TIDMHSW
RNS Number : 6336H
Hostelworld Group PLC
26 March 2020
Hostelworld Group plc
("Hostelworld" or the "Group")
Trading statement and update on COVID-19 impact
26 March 2020 : Hostelworld, a leading global OTA focused on the
hostel market, today provides the following update on trading in
light of the unprecedented challenges presented by the COVID-19
outbreak.
Trading Update
On 4 March 2020 at the time of the Group's preliminary results,
Hostelworld estimated that the impact of COVID-19 would be a
reduction in Q1 2020 EBITDA in the range of EUR3 to EUR4 million.
Since early March booking trends have continued to deteriorate as
the outbreak expanded, and while the Group took immediate steps to
mitigate the financial impact, we now expect the overall EBITDA
reduction in Q1 2020 to be c. EUR5.0 million.
COVID-19 Risk Management
The well-being and safety of our employees, customers and hostel
partners remains our top priority. During the first half of March
2020 a series of actions were taken to protect the health and
safety of our employees, including restricting travel and meetings
and the adoption of flexible working arrangements for colleagues.
Detailed contingency plans were also drawn up to ensure business
continuity in the light of evolving government guidelines. On the
13 March 2020, we took the further step of implementing a full
working from home policy for all our employees in Europe.
Cash conservation measures
Liquidity
As at 24 March 2020, the Group's net cash position remains
strong, with in excess of EUR20 million of immediately available
cash on hand (as at 31 December 2019: EUR19.4 million). The Group
confirms it has no debt obligations. As at 24 March 2020, Deferred
Revenue, reflecting customer deposits made under the free
cancellation booking product, amounted to EUR2.5 million. While the
rate of cancellation under this booking option has increased due to
changes in travel patterns in response to COVID-19 outbreak, we are
working to minimise any negative cashflow impacts to the business,
by offering credits in lieu of cash refunds.
Dividend
Given the current focus on cash conservation, we have taken the
decision to cancel the proposed final dividend of 2.1c per share
(representing a EUR2.0 million cash outflow), in respect of the
financial year to 31 December 2019.
Variable costs
Variable costs in the business relate primarily to paid
performance marketing channels. While reducing overall marketing
spend, the Group is actively optimising any expenditure across
these channels to match investments with near term revenue.
Fixed costs
Fixed costs comprise mainly of Staff Costs and Other
Administrative Costs. While we continue to progress against our
"Roadmap for Growth" initiatives, we have implemented various
measures to reduce near term costs and conserve cash.
FY20 outlook
As a result of the significant uncertainty surrounding the
impact of the COVID-19 outbreak, it is too early to predict or
quantify the impact this will have on the Group's results for the
financial year ending 31 December 2020.
Our balance sheet remains strong and we have taken mitigating
actions to preserve cash as detailed above. The Board continues to
monitor the situation and will provide an update to the market as
appropriate. However, with continued tight cost control and the
Group's strong cash generative characteristics, the Group remains
resilient in volatile market conditions.
Gary Morrison, Chief Executive of Hostelworld, commented:
"The COVID-19 outbreak has had an enormous impact on the
hostelling industry, the wider travel market, and the communities
we live in. Right now, the Hostelworld team and I are fully focused
on supporting our employees, our customers and our hostel partners;
just as we have done so over the last 20 years and will continue to
do so for the next 20 years to come. Given the strength of our
balance sheet and the initiatives we have taken in recent weeks I
am confident that when this crisis passes, as it inevitably will,
we will emerge stronger than ever."
This announcement contains inside information for the purposes
of Article 7 of Regulation 596/2014 ("MAR").
For the purposes of MAR and Article 2 of Commission Implementing
Regulation (EU) 2016/1055, this announcement is being made on
behalf of the Company by TJ Kelly, Chief Financial Officer.
For further information please contact:
Hostelworld Group plc
Gary Morrison Chief Executive Officer
TJ Kelly Chief Financial Officer
Rudolf O'Kane Head of Commercial Finance
Tel: +353 (0) 1 498 0700
Powerscourt hostelworld@powerscourt-group.com
Lisa Kavanagh / Jack Hickey
Tel: +44 (0) 20 7250 1446
hostelworld@powerscourt-group.com
About Hostelworld Group
Hostelworld Group, the global hostel-focussed online booking
platform, inspires passionate travellers to Meet The World, and
come back with life-changing stories to tell. Our customers are not
your average tourists; they crave cultural connection and unique
experiences that we make possible by providing an unbeatable
selection of hostels in unmissable locations - all in the palm of
their hand.
It is the social nature and community feel of hostels and their
environment that enable travellers to embrace journeys of
discovery, adventure and meaning. We have more than 13 million
reviews across more than 17,700 hostels in more than 179 countries,
making our brand the leading online hub for social travel. Our
website operates in 19 different languages and our mobile app in 13
languages.
Disclaimer:
This announcement may contain forward-looking statements with
regard to the financial position and results of Hostelworld's
activities. Any forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially.
Many of these risks and uncertainties relate to factors that are
beyond Hostelworld's ability to control or estimate precisely. The
risks and other factors which may affect financial performance are
detailed in Hostelworld's publicly filed annual reports. Any
forward-looking statements in this announcement are current only as
of the date on which such statements are made. Hostelworld
undertakes no obligation to update any forward-looking statements,
save in respect of any requirement under applicable law or
regulation.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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