Hostelworld says recovery will be ‘muted’ as travel restrictions tighten
Resurgence in Covid-19 cases has quashed hopes of an improvement in travel environment
Hostel booking company Hostelworld said global tightening of travel restrictions meant it was no longer expecting an improvement in the wider travel environment, and that any recovery would be “muted”.
The group said full-year net bookings were expected to be in the range of 20 to 22 per cent of the previous fiscal year, and net revenue would be 16 to 18 per cent of last year.
The hostel group saw a modest recovery in domestic bookings in late June, with an improvement in European bookings in July and August as travel restrictions eased. That resulted in the business tracking slightly ahead of the company’s base case scenario outlined at the time of the group’s equity placing in June.
However, a resurgence in Covid-19 across Europe and increased travel restrictions has hit the company.
“We have also seen a greater than expected decline in ABVs driven in part by bed price deflation and adverse foreign exchange movements,” Hostelworld said in a statement.
Hostelworld’s net cash position at October 9th stood at €22.6 million, down from €29.4 million at June 30th, with monthly operating cash burn of €2 million through the third quarter, which is expected to reduce further in the fourth quarter.
The company said it had continued to deploy significant enhancements to strengthen its core platform during the third quarter, and would continue to do so.
“We expect these enhancements will result in strengthened marketing capabilities, an improved user experience and increased inventory competitiveness when normal travel patterns resume,” the company said.