DAVY VIEW

Hostelworld’s business is highly sensitive to demand trends, so its admission of weakening bookings since late-August was far from surprising. We have taken a conservative approach in forecasting the company’s financials over the 2020-22 period, but we think Hostelworld can disproportionately benefit from easing restrictions when they arrive given its young, dynamic customer base and the recent investments in its platform. Valuation levels (just 4x 2019 earnings) significantly mitigate the risk in the meantime.