Hostelworld, the Dublin-based online travel agency specializing in the global youth hostel market, saw an 81% drop in net sales last year, Covid restrictions worldwide having ravaged the travel industry.
The company only achieved € 15.4m in revenue compared to € 80.7m in 2019, due to a 79% collapse in booking volumes.
Average booking values also fell 22% over the year, as cancellations and lower bed prices reduced payments.
Adjusted profit however held up reasonably well, falling only from € 3.2m to € 17.3m, in part due to a substantial reduction in online marketing costs with lower sales volumes, as well as a 43% reduction in administrative costs.
Given the difficult financial situation of the company, the board has chosen not to issue a dividend for 2020.
Chief Executive Officer Gary Morrison said the company has focused on maximizing its free cash flow during a difficult year and building its capacity to end the pandemic.
“2020 has been an extremely difficult year for Hostelworld and for the entire global travel industry,” he said. “During the year, we made significant improvements in terms of marketing capabilities, user experience and inventory competitiveness. These improvements will have further strengthened the competitiveness of our platform compared to our capacities in Q419, when we had resumed growth in reservations. ”
Hostelworld strengthened its balance sheet in 2020, raising € 15.2 million in an equity investment last June, as capital markets recovered from the initial Covid shock in the second quarter.
The company had a relatively stable cash position at the end of last year of € 18.2m against € 19.4m in 2019. The company negotiated a new € 30m term credit line last month, giving it a significant financial flexibility for the coming year.
“As vaccination programs continue to be rolled out in our major geographies around the world, I am confident that our loyal customer base has a strong desire to travel once restrictions allow, even more after an extended lockdown period. Mr. Morrison said.
“I remain convinced that Hostelworld will emerge from the pandemic stronger than before and able to seize market opportunities when travel habits resume.”
The company was unable to provide a profit forecast for 2021. Hostelworld’s stock price was down slightly at the start of trading, but well above its average for the year to date.
Davy’s analyst Ross Harvey praised the company’s performance during what he called “a trying year.”
“The company has not only fallen back on security by reducing cash outflows and protecting liquidity, it has doubled its efforts to improve its customer offering and will be better placed to benefit from the possible recovery of the market”, did he declare.
“Against a difficult backdrop, Hostelworld has been successful in maintaining the engagement of staff, guests and hostels – which should allow for a smooth restart once conditions improve.”