DAVY VIEW

Hostelworld issued a FY24 trading update this morning. As had been flagged through the year, there was pressure on booking values owing to a mix shift to lower cost destinations, which contributed to a small year-on-year (yoy) decline in revenue (-1%), in line with our expectations. Importantly however, the company successfully executed on its social strategy during 2024, which drove an impressive margin performance and aEBITDA of €21.8m was ahead of our €21.4m. We expect the revenue mix to normalise in 2025 and the statement flags some encouraging rays of light in this regard. We believe the Hostelworld investment case is attractive given the combination of: revenue growth; margin expansion owing to continued execution of its social strategy; and its strong balance sheet position.