Hostelworld bullish as growth in bookings continues

Online booking platform Hostelworld is enjoying growth in both volumes and average booking values ahead of the critical peak summer period, it said ahead of its annual general meeting on Thursday.

"I am pleased to report that the improved trading momentum which commenced in the latter part of 2016 has continued," said chairman Richard Segal.

“Total Group bookings year to date are ahead of the corresponding period last year across all regions, albeit with more moderate gains in European destinations. Overall average booking value is also higher than the corresponding period last year.

“Our continued execution of key strategic initiatives together with our highly cash-generative business model positions the group well to make further progress.

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“While mindful that the key summer travel season is still ahead of us, we remain confident of meeting the board’s expectations for the full year.”

Subject to approval at the agm, the final dividend of 10.4 cent a share together with the supplementary dividend of 10.5 cent a share will be paid on June 6th to shareholders on the register on April 28th, 2017.

This will bring the total dividend in respect of 2016 to 25.7 cent a share.

Top-line momentum

In a note, Davy said the top-line momentum at Hostelworld through the latter stages of 2016 had continued into the current year.

“Its agm statement notes growth in both volumes and average booking values and it places the company in a strong position entering the earnings critical peak summer period,” it said.

“While we will be leaving our full-year earnings estimates unchanged at this point, we expect the business’s increasingly consistent delivery to be well received.

“For the first five months of the year, bookings have continued to grow at a group level. In our view, this likely translates into continued double-digit growth in the Hostelworld brand, validating its continued marketing focus and a further decline in other brands bookings.”

Davy said the continued volume growth across all regions, albeit with more moderate gains in Europe, suggest that Asia-Pacific and North America will continue to act as the main sources of growth in a similar fashion to last year.

“Encouragingly, average booking value is also higher than the previous year,” it said. “While we believe that this is somewhat related to the initiative to attract higher value bookings from customers, which came into effect in July 2016, it nonetheless suggests good demand for the hostel product at a macro level.”