TIDMHSW

RNS Number : 5555C

Hostelworld Group PLC

12 October 2022

LEI:213800OC94PF2D675H41

Hostelworld Group plc

Hostelworld Group plc - Trading Update

Strong current trading

Well positioned for profitable growth enabled by social network strategy

Hostelworld Group plc ("Hostelworld" or the "Group") is pleased to provide an update on trading up to 30 September 2022.

Since reporting results for the first half, we have seen significant improvements in our key financial metrics and performance indicators.

Key highlights:

   --    GMV net of cancellations (1) in September reached 116% of 2019 levels 

-- Net Bookings in September reached 83% of 2019 levels, driven by the continuing recovery of 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

-- As a result, we now expect to finish the year modestly EBITDA positive and with a stronger cash position than originally expected

(1) Total Transaction Value: Gross merchandise value of bookings net of cancellations (pre-commission) processed on our platform

Since launching our innovative and differentiated social network strategy earlier this year, we have seen strong growth week over week in the number of customers signing up to our App based social platform when they make a booking with us. 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 our Apps. This, along with strong net booking and average booking value (ABV) growth, has translated into increased revenues, lower marketing costs and improved margins.

We are also pleased to report that through our continued strong cost discipline and with marketing costs now lower than anticipated, we expect our closing cash balance to be higher than originally expected.

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 our marketing spend is significantly reduced as the benefits of our social features continues to materialise.

Outlook:

Based on the current business performance and trajectory we now expect to be modestly EBITDA positive for the Financial Year 2022. Given our continued momentum, the outlook for 2023 is encouraging and we expect our growth strategy to continue to deliver further significant benefits in FY 2023 and beyond.

We look forward to providing further details of our growth plans and long-term outlook at our Capital Markets Day on the 10(th) of November.

Gary Morrison, Group Chief Executive Officer, said today:

"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 t ravellers 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 macro-economic 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."

Capital Markets Day 10(th) November:

The Group will host a Capital Markets Day event on 10(th) November 2022 at the offices of Numis Securities, 45 Gresham Street, London EC2V 7BF, where the CEO, CFO and members of the management team will discuss latest developments and future plans to continue our journey to profitable growth.

To register your attendance in-person or virtually, please email numis_hostelworld@numis.com .

MAR information

This announcement contains inside information for the purposes of Article 7 of the UK version of the Market Abuse Regulation (EU 596/2014) ("MAR") which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is being made on behalf of the Company by Caroline Sherry, Chief Financial Officer.

For further information please contact:

     Hostelworld Group plc                                                     Corporate@hostelworld.com 

Gary Morrison, Chief Executive Officer

Caroline Sherry, Chief Financial Officer

David Brady, Head of Commercial Finance

 
 Powerscourt 
  Eavan Gannon / Nick Dibden     Tel: +44 (0) 20 7250 1446 
                                 hostelworld@powerscourt-group.com 
 

About Hostelworld Group

Hostelworld Group is a leading Online Travel Agent focused on the hostelling category, with a well-known trusted brand, 13.7 million reviews and a loyal customer base built up over 22 years. Our core business provides our customers with hostel accommodation options and hostel focused small group adventure tour products (Roamies) in over 180 countries worldwide via our website and native app platforms in 19 languages.

In parallel with helping millions of hostel focused travellers Meet The World(R), we are also committed to building a better world in everything we do. In particular, we are increasing our focus on improving the sustainability of the hostelling industry, through our active involvement in the Global Tourism Plastics Initiative (GTPI), led by the UN Environment Programme and the World Tourism Organization (UNWTO); our membership of the Global Sustainable Tourism Council (GSTC); and our recent partnership with the South Pole to offset all our greenhouse gas emissions in 2021.

Disclaimer

This announcement contains forward-looking statements. These statements relate to the future prospects, developments and business strategies of Hostelworld. Forward-looking statements are identified by the use of such terms as "believe", "could", "envisage", "estimate", "potential", "intend", "may", "plan", "will" or variations or similar expressions, or the negative thereof. Any forward-looking statements contained in this announcement are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, Hostelworld's actual results may vary materially from those expected, estimated or projected. Any forward-looking statements speak only as at the date of this announcement. Except as required by law, Hostelworld undertakes no obligation to publicly release any update or revisions to any forward-looking statements contained in this announcement to reflect any change in events, conditions or circumstances on which any such statements are based after the time they are made.

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