Irish travel accommodation company Hostelworld has seen earnings before deductions increase 28% so far this year despite a slight drop in revenue as it focuses on costs.
According to the company’s latest trading update, ending on September 30, Hostelworld said net bookings are up 7% year-on-year to 5.4 million driven by record performances in Asia and Central America.
The net average booking value was €13.54, down 9%, which was driven by a greater proportion of Asian destination bookings and a slight increase in the proportion of solo customers.
Net revenue stands at €72.3m down slightly by 2% compared to the same period last year. Operating costs stood at €18.7m, down 3% overall.
Adjusted earnings before various deductions — including taxes, depreciation and interest — for this period rose 28% to €17.8m. The company said it had a closing cash position of €7.8m and a net cash position of €900,000, having repaid all bank debt in full.
Chief executive of Hostelworld Gary Morrison said the company’s performance in the year-to-date has been driven by strong consumer demand from Europe, the UK and North America as well as lower cost destinations such as Asia and Central America.
“The strong cash generative nature of this business has seen us return the balance sheet to a net cash position in the third quarter of 2024, as previously guided,” he said.
Mr Morrison said that the company’s net margin now stands at 10%, and combined with their “continued focus on cost, means their adjusted earnings increased by 28% year-on-year”.
“Looking ahead, I remain very confident in our business model and our continued success in building a platform for long-term profitable growth.”
Marketing as a percentage of the revenue generated totalled 46% down from 51%. In addition to its marketing, the company has a social network which allows users to interact.
On the social features side, Mr Morrison said its “continued impressive performance” means their “marketing expense as a proportion of revenue has improved significantly year-on-year”.
The company’s management said that it is “actively reviewing” its capital allocation policy and will provide a more expansive update at its full-year results in March.
Hostelworld is an online travel agent that people can use to book hostel accommodation. The company was founded in Ireland in 1999 and employs almost 230 people. It said it has hostel partners in over 180 countries.