Hostelworld has reported lower earnings and revenues for last year and it said trading since late January has been challenged by the outbreak of the Covid-19 virus.
The company said the virus is having a significant impact on global travel demand, within Asian markets and more recently within the European market.
It said that as the coronavirus has spread, the company has observed a material reduction in bookings and an increase in marketing cost as a percentage of net revenue.
"This has been driven by a significant reduction of bookings from free channels, an increase in longer lead time cancellations across all channels and an increase in investment in paid channels to partially offset the bookings decline in free channels," the company said today.
"Given that the depth and duration of the virus outbreak is impossible to forecast at this time, we are unable to calibrate its effect for the balance of the year," it said.
But it added that if near term trends were to persist to the end of March, it estimates the impact to EBITDA to be in the range €3m to €4m for the first quarter of 2020.
"With continued tight cost control and our strong cash generative characteristics, the group remains resilient in volatile market conditions," it added.
Hostelworld said its revenues for the year to the end of December fell by 2% to €80.7m, though it added that revenues had grown in the second half of the year.
Its adjusted EBITDA of €20.5m was in line with market expectations, but was down 9% on 2018.
The company also said its full year Hostelworld brand net bookings declined by 5%, but it saw a return to net bookings volume growth during the second half of the year.
Hostelworld today reported an average Net Booking Value of €11.97, a 3% increase over 2018.
It has proposed a final dividend of 2.1 cent per share and a full year dividend 6.3 cent per share, down from 13.8 cent per share in 2018.
Gary Morrison, Hostelworld's chief executive Officer, said he sees significant opportunities to build a broader catalogue of experiential travel products beyond hostel accommodation.
"These types of experiences may include opportunities to study, work or volunteer abroad, with hostel stays featuring as part of an extended itinerary. Our research would also suggest that this market is very fragmented, with many different marketplaces and business models," Mr Morrison said.
"With the group's deep knowledge of experiential travellers built up over 20 years, our trusted brand, and a loyal and relevant customer base, I believe we are uniquely positioned to help both our existing customers and new experiential travellers," the CEO said.
"To execute this strategy, the group has increased its focus on potential M&A opportunities in the past six months and built an extensive pipeline of potential targets," he added.
