Hostelworld earnings fall despite growth in brand bookings
Hostelworld reported a 19pc fall in earnings before interest, taxation, depreciation and amortisation (EBITDA) to €21.4m last year, despite growth in its brand bookings.
Excluding the impact of deferred revenue, earnings fell 8pc year-on-year, according to annual results from the group.
Deferred revenue comes from the rollout of Hostelworld’s free cancellation booking option last year, a key product for the company that it hopes will broaden its customer offering.
This deferred income amounts to €2.9m, which will be recognised this year, net of any future cancellations.
Hostelworld brand bookings recorded growth of 4pc in 2018, however total group bookings growth was flat reflecting the managed decline in supporting brands.
The group generated revenue of €82.1m in the year – not including deferred revenue. Excluding the impact of deferred revenue, group revenue grew by 1pc on a constant currency basis.
Importantly the group's app bookings rose 22pc in the year and now accounts for 40pc of group bookings.
Meanwhile, Hostelworld’s average booking value of €11.90 was a 3pc increase on 2017, and a 6pc increase on a constant currency basis.
Gary Morrison, CEO of Hostelworld, said: “We are pleased to have reported continued growth in our core Hostelworld brand gross bookings of 4pc during the year and to have successfully developed the 'Roadmap for Growth' programme.”
Looking forwards the company said it has plans in place to utilise and leverage its “rich data sources” to target and grow its most profitable customer segments.
It added that marketing activity and investment is now focused on driving core customer acquisition, a move away from category advertising.
Describing the market Hostelworld operates in as “highly competitive,” Mr Morrison said the company would use its 'Roadmap for Growth' programme “to allow the group to capitalise on these significant opportunities available and to return the business to growth.”
“We started work on a number of initiatives during the second half of 2018 and we look to 2019 as a year of investment to fund the growth drivers for 2020 and beyond. We anticipate that organic growth will be self-funded from our existing cash resources and cash generated from the business.”
Meanwhile, the group described trading so far this year as being “in line with the board’s expectations.”
“We remain committed to delivering value to shareholders and continue to assess our capital allocation approach in line with investment choices and priorities,” Mr Morrison said.