Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net bookings increased by 9% year over year, with a notable rise in solo travelers and a strong preference for lower-cost destinations.
- The social strategy has been effective, reducing marketing costs as a percentage of net revenue from 51% to 45%, contributing to a 23% growth in net margin.
- App bookings grew by 20% year over year, now accounting for 45% of total bookings, indicating successful customer engagement through the app.
- Operating expenses decreased by 2% year over year, demonstrating effective cost management despite increased booking volumes.
- The company fully repaid its AIB debt two years ahead of schedule, improving its balance sheet and reducing interest costs.
Negative Points
- Average Booking Value (ABV) contracted by 10% due to a shift towards lower-cost destinations and shorter stays by solo travelers.
- Revenue growth was limited to 1% year over year, impacted by the decline in ABV.
- Oceania was the only region to see a contraction in bookings, with a shift towards more short-haul travel.
- Generated revenue was down 2% year over year, reflecting the impact of lower-cost destination preferences.
- The company still has EUR7.5 million outstanding in warehoused debt to the Irish Revenue, indicating ongoing financial obligations.
Q & A Highlights
Q: How has the recent news of slowing growth in the US impacted Hostelworld's first-half results, and what is the outlook for demand in Europe and the US?
A: Gary Morrison, CEO, noted that bookings from UK and European customers increased significantly, with a strong preference for lower-cost destinations like Asia. The US market, while a small portion of total bookings, also saw a shift towards Asia. Despite these shifts, the social strategy has driven a 23% increase in net margin.
Q: Can you explain how marketing costs are managed across different geographies and their impact on revenue and cost performance?
A: Gary Morrison explained that Hostelworld operates as a global platform with variable marketing costs that adjust with destination revenue. The social strategy helps reduce marketing expenses, and the company focuses on ensuring competitive supply to stimulate demand.
Q: What developments are planned for the social platform, and do they include monetization opportunities?
A: Gary Morrison stated that the focus is on growing volume rather than immediate monetization. Enhancements include improving user profiles and chat features, with AI potentially aiding in content generation. The goal is to strengthen the platform without adding friction.
Q: What factors contributed to the 3% improvement in market coverage, and is there potential for further increases?
A: Gary Morrison attributed the improvement to the value Hostelworld provides to hostels, streamlined sign-up processes, and increased outreach efforts. The company plans to continue these efforts to further expand market coverage.
Q: How does Hostelworld ensure the safety and appropriateness of content on its social platform?
A: Caroline Sherry, CFO, explained that Hostelworld uses third-party monitoring tools and AI to oversee chat content and images. The company complies with relevant legislation and has customer service teams to address any flagged issues, ensuring a safe and engaging environment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
