Hostelworld shares tumble 30pc in London in surprise booking fall
Hostelworld shares closed down almost 30pc in London yesterday after the company said bookings had declined in the second quarter because of geopolitical issues.
The company's shares closed below their IPO price of 185p at 183p.
Chief executive Feargal Mooney said Hostelworld had seen softness in the market coming out of Easter over the last six or seven weeks.
"Typically what we would expect to see coming out of Easter is that you would get a little bit of a boost in the run-up to the May and June bank holidays and into the key summer season. And we didn't see that," he said.
He said the weakness was particularly pronounced in European destinations, and that the company still had beds to sell ahead of the European Football Championships in France this summer.
"That's out of the norm, normally with a big sporting event like that, we'd be sold out well in advance," Mr Mooney said.
The share collapse makes the timing of a share sale by some of the company's pre-IPO shareholders prescient.
Hostelworld's former private equity owner Hellman & Friedman (H&F), and the Duffy family, sold all their Hostelworld shares (a combined 23.5 million) at 260p each on April 13, three weeks after the Brussels attacks.
In a stock market announcement on April 12, H&F and the Duffys said they had entered into a 180-day lock-up agreement (meaning they could not sell their shares during the relevant period) with stockbrokers Numis at the time of Hostelworld's IPO in November.
The announcement said Numis had agreed to waive the lock-up for the purposes of the share sale.
Mr Mooney said that the sale "would have been in line with everybody's expectations".
"As a private equity firm, they typically like to exit their investments after four to five years," he said.
"That's what the IPO was about, they sold 75pc in the IPO. And the expectation from everybody would have been that they would sell the remaining 25pc when their lock-up period was over.
"So that's not something that was unexpected either by us as a management team or by our incoming new shareholders. [It was] very much in line with what everyone had expected," Mr Mooney said.