Earnings rise to €26.4m at Hostelworld as brand bookings increase by double digits
Online hostel booking business Hostelworld has 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.
The increased earnings were driven by a double digit growth in core Hostelworld brand bookings, while overall bookings at the Dublin-listed group were up 6pc year-on-year, according to preliminary results from the company.
Adjusted profit after tax at the company was €21.7m, a 16pc increase on the previous year at constant currency. While the group’s adjusted Ebitda margin was consistent year-on-year at 30pc.
- Read more: Bookings growth up 6pc at Hostelworld
During the year the company, which invested 34pc of net revenue in marketing, saw just over one in two of its hostel bookings come from mobile devices, while the group established a new technology centre in Portugal to increase its capacity in product development.
Despite the solid performance, the group warned on market conditions, particularly in Europe, remaining uncertain, and weaker exchange rates, especially for the US dollar.
"In 2017, a double digit increase in Hostelworld brand bookings underpinned a record adjusted Ebitda of €26.4m," Feargal Mooney, CEO of Hostelworld, said.
"Market conditions, particularly in Europe, remain uncertain and while volume bookings are in line with expectations, weaker exchange rates, particularly for the US dollar, remain a significant headwind".
During the year net revenue increased by 10pc on a constant currency basis to €86.7m, while average booking value at the group was €11.6, flat on 2016 and up 2pc on a constant currency basis.
Looking forwards Mr Mooney said that the company was continuing its program of pricing initiatives in the first three months of 2018, 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 2018, had resulted in a noticeable increase in conversion and booking levels, on the back of which the company said it was planning to introduce the model more widely, which it sees 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.
"This new product together with increased technology investment will substantially improve our offering to customers and our competitive position and underpin the board’s confidence that we will see bookings growth in 2018 and beyond."
The group proposed a 15pc increase in final dividend of €12.0 per share, resulting in full year dividend of €17.1 per share, in line with stated dividend policy.