DAVY VIEW

Hostelworld is in evolution. Its ‘Roadmap for Growth’ put the core business on an improving trajectory – achieving bookings growth in Q4 – while the group enhanced its capabilities as a technology provider with investments in Goki and Counter. Strategically, it also sees opportunities to build a broader suite of offerings to its experiential travellers and we expect M&A to follow on a rebased dividend payout (20-40% of profits). In the shorter term, however, the COVID-19 virus has added significant uncertainties to the outlook. The situation is still evolving but we expect to tentatively reflect an EBITDA impact of c.€11-12m on the full year, depending on when the virus peaks and its geographical footprint. Value is evident in the medium-term potential and we reiterate our ‘Outperform’ rating.