Hostel booking group Hostelworld said revenue grew in the third quarter as both volume and average value of bookings rose.
The company, which targets millennial and GenZ backpackers, said the 5 per cent increase in revenue for the three-month period was boosted by its increased effective commission rate, which rose to 16.3 per cent from 15.2 per cent previously.
Direct marketing costs as a percentage of revenue fell from 49 per cent in the third quarter of 2024 to 47 per cent in the most recent quarter.
“Our third-quarter results show that the strategic plan we announced at our Capital Markets Day is delivering positive results,” said Gary Morrison, chief executive of Hostelworld.
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“This increased commission rate boosted our Average Booking Value (ABV) by 3 per cent year on year, which successfully offset the impact of a weaker US dollar and the continued popularity of low-cost destinations.”
[ Hostelworld bookings pick up in summer after slow start to yearOpens in new window ]
Looking at 2025 to date, net revenue was €72.6 million, broadly flat year on year as a 1 per cent growth in net bookings was offset by lower deferred revenue benefits.
Adjusted earnings before interest, depreciation and amortisation for the period were €15.4 million compared to €17.8 million last year, as planned investments in growth initiatives and the timing of deferred revenue impacted results.
Net cash was €6.6 million at the end of the nine-month period.
“Looking ahead, we are on schedule to launch our social network monetisation and the provision of budget accommodation initiatives in the fourth quarter,” Mr Morrison said. “The timely delivery of these foundational initiatives is a key step towards delivering our growth strategy, as set out at our Capital Markets Day.”
In a note, Davy analysts said revenue trends were tracking a little behind expectations for the year. “However, Hostelworld has reiterated its full year EBITDA guidance, which is in line with our expectations,” analysts said. “We believe an acceleration in top line trends on the back of its investments will be key to a rerating of the shares.”
