelerated in key destinations as borders reopened around the globe during 2021, business suffered a temporary set-back in the final six weeks of the year due to the spread of the Omicron variant of the virus.
“What we’ve seen in the first weeks of trading of this year is a very, very strong start,” Mr Morrison told The Irish Times. “We’ve seen that in all of the trading metrics, whether it’s revenue or net bookings or margins. And that’s really reflecting the fact that the travel landscape is starting to ease in terms of Covid restrictions.”
Strong demand
While overall pent-up demand is strong, Mr Morrison noted that risk factors include the fact that Asia and Oceania regions remain “significantly depressed” compared to before the pandemic. All other regions are higher than the third-quarter peak of last year, before Omicron.
While he said that the Russia-Ukraine war does not impact Hostelworld directly, as both countries account for a combined 0.01 per cent of group net revenue, the conflict poses “new uncertainties” for the broader travel industry. “If that were to cause significantly higher flight prices because of fuel inflation, obviously that would be a bit of a headwind for us,” he said.
Hostelworld reported a loss of €36 million for last year, narrower than the €46.9 million shortfall for 2020. The company, which cancelled a planned final dividend on 2019 earnings as the pandemic struck two years ago, said that it believes that a continued suspension of cash payouts “remains in the best interests of the business for the foreseeable future”.
Marketing costs per booking remained elevated versus 2019, driven by lower conversion rates in destinations where some level of restrictions persist and higher cancellation rates.
“Consequently, direct marketing costs as a percentage of net revenue remain significantly higher than 2019 levels, although we expect these to gradually normalise as historic travel patterns resume,” the company said. “On the supply side, despite the continuing depressed demand during 2021 we have only seen a very modest net reduction (3.5 per cent) in the number of hostels on our platform compared to levels at the end of 2020, driven by continual sign ups to our platform.”
Shares in Hostelworld were up 5.9 per cent at 77.5p in mid-morning trading in London.
