26th May 2016 09:11
LONDON (Alliance News) - Hostelworld Group PLC on Thursday said trading in the second quarter of 2016 has been below its expectations following "recent geopolitical events" in Europe.
Shares in Hostelworld were trading down 26% at 190.00 pence on Thursday following the announcement.
The hostel-focused online booking platform said Asia Pacific continued to be its fastest-growing destination in the quarter, driven by increased demand and Hostelworld's increased supply in the region.
However, bookings into higher-priced European destinations have been weaker reflecting "recent geopolitical events", Hostelworld said, without elaborating.
In addition, planned changes to its supporting brands' product offering and focus on improving the quality of its revenue streams have resulted in a material reduction in bookings from those channels, Hostelworld said, meaning overall group bookings in the second quarter are marginally down compared with last year.
Average booking value has also been lower, reflecting the "evolving geographic mix", the higher proportional growth in mobile bookings, and exchange rate movements.
On a more positive note, Hostelworld said it is making "better-than-anticipated" progress in gaining further efficiencies in direct costs, expecting marketing investment as a percentage of net revenue to come in below the previous guidance of 45% to 50% in the full year.
It also noted its Elevate pricing programme, which attracts higher commissions, continues to grow in line with expectations.
Looking to the key summer period, Hostelworld said the launch of its brand advertising campaign with rapper 50 Cent should support summer trading. The campaign was launched across digital channels last week.
"The trends in bookings and average booking value that we have seen in the travel market, particularly into higher priced European destinations, while partially offset by improved marketing efficiency, means that the year's outturn will be dependent on a recovery in key European destinations over the important summer travel season, and we remain mindful of the exchange rate environment," Hostelworld said in a statement ahead of its annual general meeting on Thursday.
"Hostelworld will continue to actively respond to movements in demand, supply and pricing. The strength of our brand and technology, underpinned by a growing marketplace, gives the board confidence in the group's future prospects," Hostelworld added.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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