Hostelworld returns to profit amid soaring demand for travel

Budget travel website Hostelworld

Caoimhe Gordon

Dublin-based online travel agent Hostelworld returned to profit last year as the easing of pandemic restrictions across the world fuelled demand for travel.

The company reported earnings before interest, taxes, depreciation and amortisation (Ebitda) of €1.3m in 2022.

This marked a sharp rise from the €17.3m loss reported the year before when Covid restrictions wreaked havoc on the travel industry.

Net bookings rose to 4.8 million across the year, a rise of 228pc year-on-year, which the company attributed to recovery in Europe, as well as Asia and Oceania in the second half of 2022.

As a result of increased demand, revenues rose to €69.7m, up from €16.9m reported in 2021.

Bookings last year stood at 70pc of pre-pandemic levels at the end of December.

This momentum has been maintained as the company approaches the end of the first quarter of the year.

"We’re at about 115pc of 2019 revenues,” chief executive Gary Morrison told the Irish Independent. “March was about 120pc of 2019 bookings.”

Mr Morrison also said this Q1 demand does not reflect the busier summer season. “We do not have a long booking window. About 65pc to 70pc is booked within stay date.”

In 2022, many of the top markets in Southern Europe exceeded 2019 levels over the summer, while Asia and Oceania rose to 79pc of pre-pandemic levels.

Bookings for Central America performed strongly throughout the year to rise to 150pc of 2019 levels.

In the first few months of the year, Central American bookings have risen to twice the level recorded in 2019, with Europe making up 40pc of total bookings so far in 2023.

Operating costs last year, excluding marketing, fell below 2019 levels due to platform modernisation over the pandemic.

The net average booking value stood at €14.90 for the year, reflecting a 23pc increase linked to bed price inflation.

“The bed price level we are at now is probably the level that is going to persist. Compared to 2022, the prices have remained at that increased level,” chief financial officer Caroline Sherry said.

Since the pandemic, some hostel guests were also spending longer away, with some travellers taking advantage of remote working to spend time logging in elsewhere.

"Throughout 2022, the number of bed nights per booking was slowly increasing,” Mr Morrison said, pointing to the fact that the global average of nights rose by 3pc last year.

Total cash at the end of December was €19m, while a refinancing process is now underway for a €30m term loan facility, which is expected to be completed this year with one of the Irish pillar banks.

The company’s social app is also a priority for Hostelworld, with 55pc of bookings now made through members of this platform.

Hostelworld has also developed the app's functions to allow meet-ups with travellers in the same cities, as well as to offer hostels the opportunity to showcase their events to its members visiting the same place.