Lower-than-expected bookings ahead of the busy summer season took its toll on Hostelworld (HSW) during the first half. Total bookings fell 5 per cent to 3.75m year on year, though this came mainly from the non-core supporting brands that Hostelworld is gradually phasing out. Free cancellations were introduced across all regions in July 2018, resulting in an increase in cancellations to 0.25m, compared with 0.1m during the first half of 2018. This contributed to the 9 per cent decline in sales to €38.8m (£35.5m), or 12 per cent at constant currency.
Encouragingly, the average booking value improved by 6 per cent to €12.84, supported by an increase in the average commission rate from 15.3 per cent to 16 per cent. Bookings made on the Hostelworld app grew by 7 per cent to 43 per cent of net bookings. Still, chief executive Gary Morrison said the market remains “highly competitive”, and this has continued into the peak summer travelling period. This, along with higher-than-anticipated inflation in marketing costs and increased investment in the ‘Roadmap for Growth’ programme during the second half, means that full-year cash profits are expected to be below that of 2018.
Analysts at Numis expect pre-tax profits of €16.6m during 2019, giving EPS of 15¢, increasing to €16.7m and 15.1¢ in 2020.
| HOSTELWORLD (HSW) | ||||
| ORD PRICE: | 150p | MARKET VALUE: | £143m | |
| TOUCH: | 147-151p | 12-MONTH HIGH: | 285p | LOW: 136p |
| DIVIDEND YIELD: | 8.1% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 140¢* | NET CASH: | €25m | |
| Half-year to 30 Jun | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
| 2018 | 42.6 | 2.83 | 2.14 | 4.8 |
| 2019 | 38.8 | 0.39 | 6.82 | 4.2 |
| % change | -9 | -86 | +219 | -13 |
| Ex-div: | 29 Aug | |||
| Payment: | 20 Sep | |||
| *Includes intangible assets of €112m or 117¢ per share £1=€1.09 | ||||
