Bed price inflation boosts revenue at Hostelworld

Dublin-based hostel booking company reports net revenue of €28m for the first six months of 2022

“Bed price inflation” boosted half-year revenue at Dublin-based hostel booking company Hostelworld, The company said net bookings totalled 2.1 million or 59 per cent of pre-pandemic levels during the first six months of 2022 and 80 per cent in the month of June as the impact of Covid-19 subsided.

Net revenue of €28 million for the six-month period was 104 per cent of 2019 levels driven by higher average booking values, it said.

“As the recovery progressed, we have seen several factors impact our trading economics versus 2019. In particular, net revenue growth has outpaced net bookings growth driven by a steady increase in average net booking values versus 2019,” it said.

This has been driven primarily by bed price inflation, it said.

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The company said the net average booking value of €15.82 for the period was 35 per cent up on same period last year due to favourable geographical mix, price inflation, recovery of underlying bed prices and longer length of stay bookings.

Speaking to The Irish Times on Wednesday, Caroline Sherry, Hostelworld’s chief financial officer, said that despite the increase in average booking value, affordability is not a big concern, given the company’s main customer demographic.

“They are a younger demographic, they do not have the same level of overheads. They do not have mortgages,” she said. “That level of affordability and the entry point into our products mean it’s very affordable.”

“Hostelling is a rite of passage. It is just a part of a young 20 year-old’s life and given Covid and two years of lockdown, it is something that they will prioritise over, I guess, other aspects of their life.”

With hostels delisting from the platform as a consequence of the pandemic, either temporarily or after going out of business, the number of hostels listed on Hostelworld had declined roughly 8 per cent from December 2019 to 16,000 at the end of June, the results indicate.

But Ms Sherry said the decline had largely been halted in the first six months of the year as travel and tourism rebounded. Ms Sherry said Hostelworld had also “temporarily” delisted 400,000 hostels in Russia and Belarus following the invasion of Ukraine.

“When we look at that two and a half year period, the drop was most acute June 2020 to June 2021, the peak Covid period, and that drop has tapered off now,” she said.

“Looking at that 8 per cent number, that’s a net [figure] between hostels that had delisted and new sign-ups and new listings.”

Overall, she said the industry had “held up” despite the impact of the pandemic and that Hostelworld is pleased with the quality of new listings it has added.

Chief executive Gary Morrison said: “We are encouraged by the strong recovery we have seen in the first six months of the year across all demand segments and destinations, which demonstrate the ability of our business to capture pent-up demand as the travel market returns.

“In particular, booking demand into Europe, our largest destination in 2019, remains strong with our top markets in southern Europe exceeding 2019 levels,” he said.

“We also witnessed booking momentum slowly returning in Oceania and Asian destinations from a very low level in January, with booking demand in June at 43 per cent of 2019 levels. Finally, long-haul bookings have reached 75 per cent of 2019 levels in June, with trips from the US and Canada into European destinations above 2019 levels,” he added.

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times

Ian Curran

Ian Curran is a Business reporter with The Irish Times