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Saturday 1 October 2016

McCue, Cawley join Hostelworld as advert sparks official reprimand

Online hotel booking company aims to reach wider audience with its ads, writes Gavin McLoughlin

Published 01/11/2015 | 02:30

Paddy Power chief executive Andy McCue (pictured) and former Ryanair deputy chief executive Michael Cawley have joined the board of newly listed Hostelworld
Paddy Power chief executive Andy McCue (pictured) and former Ryanair deputy chief executive Michael Cawley have joined the board of newly listed Hostelworld

Paddy Power chief executive Andy McCue and former Ryanair deputy chief executive Michael Cawley have joined the board of newly listed Hostelworld as the company seeks to tailor its advertising for a wider audience.

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The move comes shortly after a Hostelworld advert showing naked backpackers jumping into an open water pool was banned by the UK Advertising Standards Authority, which said the ad was likely "to condone or encourage a dangerous practice" known as tombstoning - jumping from cliffs into water.

Paddy Power and Ryanair are noted for their edgy advertising strategies.

Hostelworld chief executive Feargal Mooney told the Sunday Independent that the ad was designed to "highlight the experience of a hostel".

"The key message coming across there is you've got a bunch of backpackers staying in a hostel, all from different parts of the world, and engaging with each other and being comfortable in each other's presence, so much so that they're prepared to go skinny dipping before they know each other's names.

"People specifically go to hostels to engage in that social interaction experience, meeting other international travellers and engaging with people in a way that you mightn't necessarily be able to do in other accommodation types," Mooney said.

"Clearly, if you look at Paddy Power and Ryanair, they've done great jobs on the brand marketing side of things and that'll certainly feed into it. The agency that we worked with on that campaign... is an agency that Paddy Power has also used a few times."

"One of the things that we're focused on is increasing the overall awareness of both the hostel product and experience and the Hostelworld brand.

"Historically, in terms our marketing investment, we've focused on search-engine marketing, we haven't really invested in brand building to any extent."

The company was valued at €245m on Wednesday's listing. It was bought in 2009 by private equity firm Hellmann & Friedman for a reported €202.5m.

On IPO, the shares were priced at 185p; by Friday afternoon, they were trading above 200p.

Mooney would not reveal the price paid for the business in 2009 but said the €245m valuation didn't take account of "significant cash that has gone out to shareholders in the in the meantime". The business is aiming to return 70-80pc of adjusted profit after tax to shareholders going forward. It had adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of almost €27m last year.

The company also wrote €50.7m off its €62.7m acquisition of its rival Hostelbookers, according to the IPO prospectus. Mooney said that was an "accounting charge within that particular legal entity" and that the rationale for acquiring the business was to consolidate the company's position in the sector.

Sunday Indo Business

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