Asia boom helps Hostelworld book solid results
Online hostel-booking business Hostelworld reported a strong performance for 2017, driven by European travellers using the site to book accomodation in Asia.
Hostel bookings in Asian countries accounted for more than one in five bookings on the Hostelworld website last year, according to the group's preliminary results for 2017, while European customers made up about half of the its customers.
The Dublin-headquartered company, which reported adjusted ebitda (earnings before interest, taxation, depreciation and amortisation) of €26.4m for 2017 - a 13pc increase year-on-year on a constant currency basis - said that over the past two years geopolitical events have had an impact on the European market, with growth there not as strong as on other continents.
Bookings at the group were up 6pc year-on-year, while core Hostelworld bookings increased by double digits. Innovations in technology and the company's focus on driving improved efficiencies saw adjusted profit after tax at the company reach €21.7m, a 16pc increase on the previous year at constant currency.
In addition, the company, which last year invested just over one-third of its net revenue in marketing, saw its adjusted ebitda margin remain consistent year-on-year at 30pc.
Describing the company's performance as "very positive", Hostelworld CEO Feargal Mooney noted that "while volume bookings are in line with expectations, weaker exchange rates, particularly for the US dollar, remain a significant headwind".
During the year the company, which employs around 165 people in Dublin, opened a technology centre in Portugal with the aim of increasing its capacity in product development.
Mr Mooney said that the Porto location was chosen due to the "great" availability of tech workers in the region, as well as the location providing a "good cultural fit" with the organisation.
Looking forwards to the rest of 2018, he said that the company was continuing its programme of pricing initiatives in the first three months of the year, with changes to base rate commissions making a positive contribution to its average booking value.
In addition, the pilot launch of its new free cancellation booking option in February this year had resulted in a noticeable increase in conversion and booking levels,
On the back of this the company said it was planning to introduce the model more widely and sees it as "a key strategic move for the business".
"We anticipate this product to be earnings enhancing in the medium term but will result in a deferral of revenue recognition which will affect reported earnings in 2018, its first year, but will not impact on cash receipts," Mr Mooney said.