Expansion costs impact on profits at travel firm
Expansion costs at the firm that operates hostelworld.com last year hit profits at the online travel business.
New figures lodged with the Companies Office show that the group last year recorded an operating profit of €13.71m before non-cash depreciation and amortisation costs of €14m are taken into account.
This followed an operating profit of €22.4m in 2012 before the €13.4m depreciation and amortisation costs. In August 2013, parent firm, Web Reservations International (WRI) bought UK web travel agency, hostelbookers.com for €100m in a move that valued the WRI group at $500m (€389m).
Costs associated with the acquisition resulted in pre-tax losses doubling from €14.83m to €29.81m.
Net revenues at the group increased by 10pc from €52m to €57.1m last year.
Remuneration to the firm's key management personnel last year dropped from €1.43m to €1.33m and this followed bonus payments tumbling from €388,300 to €34,439. Salaries increased from €994,666 to €1.24m.
The figures show that the holding firm that operates hostelworld.com and bedandbreakfastworld.com, H&F Wings Lux 1 S.a.r.l. incurred financial expenses last year of €28.9m and the expenses were the main contributor to the firm sustaining the pre-tax loss.
WRI operates the various websites, providing online reservations to more than 35,000 properties in 180 countries from hostels to budget hotels, B&Bs, guesthouses, campsites and holiday apartments.
According to the directors' report, "the managers consider that the overall business performed satisfactorily during the year".
The directors state the group plans to continue to focus on providing software and data processing services and anticipates increased revenues from continued expansion within worldwide markets.
In 2010, WRI was purchased for over €200 million by a US private equity firm, Hellman & Friedman Capital Partners.
The accounts show that a major hike in administrative expenses from €29.53m to €44m also contributed to the loss and the administrative costs included €6.5m relating to the acquisition of hostelbookers.com.
The acquisition contributed to numbers employed by the group increased from 129 to 255 with staff costs going up from €8.74m to €11m.
The majority of 63pc of revenues were recorded in Europe with 19pc recorded in the US and 18pc in Africa, Asia and Oceania.
Net liabilities stood at €59.2m at the end of December last and in a note, Hellman & Friedman has committed to continue to provide financial support to the company.