Hostelworld reaffirms full-year guidance

(Sharecast News) - Hostelworld Group reaffirmed its full-year adjusted EBITDA guidance in an update on Tuesday, in line with market expectations, following a solid performance through the year-to-date up to 30 September. The London-listed company recorded 5.4 million net bookings, a 7% year-on-year increase, driven by record performances in Asia and Central America.

However, the net average booking value declined 9% to €13.54, reflecting a higher proportion of bookings in lower-cost Asian destinations and a rise in solo travellers, consistent with mid-year trends.

Net revenue for the period stood at €72.3m, down 2% from the prior year, while direct marketing costs as a percentage of revenue decreased to 46%, from 51% in 2023.

The proportion of bookings from Hostelworld's Social Members rose to 80%, up from 67% the prior year, signalling growing engagement with the company's social platform.

Operating costs were tightly managed, totaling €18.7m, a 3% reduction from last year and representing 26% of net revenue.

Adjusted EBITDA increased 28% to €17.8m, with the EBITDA margin improving to 25%, compared to 19% for the same period last year.

Hostelworld said it ended the period with a net cash position of €0.9m, having fully repaid its bank debt, and a closing cash balance of €7.8m.

The company said it was currently reviewing its capital allocation policy, adding that it would provide an update with its full-year results.

"I am pleased with our performance year to date, which has been driven by strong consumer demand from Europe, the UK and North America to low-cost destinations in Asia and Central America," said group chief executive officer Gary Morrison.

"The strong cash generative nature of this business has seen us return the balance sheet to a net cash position in quarter three of 2024, as previously guided.

"In addition to our strong financial performance, I am equally pleased with the continued impressive performance of our Social Network, as a result of which, marketing expense as a proportion of revenue has improved significantly year-on-year."

Morrison said that had resulted in net margin growth of 10% and, combined with the firm's continued focus on cost, had delivered a 28% increase in adjusted EBITDA on the year.

"Looking ahead, I remain very confident in our business model and our continued success in building a platform for long-term profitable growth."

At 0959 BST, shares in Hostelworld Group were down 1.46% at 135p.

Reporting by Josh White for Sharecast.com.