Hostelworld is at pains to show its ‘Roadmap for Growth’ is well on track, despite the hiatus of COVID-19 (2020 net revenue down 81%). It has followed its return to net bookings growth in normal conditions of Q419 with multiple enhancements to its booking platform. Also, for the longer term, there is reiteration of the company’s aim to offer complementary experiential travel products, such as tours and experiences, with cross-selling opportunities (‘an extensive pipeline of potential targets’ had been identified by the eve of the pandemic). For now, the outlook is clouded by uncertainty about the lifting of COVID-19 travel restrictions in key markets, with varying infection rates and vaccination programmes. In the UK, the very success of a rollout may only reinforce border controls.
Hostelworld |
Some sunny day
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Travel & leisure |
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6 April 2021 |
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Hostelworld is at pains to show its ‘Roadmap for Growth’ is well on track, despite the hiatus of COVID-19 (2020 net revenue down 81%). It has followed its return to net bookings growth in normal conditions of Q419 with multiple enhancements to its booking platform. Also, for the longer term, there is reiteration of the company’s aim to offer complementary experiential travel products, such as tours and experiences, with cross-selling opportunities (‘an extensive pipeline of potential targets’ had been identified by the eve of the pandemic). For now, the outlook is clouded by uncertainty about the lifting of COVID-19 travel restrictions in key markets, with varying infection rates and vaccination programmes. In the UK, the very success of a rollout may only reinforce border controls.
Annus horribilis
As a result of COVID-19 global travel restrictions, 2020 saw Hostelworld’s trading metrics drastically down across the board. The impact of a 79% decline in net bookings (1.5m vs 6.8m) in 2019 was compounded by a 22% reduction in price (net average booking value), which largely reflected cancellations of higher-ticket bookings and inevitable discounting by hostels in the downturn. The overall cancellation rate trebled to a third of gross revenue. In mitigation the largest cost, marketing, was pared almost in line (down 72%) with sales volumes, while efficiencies and government subsidy schemes drove other opex down by a third. As a result, EBITDA moved from €20.5m to a loss of €17.3m.
Taking the positives
Alongside the progress with the strategic plan (management is ‘very pleased’), Hostelworld looks to have handled the COVID-19 pandemic effectively. It can point to a 2020 outcome in line with its October guidance, a much lower cost base and an encouraging, if understandably modest, rebound in Q3 when allowed to trade. Almost maintained y-o-y cash (€18m) at year end, facilitated by a €14m placing in H1, has since been supplemented with a €30m five-year debt facility.
Valuation: We’ll ‘meet the world’ again
With governments’ travel guidance so fluid in view of COVID-19 persistence, Hostelworld’s 2021 expectation of ‘significantly lower net bookings than 2019’ seems reasonable and reflected in consensus estimates. However, key platform modernisation continues undimmed, as does its ‘Meeting the World’ vision to create a global experiential travel network from its large and engaged customer base.
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Consensus estimates
Source: Refinitiv. Note: *Cash dividends suspended owing to COVID-19 uncertainty, so paid by way of bonus shares equating to one cent. |
EDISON QUICKVIEWS ARE NORMALLY ONE OFF PUBLICATIONS WITH NO COMMITMENT TO WRITING ANY FOLLOW UP. QUICKVIEW NOTES USE CONSENSUS EARNINGS ESTIMATES.
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Research: Healthcare
The year 2020 was one of challenges for CASI, as it was for the rest of the world, but the company was able to continue to advance the commercialization of Evomela and jumpstart its clinical development engine. CASI is continuing to execute on its strategy of opportunistically in-licensing assets and the recent trend has been to earlier-stage assets such as its latest acquisition, the Chinese rights to the Phase I broad spectrum anti-cancer drug CB-5339, announced in March.