REG - Hostelworld Grp PLC - Long-Term Strategy to Generate Shareholder Value

HostelworldAnnouncement

Tue 07:00

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RNS Number : 5178G  Hostelworld Group PLC  29 April 2025

LEI:213800OC94PF2D675H41

 

Hostelworld Group plc ("Hostelworld" or the "Group")

 

Hostelworld to Outline Strategic Growth Plan at Capital Markets Day, Focusing
on Scaling our Social Travel Network for Long-Term Value Creation and the
Reinstatement of a Dividend

 

Hostelworld, the ground-breaking social network-powered Online Travel Agent
("OTA") focused on the hostelling category, provides an update ahead of a
capital markets event this afternoon. The event will be hosted by CEO Gary
Morrison, CFO Caroline Sherry, and CTO Chris Berridge at the offices of
Deutsche Numis, 45 Gresham Street, London EC2V 7BF, at 2:00pm.

 

Long-Term Strategy to Generate Significant Shareholder Value

 

We have built a highly differentiated, scalable and cash generative business
model. Our pioneering social travel network has delivered powerful network
effects across our core hostel OTA platform, which has delivered meaningful
cash generation in recent years.

 

This strong financial performance has enabled us to fully repay our
outstanding debt, significantly strengthen our balance sheet and enable the
business to invest in its next phase of growth.

 

Today, management will outline a new medium-term strategy centred on three key
pillars:

 

1.    Strengthening the core business through increased hostel inventory,
enhanced social platform capabilities powered by AI and enhanced marketplace
monetisation to increase revenues

 

2.    Expanding the addressable market

·      Supplementing our hostel inventory with additional budget
accommodation options to increase customer growth and conversion rates

·      Expanding our travel product range to include additional products
that are highly relevant to youth travellers

·      Leveraging the value of expanding, proprietary social network
data set to unlock new and exciting revenue streams

3.    Selective M&A: Exploring complementary acquisitions aligned with
our strategic objectives that can accelerate growth, extend our capabilities
and help drive incremental shareholder returns.

 

This new strategy is expected to deliver meaningful long-term value creation
with the Company targeting:

 

·      Low double-digit revenue growth in 2026 and 2027, pre-M&A

·      Marketing as a % of revenue of 45 - 50%

·      Adjusted EBITDA margin greater than 20%

·      Adjusted Free cash flow (FCF) conversion of circa 70%

 

Commitment to Shareholder Returns

 

With our consistently strong cash generation, strengthened balance sheet and
confidence in our growth strategy, we are pleased to announce the
reinstatement of a progressive dividend policy of 20% - 40% of adjusted profit
after tax starting with an interim payment in the second half of FY 2025. In
addition, the company will introduce a share buy-back programme, subject to
market conditions and taking into account other investment opportunities.

 

Current Trading

 

The group continues to deliver a resilient performance, despite the recent
weakening of the US dollar and a persistent shift in traveller preferences
towards lower-cost destinations; both of which are leading to a less
favourable booking mix and average booking value (ABV).

 

While it is still early in the year and the summer booking season hasn't yet
reached its peak, if current trends persist, we anticipate achieving
mid-single-digit revenue growth for the full year.

 Key performance indicator  FY 2025 Trends      FY 2026 / 2027
 Net Revenue growth         Mid-single digit %  Low-double digit %

 (pre-M&A)
 Marketing % of revenue     45% - 50%           45% - 50%
 Adj. EBITDA margin         c. 20%              > 20%
 Adj. FCF conversion        60% - 70%           c. 70%

 

The presentation will be available on the Group's website at 2:00pm via the
following link:

https://www.hostelworldgroup.com/investors/reports-and-presentations/2025
(https://www.hostelworldgroup.com/investors/reports-and-presentations/2025)

 

A live webcast of the event can be viewed via the following link:

https://brrmedia.news/HSW_CMD_2025
(https://eur01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fbrrmedia.news%2FHSW_CMD_2025&data=05%7C02%7Cdavid.brady%40hostelworld.com%7Cab0dcb720af0422d254d08dd86412c3f%7Cd0cd9790608d443fb92b11d38e2ec1d8%7C1%7C0%7C638814336728828047%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&sdata=E%2FSrO%2Fzv4d%2FIXtmfJlpZU%2Fl5RigJyQUsP9AYcamsm7A%3D&reserved=0)

 

MAR information

 

This announcement contains inside information for the purposes of Article 7 of
the UK version of the Market Abuse Regulation (EU 596/2014) ("MAR") which is
part of UK law by virtue of the European Union (Withdrawal) Act 2018. For the
purposes of MAR and Article 2 of Commission Implementing Regulation (EU)
2016/1055, this announcement is being made on behalf of the Company by
Caroline Sherry, Chief Financial Officer.

 

For further information please contact:

 

Hostelworld Group plc
                   Corporate@hostelworld.com
(mailto:Corporate@hostelworld.com)

Gary Morrison, Chief Executive Officer

Caroline Sherry, Chief Financial Officer

David Brady, Head of Commercial Finance

 

Sodali &
Co
  (mailto:%20hostelworld@sodali.com) hostelworld@sodali.com
(mailto:%20hostelworld@sodali.com)

Eavan Gannon / Oliver Banks                           Tel: +44
(0) 20 7250 1446

 

About Hostelworld Group

 

Hostelworld Group PLC is a ground-breaking social network powered Online
Travel Agent ("OTA") focused on the hostelling category, with a clear mission
to help travellers find people to hang out with. Our mission statement is
founded on the insight that most travellers go hostelling to meet other
people, which we facilitate through a series of social features on our
platform that connect our travellers in hostels and cities based on their
booking data. The strategy has been extraordinarily successful, generating
significant word of mouth recommendations from our customers and strong
endorsements from our hostel partners.

 

Founded in 1999 and headquartered in Ireland, Hostelworld is a well-known
trusted brand with almost 230 employees, hostel partners in over 180
countries, and a long-standing commitment to building a better world. To that
end, our focus over the last few years has been on improving the
sustainability of the hostelling industry. In particular, over the last two
years we have commissioned independent research to validate the category's
sustainability credentials and recently introduced a hostel specific
sustainability framework which encourages our hostel partners to move to even
more sustainable operations and also provides the data points for our
customers to make more informed decisions about where they stay. In addition,
our customers are now able to offset their trip's carbon emissions should they
wish to do so, and we have maintained our 'Funding Climate Action' label
awarded by South Pole.

 

Disclaimer

 

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 materialize,
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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