Bookings at Hostelworld were strong in the first half of the year as the company’s investment in its social strategy paid off and activity in Asia and Central America reached records.

The hostel-booking company, which targets millennial and Gen-Z backpackers, said net bookings in the first six months of 2024 reached 3.7 million, up 9 per cent year on year.

However, the average booking value (ABV) of a bed on Hostelworld’s platform declined by 10 per cent to €13.60 in the first half, driven by strong demand among UK and European travellers for lower-cost destinations in Asia, the company said on Thursday.

Speaking to The Irish Times, Hostelworld chief executive Gary Morrison said the decline in ABV was due to a number of factors, including an increase in the proportion of solo travellers booking through the platform from 59 per cent to 62 per cent of the total.

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Cost is also factoring into the equation, with the average price of a bed in Europe standing at about €36 over the period and €42 in the United States and Canada. In Asia, it was “about €12 a night”, he said, driving interest in the region.

“That’s great if you’re an 18- to 25-year-old, you don’t have a mortgage, you don’t have a family to support,” Mr Morrison said. “But if you do have a budget, you’re going to look for the cheapest flight possible to take you to Asia and you’re going to go because you can make your money last longer.”

Consequently, “We’re still saying that bookings [growth is] going to be high single-digit” this year, he said, with revenue growth “lagging behind bookings growth” due to the decline in ABV.

Net revenue for the first half of the year was €46.4 million, up 1 per cent year on year, while operating profit was €4 million, swinging back from a loss of €1.7 million a year earlier. Operating costs fell 2 per cent to €12.5 million.

“This performance, coupled with operating cost discipline, has translated directly into strong operating cash flow enabling us to fully repay our residual debt facility with AIB, two years ahead of schedule,” said chief executive Gary Morrison.

Direct marketing fell as a percentage of revenue, from 51 per cent in 2023 to 45 per cent this year, helping to boost margins.

Hostelworld has invested significantly in its social network strategy as a means of driving growth. The company said the proportion of bookings from social members increased to 80 per cent in the first half of the year, up from 66 per cent in the same period in 2023.

That investment has it positioned for further growth, the company said, with the company growing its hostel supply and market coverage increasing 3 per cent year on year.

“We have continued to provide our customers with enhanced social network product features, added more hostel inventory to our platform, and have continued to upgrade our platform towards a fully cloud native architecture,” Mr Morrison said.

The company reaffirmed its full year earnings guidance of adjusted ebitda in line with market consensus.

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