Hostelworld : 2021 Interim Results Announcement

Hostelworld Group PLC - Interim Financial Report

For the half year ended 30 June 2021

Hostelworld Group plc

("Hostelworld" or the "Group" or the "Company")

Interim Results 2021

H1 2021 in line with expectations; modest increase in bookings in recent weeks in line with the

easing of travel restrictions

11 August 2021: Hostelworld, a leading global Online Travel Agent (OTA) focused on the hostel market, is pleased to announce its interim results for the period ended 30 June 2021

Financial highlights1

• Net revenue of €2.9m in H1 2021, a decline of 76% (H1 2020: €12.0m). On a quarterly basis, net
  revenue in Q1 2021 was €0.9m (Q1 2020: €12.0m) and in Q2 2021 €2.0m (Q2 2020: €0.0m)
• Total Group net bookings decline of 73% (H1 2020: 67%). Net booking volume decline from 1.1m to
  0.3m, with cancellations €0.8m (H1 2020: €5.4m). On a quarterly basis, net bookings in Q1 2021 were
  0.1m (Q1 2020: 1.1m) and in Q2 2021 0.2m (Q2 2020: 0.0m)
• Net Average Booking Value ("ABV") of €11.72 (H1 2020: €9.45), reflecting favourable geographic mix, and higher number of bed nights per booking
• Total H1 2021 marketing costs of €2.4m were 64% of net revenue (excluding deferred revenue), (H1 2020: €7.5m, 76%)
• Administrative expenses reduced by 43% to €13.5m in H1 2021 (2020: €23.7m)
• Adjusted EBITDA loss of €9.7m (H1 2020: €8.3m loss)
• Basic loss per share of 17.50 € cent (H1 2020 basic loss per share: 18.60 € cent)2

Balance sheet and cash flow:

• Closing cash position €33.7m (H1 2020: €32.9m)
• Adjusted free cash flow (101%), (H1 2020: (33%))
• Customer deposits related to bookings made under the free cancellation policy amounted to €1.1m (H1 2020: €0.6m)
• Cash dividends for 2021 remain suspended

• The Group uses Alternative Performance Measures ('APMs') which are non-IFRS measures to monitor the performance of its operations and of the Group as a whole. These APMs along with their definitions and reconciliations to IFRS measures are provided in the APMs section on pages 35 and 36.

• The H1 2020 earnings per share figures have been restated to incorporate the 1,636,252 new Hostelworld Group ordinary shares that were issued in September 2020. The weighted average number of shares in issue during the period was adjusted to include these bonus shares as if they were issued 1 January 2020.

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Hostelworld Group PLC - Interim Financial Report

For the half year ended 30 June 2021

Gary Morrison, Chief Executive Officer, commented:

"During the first half of 2021 the Covid-19 pandemic has weighed heavily on the global travel industry. Although global vaccination programmes have continued at pace, new strains of the virus have spread rapidly around the world leading to frequent and swift changes to travel restrictions.

Despite the challenging macro environment, we are starting to see customer demand returning in geographies where travel restrictions have been eased. In the US we have seen a recovery in domestic demand during Q1 and Q2, followed by a strong recovery in several Southern European markets in Q2. As the recovery has progressed we are also seeing the economic benefits of the initiatives we have already taken to strengthen our core platform, driven by improvements in inventory competitiveness, user experience enhancements and improved marketing capabilities.

As we look ahead, I am very pleased with the positive customer feedback we have received to our Meet The World growth strategy tests in the first half of the year which builds on our Core business strengths to provide our customers with a wider range of travel products and social features to help them meet other likeminded travellers. Finally, our liquidity position remains very strong, driven by our relentless focus on cost control coupled with the successful term loan facility transaction in February 2021.

In summary, while the short-term outlook for the travel industry remains extremely challenging, I remain confident that Hostelworld will emerge from the COVID-19 crisis stronger than before. I would like to take this opportunity to thank all of our employees for their continued hard work and commitment, and our customers and shareholders for the support they have shown through these challenging times."

Trading update and outlook:

Similar to the initial recovery observed in Q3 2020, we are seeing swift increases in demand in those destinations where travel restrictions have eased. The recovery started with domestic demand in the US and Australia followed by stronger growth into several European destinations throughout Q2. Overall, we continue to expect the pace to mirror changes in individual markets over the coming months, both positive and negative. Outside of these geographies, demand continues to remain very depressed.

As the recovery has progressed we have seen several factors impact our trading economics versus the first half of 2019. In particular, average net booking values have steadily recovered to near H1 2019 levels driven by a favourable geographic mix and longer length of stay bookings, which has been partially offset by underlying bed price deflation, higher cancellation rates (in part driven by a higher proportion of free cancellation bookings) and a reduction in blended commission rates (driven by the removal of Elevate in 2020). Marketing costs per net booking however have remained elevated versus H1 2019 driven by lower conversion rates and higher cancellation rates (in part driven by a higher proportion of free cancellation bookings). Consequently, marketing costs as a percentage of net revenue remain significantly higher than H1 2019 levels, although we expect these to gradually normalise as normal travel patterns resume.

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Hostelworld Group PLC - Interim Financial Report

For the half year ended 30 June 2021

On the supply side, despite the continuing depressed demand during H1 2021 we have only seen a very modest reduction in the number of hostels on our platform compared to levels at the end of 2020, driven by continual sign ups to our platform. In addition, I am also encouraged to see our customers are continuing to book dorms in the majority of cases, with only a modest shift towards private rooms compared to 2019 levels.

Overall while bookings continue to trend well below normalised patterns, we expect the recovery to improve further during the second half of the year, albeit that we expect net bookings will remain at significantly reduced levels when compared to 2019. In particular we expect the pace of the recovery to mirror changes in individual markets over the coming months, both positive and negative.

Whilst significant uncertainty remains, and the recovery is likely to take some time, the Board remains confident in the resilience and flexibility of the Group's business model, and its ability to execute on its growth strategy and build market share as demand recovers. In parallel, the Board will continue to evaluate internal and external opportunities that will deliver value for shareholders, in particular the significant potential to enhance future growth through our Meet the World growth strategy.

In light of continued market uncertainty, the Group is not in a position to provide full year guidance until such time as the overall impact of COVID-19 on the Group becomes clearer.

Analyst Presentation

A presentation will be made to analysts today at 9.00am, a copy of which will be available on our Group website: http://www.hostelworldgroup.com. If you would like to dial into the presentation, please contact Powerscourt on the contact details provided below.

For further information please contact:
Hostelworld Group plc	[e-mail]
Gary Morrison Chief Executive Officer
Caroline Sherry Chief Financial Officer
Rudolf O'Kane Head of Commercial Finance
Powerscourt	[e-mail]
Lisa Kavanagh/ Eavan Gannon	[phone]

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Hostelworld Group PLC - Interim Financial Report

For the half year ended 30 June 2021

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 over 20 years' experience, with more than 13.5 million reviews across more than 16,700 hostels in 183 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.

Cautionary statements

This Announcement may contain, and the Company may make verbal statements containing, "forward-looking statements" with respect to certain of the Company's plans and its current goals and expectations relating to its future financial condition, performance, strategic initiatives, objectives and results. Forward-looking statements sometimes use words such as "aim", "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "seek", "may", "could", "outlook" or other words of similar meaning. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond the control of the Company. As a result, the actual future financial condition, performance and results of the Company may differ materially from the plans, goals and expectations set forth in any forward-looking statements. Any forward-looking statements made in this Announcement by or on behalf of the Company speak only as of the date they are made.

The information contained in this Announcement is subject to change without notice and except as required by applicable law or regulation (including to meet the requirements of the Listing Rules, the Euronext Dublin Listing Rules, MAR, the Financial Services and Markets Act 2000, Euronext Dublin and/or the Central Bank of Ireland), the Company expressly disclaims any obligation or undertaking to publish any updates or revisions to any forward-looking statements contained in this Announcement to reflect any changes in the Company's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statements are based. Statements contained in this Announcement regarding past trends or activities should not be taken as representation that such trends or activities will continue in the future. You should not place undue reliance on forward-looking statements, which speak only as of the date of this Announcement.

No statement in this Announcement is intended to be a profit forecast and no statement in this Announcement should be interpreted to mean that earnings per share of the Company for the current or future years would necessarily match or exceed the historical published earnings per share of the Company.

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Hostelworld Group PLC - Interim Financial Report

For the half year ended 30 June 2021

Interim Management Report

To the members of Hostelworld Group plc

Cautionary statement

This Interim Management Report (IMR) has been prepared to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The IMR should not be relied on by any other party or for any other purpose.

The IMR contains certain forward-looking statements. These statements are made by the directors in good faith based on the information available to them up to the time of their approval of this report but such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

This interim management report has been prepared for the Group as a whole and therefore gives greater emphasis to those matters which are significant to Hostelworld Group plc and its subsidiary undertakings when viewed as a whole.

Chief Executive's Review

H1 review and operational update

Trading in the first half of 2021 remained extremely challenging, with the continued effects of the COVID-19 pandemic weighing heavily on Hostelworld Group and the wider travel industry. In particular, Q1 remained very depressed, continuing the trends seen in Q4 2020. During Q2 we saw a modest pickup in North and Central America, followed by a strong recovery in travel to Southern European destinations as travel restrictions began to ease. The situation however remains very volatile, with demand patterns mirroring frequent and swift changes to government guidelines, both positive and negative.

In the light of the challenging trading environment and the continued uncertainty, our key priorities have remained unchanged: to support our employees, customers and hostel partners; to maintain the strength of our balance sheet; and to execute on our growth strategy.

Supporting our employees, customers and hostel partners

We have continued to support our hostel partners through conducting joint surveys to source relevant industry data and providing supporting information for government bodies. We have held more than 30 webinars over the last six months to help hostel owners optimise their businesses to cater for current demand patterns and customer needs. During the year we also continued with our hostel industry recognition programme, the HOSCARs, to celebrate the world's most extraordinary hostels. This year's awards acknowledged the incredible work hostels have been doing in their communities over the last 12 months and seek to support the industry during the pandemic.

Similarly, we have been supporting our employees throughout the pandemic, and recently launched more programmes to facilitate agile working policies, working from abroad policy and paid wellness and parental leave days help to promote flexibility and work-life balance when working from home.

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