Home Business Hostelworld expects its 2020 revenue to decline by up to 84pc

Hostelworld expects its 2020 revenue to decline by up to 84pc

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SHARES in online booking platform Hostelworld fell by as much as 26pc in London yesterday, before paring back those losses to end 18pc lower after the company said it expects revenues for this year to plunge as much as 84pc from 2019 levels.

Last year the company reported revenues of €80.7m.

Hostelworld, which has been badly hit by Covid-19 travel restrictions, now expects full year net bookings to be in the range of 20pc–22pc of last year’s total.

In a trading update, the company said it saw a very modest recovery in domestic bookings in late June as well as short haul bookings into Europe in July and early August as travel restrictions were eased.

“At that time, we stated that we expected the pace of recovery to be driven by changes in travel guidance in individual markets over the coming months, both positive and negative,” it said.

However, since the end of August, travel restrictions have tightened globally and the Dublin-headquartered company has seen demand level off.

In recent weeks it has seen a “marked deterioration” in bookings.

In addition, it has also seen a greater than expected decline in the average value of bookings, driven in part by bed price deflation and adverse foreign exchange movements.

On the back of this it expects net revenue to be in the range of 16pc-18pc of last year’s total.

The company said it no longer expects an improvement in the macro travel environment and therefore it now expects any recovery to be “muted.”

Since the group’s equity placing in June, the companysaid it has continued to assess its future funding needs and cost base in the light of continued uncertainty.

However, on a positive note, Hostelworld’s net cash position currently stands at €22.6m, down from €29.4m in June, as the group entered the year in a strong cash position.

It has a monthly operating cash burn €2m through the third quarter, which it expects to further in the final three months of this year.

Davy analyst Ross Harvey said the light at the end of the tunnel for Hostelworld is “a lean operation with proven cash-generative capability and an enhanced platform to drive growth”.

“This may feel distant, but demand conditions have proven volatile in both directions and Hostelworld is trading on less than five times pro-forma 2019 earnings,” he added.

Founded by Ray Nolan, Hostelworld listed on the stock market in 2015.

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