Revenues fell by 4 per cent at online hostel platform Hostelworld in 2016, driven by softer demand in European destinations on the back of Brexit and terrorist attacks, the company said on Tuesday. In its first year as a publically listed company, Hostelworld, which specialises in offering online booking services, said that in the year to December 31st 2016, revenues fell back to €80.5 million, as overall group bookings declined by 1 per cent. The average booking value also fell, down by 4 per cent to € 11.60. Pre-tax profits plummeted from €80.5 million in 2015 to €133,000, although the company booked an exceptional gain of €104 million in 2015. Earnings (adjusted EBITDA) rose by 7 per cent to € 23.9 million and the company had cash balances of € 24.6 million. Hostelworld will pay a full-year dividend of 10.4 cent.

Feargal Mooney, chief executive, said that while both Brexit and terrorist attacks impacted the company’s performance, “particularly in our key European market during thesecond and third quarters of the year”, the group saw “improved momentum” in the latter part of 2016, which has continued through the first quarter of 2017. “Our continued focus on key strategic initiatives is supporting year on year bookings growth, and together with our highly cash generative business model positions us well to benefit from continued market growth,” he said.

The group’s flagship brand is Hostelworld, and it now accounts for about 87 per cent of group bookings, up from 73 per cent in 2015. Bookings from supporting brands, such as Hostelbookers, fell by 53 per cent during the year. One in two bookings for the group now come via a mobile or tablet, up from 41 per cent in 2015. Asia remains the group’s fastest growing destination continent, with groupwide booking growth of 12 per cent in 2016.

Ross Harvey, analyst with Davy Stockbrokers, said that the broker sees “upside” for the company. The broker is forecasting adjusted EBITDA growth of €25.5 million for 2017. Looking to 2017, chairman Richard Segal said that the year “has started well”. “Total Group bookings are ahead of last year and there is positive momentum across the business,” he said. The group has four key focuses for 2017 and beyond: Investing in its core product; differentiating its offering; establishing a vibrant community; and driving loyalty and revenue per customer.

Hostelworld was founded by businessman Ray Nolan, who sold it to Hellman and Friedman in 2009 for € 202.5 million, in a deal which netted Mr Nolan € 100 million. The company raised more than € 180 million from its initial public offering on the Dublin and London stock exchanges in November 2015.

Source: The Irish Times March 2017