Monday 19 August 2019

Hostelworld counts cost of free cancellation policy

Bookings were flat as the company shifted to focus on its core brand.

Hostelworld reported revenue of 82.1 million euros in the year to December 31 (Niall Carson/PA)
Hostelworld reported revenue of 82.1 million euros in the year to December 31 (Niall Carson/PA)

By Alys Key, Press Association City Reporter

Hostelworld revenue and profit declined last year as it added a free cancellation policy and invested in developing new technology.

The online hostel booking platform reported revenue of 82.1 million euros (£70.45 million) in the year to December 31, down from 86.7 million euros (£74.4 million) in 2017.

This was accounted for by deferred revenue as the group rolled out a free cancellation policy.

Underlying earnings also declined by 19% to 21.4 million euros (£18.36 million).

Stripping out the effect of the delayed revenue, earnings fell 8% as a result of investment in the company’s technology hub in Porto.

We have a very relevant brand which is trusted by a loyal and engaged customer base Gary Morrison, chief executive

Bookings were flat at 7.55 million, although the core Hostelworld brand grew by 4% as the group shifted its focus away from non-core brands.

Hostelworld bookings were up 6% in the first half, but slowed to 2% in the second half, in part due to weaker demand during the World Cup and heat wave.

Chief executive Gary Morrison said: “Hostelworld is operating in a highly competitive market, which is growing.

“We have a very relevant brand which is trusted by a loyal and engaged customer base.

“Following the completion of our strategic review, we identified and developed a Roadmap for Growth programme to allow the group to capitalise on these significant opportunities available and to return the business to growth.”

Shares in the company were up almost 6% in early trading on Tuesday.

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