Strategy update and trading update

RNS Number : 8339I

Hostelworld Group PLC

29 November 2018

 

LEI:213800OC94PF2D675H41

Hostelworld Group plc

("Hostelworld" or the "Group")

Strategy update and Trading update

Investing for Growth

29 November 2018: Hostelworld, the global hostel-focused online booking platform, will host a Capital Markets Day for analysts and institutional investors this afternoon in London from 12.45pm.

The purpose of today's presentations is to provide an overview of the main findings of the strategic review conducted by Gary Morrison, following his appointment as Chief Executive Officer (CEO) in June 2018.

The event is being hosted by the CEO and other members of the senior management team.

The presentation will also provide more detail about future priorities and specific actions designed to return the business to growth, a number of initiatives which have already commenced during H2 2018, and which will enable the company to reaffirm its position as the leading hostel-focused online booking platform.

Key highlights of strategy review:

-   Operating in an attractive, growing market, Hostelworld is ideally positioned to capitalise on the clear opportunity for a hostel focused OTA to provide solutions to the unique needs of the hostelling industry;

-    A strengthened management team is now in place;

-  The strategy is to enhance competitiveness and deliver a return to growth by focusing on investment in core customer acquisition and core platform enhancements; and

-   The strategy will be supported by investments during 2019, including an expansion of the existing Porto development centre, with the benefits expected to be seen in 2020.

Trading update:

EBITDA for the full year to 31 December 2018 is expected to be in line with the Board's expectations. As communicated at the time of the Company's interim results in August 2018, growth in Group like-for-like gross bookings is likely to be flat for the full year, given the expected declines in our supporting brands. Continued effective management of our cost base, combined with strong ABV, is helping to offset the impact of flat bookings. We continue to see strong underlying cash conversion in 2018. The rollout of our free cancellation product has started well and cancellation rates are performing in line with expectations.  

The initiatives identified as part of the strategic review will require additional investment during 2019, with growth in bookings expected to be seen in 2020. However, the Board expects the business to return to modest EDITDA growth in 2019.

Gary Morrison, Chief Executive of Hostelworld, commented:  

"I'm pleased to be announcing the results of my strategic review and details of my growth strategy, which will enable us to stabilise and strengthen our core platform and return Hostelworld to growth.

We are operating in an attractive and growing market, with a strong and trusted brand, providing relevant and valuable customers to the hostel sector. We will invest in our core products, platform and capabilities as we strive to improve the hostelling experience for travellers and enhance our technology offering for the benefit of our core hostel partners.

I am hugely encouraged by the energy and opportunities in the business and believe we have an exciting future ahead. I am confident that we now have the strategy and management team in place which will enable us to build on the strong foundations of the business, increase our competitiveness and capitalise on the significant opportunity to take Hostelworld to the next stage of sustainable growth as the leading hotel focused online booking platform".

Overview of the Strategic Review

The review undertaken over the last six months has highlighted the opportunity for significant growth for the business. The positive market dynamics showcase the potential pace of growth, which a purely hostel focused business can exploit. The strength and depth of the Hostelworld Brand, valuable customer base, internal management capabilities, combined with the significant data assets and strength in native app development, positions the business well for the next phase of sustainable growth.

A number of focus areas have been identified most notably a lack of investment in the core platform and the focus on short term monetisation levers, all of which the long-term investment strategy will aim to address.

Roadmap to Growth

Over the last few months the CEO has identified and developed a 'Roadmap for Growth', starting with the strengthening of the management team to capitalise on the significant opportunities for the business. The recently appointed CFO, TJ Kelly, started on 21 November 2018 and there have been a number of internal promotions.

In addition to the personnel changes, we have also significantly evolved the product and technology organisations into an Agile development operating model. A number of initiatives have already commenced during H2 2018 to enhance Hostelworld's competitive position. There has been a refocusing of the marketing activities on core customer acquisition and leveraging the rich data assets to capture incremental 'multi destination trip' customers.

We have also sought to significantly improve the core search experience, through a targeted sort order optimisation strategy, with the ultimate goal of ensuring the 'right hostel for the right customer at the right time'.

As we look to 2019 as an investment year to fund 'return to growth' drivers in 2020, there will be a number of key focus areas for the business to strengthen the core platform focused on providing greater flexibility in the areas of:

·     Unique hostel content and improved localization;

·     Improved booking experience (payment types, currencies & online change/cancel);

·     Rate plan configurations; and

·     Improved 3^rd party platform connectivity.

Growth will be self funded from existing cash resources and cash generated from the business. Appropriate deployment of capital against organic and inorganic growth opportunities as well as returns to shareholders, will be subject to continual assessment and appraisal by the Board.

Event details

A presentation will be held this afternoon at 12.45pm at St Christopher's Inns Village Hostel, 165 Borough High Street, London, SE1 1HR. To register your attendance, please contact Powerscourt on the details below.  A copy of the presentation made to attendees will be made available on the Company's website at http://www.hostelworldgroup.com/investors/reports-and-presentations/2018.

ENDS

For further information please contact:

Hostelworld Group plc  Gary Morrison/TJ Kelly/Ruthanne Monaghan	[phone]
Powerscourt Lisa Kavanagh/Jana Tsiligiannis Jack Hickey/Eavan Gannon	[e-mail] + 44 (0) 20 7250 1446 [phone] / + 353 87 236 5973

About Hostelworld Group

Hostelworld Group is a global hostel-focused online booking platform. Connecting travellers with hostels around the world, Hostelworld offers more than ten million customer reviews across 36,000 properties in more than 170 countries, making the brand the leading online hub for social travel. The website operates in 19 different languages and mobile app operates in 13 different languages.

Hostelworld travellers are a unique, passionate breed; they want to see the world, make new connections and crave the adrenaline of new adventures. Hostelworld inspires them to 'Meet the World' through the social nature of hostels that turbo-charges their journeys and helps create unforgettable memories. 

Headquartered in Dublin, Hostelworld has offices around the world in London, Porto, Shanghai and Sydney with approximately 280 employees. The Hostelworld Group listed on the main London and Irish stock exchanges in November 2015.

This announcement contains forward-looking statements. These statements relate to the future prospects, developments and business strategies of Hostelworld. Forward-looking statements are identified by the use of such terms as "believe", "could", "envisage", "estimate", "potential", "intend", "may", "plan", "will" or variations or similar expressions, or the negative thereof. Any forward-looking statements contained in this announcement are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. If one or more of these risks or uncertainties materialise, or if underlying assumptions prove incorrect, Hostelworld's actual results may vary materially from those expected, estimated or projected. Any forward-looking statements speak only as at the date of this announcement. Except as required by law, Hostelworld undertakes no obligation to publicly release any update or revisions to any forward-looking statements contained in this announcement to reflect any change in events, conditions or circumstances on which any such statements are based after the time they are made.

 

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