Hostelworld records loss for second year running as Covid-19 restrictions and uncertainty leave many reluctant to book foreign holidays
- The booking platform made a €36m loss last year and a €46.9m loss in 2020
- Hostelworld chairman: 2021 was ‘another year of unprecedented challenge’
- Trade recovered as vaccination programmes allowed curbs to be loosened
Hostelworld has posted another major loss as the accommodation and tourism industries continued to face significant disruption from the coronavirus pandemic.
Tough international travel restrictions and uncertainty about taking overseas holidays caused the online booking platform to post a €36million (£30.3million) loss last year, having already made a €46.9million loss in 2020.
The Dublin-based company noted trade recovered well as the roll-out of vaccination schemes allowed curbs to be loosened, but overall net bookings remained nearly 80 per cent down on pre-pandemic volumes.
Empty: Tough international travel restrictions and uncertainty about taking overseas holidays caused the online booking platform to post a €36million loss last year
Net revenues were also around four-fifths below their 2019 levels after rising just 10 per cent last year, largely owing to trade being severely suppressed by much harsher Covid-19 regulations across Asia and Oceania.
And while total revenues did grow, this rebound was held back by revenue from advertising and ancillary services plummeting by more than 90 per cent to just €52,000.
Hostelworld’s chairman Michael Cawley admitted that 2021 had been ‘another year of unprecedented challenge for our business’ and the larger travel sector, 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.
Right before then, the group noted that demand at destinations in this region was trading at 60 to 80 per cent of their 2019 levels, having rebounded considerably over the summer period.
The strongest recovery in orders was observed in Central America, where the website saw its bookings surpass their pre-pandemic volumes in the second six months of the year and average 75 per cent across 2021.
Revival: ‘The current trends are encouraging and suggest that net bookings will continue to recover towards 2019 levels,’ remarked Hostelworld Group
This helped its total revenue across the Americas grow by €1.4million to €5.2million, while it surged by 46 per cent to €10.7million in Europe, offsetting a drop of over three-quarters in Asia, Africa and Oceania.
In addition, the average amount that customers paid for a booking jumped by 30 per cent to €12.11 – 14 cents ahead of pre-pandemic levels – after plunging by 22 per cent in 2020.
Hostelworld said this was driven by a greater share of bookings originating from higher-value destinations such as Europe and North America, longer booking stays, a better geographical mix and a pick up in underlying bed prices.
However, the company spent more on marketing as a share of revenue due to the high rate of cancellations and weaker conversion rates in places where travel restrictions remain in force.
Total expenses were also affected to the tune of €3.3million by a five-year term loan facility agreed with HPS Investment Partners thirteen months ago and €2.2million in equity settled share-based payment transactions.
Yet the group noted that direct margin – net revenue minus direct marketing costs – had kept resurging this year, as had weekly net bookings and revenues in tandem with weakening restrictions and a revival in consumer confidence.
It remarked: ‘The year has started strongly and confidence in the ability to travel freely is growing. The current trends are encouraging and suggest that net bookings will continue to recover towards 2019 levels, in the absence of any further escalation of the conflict in the Ukraine or other unforeseen events.’
Hostelworld shares were up 7 per cent at 78.3p during the late afternoon on Thursday, although their value has fallen by over 60 per cent in the last three years.