Hostelworld, the hostel-booking group that targets millennial and Gen-Z backpackers, saw its revenues dip 1 per cent to €92 million as customer demand shifted towards low-cost destinations.
Net bookings grew 6 per cent on the year to 6.9 million, driven by record performances in Asia and Central America, the Dublin-based company said in a trading statement on Tuesday.
The average booking value declined 8 per cent on the year to €13.21.
Adusted earnings before interest, tax, depreciation and amortisation (Ebitda) rose 19 per cent on the year to €21.8 million as its earnings margin widened. The company also cleared off all its bank debt during the year, leaving it with a net cash position of €2 million.
“We achieved a net bookings growth rate of 6 per cent driven primarily by growth in bookings from UK and European travellers to lower cost destinations in Asia, especially in the first half of the year,” said chief executive Gary Morrison.
Bookings to Asia jumped 31 per cent for the year as a whole, even as demand for higher-cost destinations in Europe remained weak.
“As we exited the year, booking values returned to growth driven primarily by bed price inflation in Asia,” the CEO said.
Hostelworld reached an important milestone in 2023 when it repaid €28.8 million of high-cost loans drawn down from US specialist lender HPS Investments three years ahead of schedule with the help of €17.4 million of much cheaper loans from AIB, all of which has since been paid back ahead of schedule.
The company also agreed with Revenue early last year to repay €9.6 million of warehoused taxes, racked up during the Covid-19 pandemic, over the next three years.
Hostelworld has been winning back hostel bookings market share that had been ceded to general online travel agents such as Booking.com before the pandemic, helped by the introduction of a pioneering social network that invites customers into city and hostel chat groups before checking in. Some 80 per cent of company’s bookings came from social members last year, which helped reduce marketing spend as a percentage of revenue.
“We will provide a detailed growth strategy and capital allocation update in the second quarter,” said Mr Morrison.
- Sign up for the Business Today newsletter and get the latest business news and commentary in your inbox every weekday morning
- Opt in to Business push alerts and have the best news, analysis and comment delivered directly to your phone
- Join The Irish Times on WhatsApp and stay up to date
- Our Inside Business podcast is published weekly – Find the latest episode here
