Hostelworld shares slump nearly 30% amid warning on trading
Shares in Irish travel website Hostelworld slumped nearly 30 per cent yesterday wiping € 80 million off the value of the company after it reported weaker-than-expected demand across Europe in the aftermath of the Paris and Brussels terrorist attacks. In a trading statement released ahead of its annual general meeting in Dublin, the company said “trading over the second quarter has been at a level below our expectations” citing recent geo-political events. Shares in the company dropped 28.9 per cent to £1.83 in London, where it main listing is held, having been down 33 per cent at one stage.
Chief executive Feargal Mooney admitted to being somewhat surprised by the market reaction to its trading update. “What we’re seeing is softness across Europe’s travel sector since the terrorist attacks, which is in line with what other companies are experiencing,” he told The Irish Times after the group’s AGM. “Possibly some of them haven’t been as upfront and transparent about it as we have in our statement this morning but I think the trends are coming through.” Mr Mooney said that with two weeks to go to Europe’s showcase soccer tournament in France, there were vacancies all across the host country, which was unprecedented.
“To see beds available this close to a tournament, we just haven’t seen that before.” Mr Mooney also said bookings in London, the company’s most popular destination, were significantly down on last year. When questioned about the timing of recent share sell-off by Hostelworld’s former parent Hellman and Friedman, just six weeks before a negative trading statement, Mr Mooney said the move had been well flagged and was part of “the natural cycle of investment”.
The private equity group had placed 75 per cent its stake in the company on the market at the time of its initial public offering (IPO) last year before selling the remainder, at a price of 260 pence per share, in April. Mr Mooney said some of the fall-off in sales reflected the scaling back of its non-core brands, Hostelbookers and Hostels.In its trading statement, the company reported strong growth in its flagship Hostelworld brand, improved efficiencies in its marketing mix, and “continued geographic expansion and digital engagement across our key social platforms.”
However, it said with recent geo-political events, particularly in Europe, trading over the second quarter has been at a level below expectations. “Whilst during this period Asia Pacific continued to be our fastest growing destination region, driven by hostellers’ travel preferences and our increased supply in that geography, bookings into higher priced European destinations have been weaker,” it said. Davy Stockbrokers said given Europe’s significance within the group, accounting for approximately 60 per cent of destination bookings and revenue, the terrorist attacks a pronounced effect on group bookings,
Overall, the company said group bookings were marginally down compared to last year, with average booking value lower also.
Source: Irish Time