DAVY VIEW

Hostelworld has updated on Q3 trading. Volumes in the third quarter are behind our expectations owing to a bigger impact than anticipated from the conflict in the Middle East, which the company expects will continue into year end. It has also guided to a mid-single revenue growth rate for FY27 versus our forecast of 8% and Visible Alpha consensus of 10% growth. We spoke to management and they highlighted that the expectations for FY27 growth were conservative and did not assume any recovery in volumes despite the considerable headwind this year (-4 points in Q3). Although we acknowledge the unfortunate impact of the conflict on volumes, it is disappointing nonetheless to see earnings forecasts fall again.