DAVY VIEW

Hostelworld’s Capital Markets Day outlined an ambitious strategy to drive further revenue and updated on capital allocation. Its platform and social strategy are primed to deliver further growth. It believes it can expand its total addressable market (TAM) beyond hostel travellers, which presents very significant market opportunities, and it has made an initial move into budget hotels. In the near term, some headwinds around Average Booking Value (ABV) and opex investment to pursue growth put downward pressure on forecasts. Evidence of the acceleration in revenue trends as a result of the group’s new initiatives will be key to a re-rating.