Online booking platform Hostelworld posts loss for second consecutive year
Hostelworld posts a loss for the second consecutive year as Covid-19 restrictions and uncertainty leave many reluctant to book overseas holidays
- The booking platform made a loss of 36 million euros last year and a loss of 46.9 million euros in 2020
- Hostelworld President: 2021 has been “another year of unprecedented challenge”
- Trade resumed as vaccination programs eased restrictions
Hostelworld recorded another major loss as the accommodation and tourism industries continued to face significant disruption from the coronavirus pandemic.
Strict restrictions on international travel and uncertainty over overseas holidays saw the online booking platform post a €36m (£30.3m) loss last year , after having already recorded a loss of 46.9 million euros in 2020.
The Dublin-based company noted that trade had recovered well as the rollout of vaccination programs helped ease restrictions, but overall net bookings remained nearly 80% below pre-pandemic volumes.
Empty: Strict restrictions on international travel and uncertainty over overseas vacations meant the online booking platform posted a loss of 36 million euros last year
Net revenues were also around four-fifths below their 2019 levels after rising just 10% last year, largely due to the severe crackdown on trade by much stricter Covid-19 regulations in Asia and in Oceania.
And while total revenues increased, this rebound was dampened by revenues from advertising and ancillary services which fell by more than 90% to just €52,000.
Hostelworld Chairman Michael Cawley admitted that 2021 had been “another year of unprecedented challenges for our business” and the wider travel industry, and said the outlook remained uncertain.
Bookings in southern Europe were further impacted in late November and December by the reintroduction of travel restrictions in response to the emergence of the Omicron variant.
Just before that, the group noted that demand from destinations in this region was trading at 60-80% of its 2019 levels, having rebounded significantly over the summer period.
The strongest recovery in orders was seen in Central America, where the website saw bookings surpass their pre-pandemic volumes in the second half of the year and average 75% in 2021.
Recovery: “Current trends are encouraging and suggest that net bookings will continue to recover towards 2019 levels,” noted Hostelworld Group.
This helped its total revenue across the Americas increase by €1.4 million to €5.2 million, while it jumped 46% to €10.7 million. euros in Europe, offsetting a decline of more than three quarters in Asia, Africa and Oceania.
Additionally, the average amount customers paid for a booking jumped 30% to €12.11 – 14 cents more than pre-pandemic levels – after falling 22% in 2020.
Hostelworld said this was due to a greater share of bookings from higher value destinations such as Europe and North America, longer booking stays, better geographic distribution and an increase underlying bed prices.
However, the company spent more on marketing as a share of revenue due to the high rate of cancellations and lower conversion rates in places where travel restrictions remain in place.
Total expenses were also affected by €3.3 million from a five-year term credit facility entered into with HPS Investment Partners thirteen months ago and €2.2 million from transactions whose payment is share-based.
Still, the group noted that the direct margin – net revenue minus direct marketing costs – has continued to recover this year, as have weekly net bookings and revenue, alongside easing restrictions and rising confidence. consumers.
He remarked: “The year has started well and confidence in the ability to travel freely is growing. Current trends are encouraging and suggest that net bookings will continue to recover towards 2019 levels, barring any further escalation of the conflict in Ukraine or other unforeseen events.
Shares of Hostelworld rose 7% to 78.3p late Thursday afternoon, although their value has fallen more than 60% in the past three years.