Hostelworld counts cost of free cancellation policy
Bookings were flat as the company shifted to focus on its core brand.
Hostelworld revenue and profit declined last year as it added a free cancellation policy and invested in developing new technology.
The online hostel booking platform reported revenue of 82.1 million euros (£70.45 million) in the year to December 31, down from 86.7 million euros (£74.4 million) in 2017.
This was accounted for by deferred revenue as the group rolled out a free cancellation policy.
Underlying earnings also declined by 19% to 21.4 million euros (£18.36 million).
Stripping out the effect of the delayed revenue, earnings fell 8% as a result of investment in the company’s technology hub in Porto.
We have a very relevant brand which is trusted by a loyal and engaged customer base Gary Morrison, chief executive
Bookings were flat at 7.55 million, although the core Hostelworld brand grew by 4% as the group shifted its focus away from non-core brands.
Hostelworld bookings were up 6% in the first half, but slowed to 2% in the second half, in part due to weaker demand during the World Cup and heat wave.
Chief executive Gary Morrison said: “Hostelworld is operating in a highly competitive market, which is growing.
“We have a very relevant brand which is trusted by a loyal and engaged customer base.
“Following the completion of our strategic review, we identified and developed a Roadmap for Growth programme to allow the group to capitalise on these significant opportunities available and to return the business to growth.”
Shares in the company were up almost 6% in early trading on Tuesday.