Hostelworld Group Plc · LSE:HSW
Hostelworld — Investor Day (November 2022)
40 slides from Hostelworld's investor day presentation, Nov 23, 2022
Slide 1: Capital Markets Day November 2022
Capital Markets Day November 2022
Slide 2: Disclaimers
Disclaimers This presentation, and any ancillary documents relating to it, any oral competitive position data contained in the presentation has been verified by presentation and any question or answer session (together, the "Presentation") any independent source for accuracy or completeness and such
Slide 3: Agenda
Agenda 01 02 03 Overview Opportunity Growth 2.00-2.15pm 2.15-2.30pm 2.30-3.00pm 04 05 06 Outlook Summary Q&A 3.00-3.20pm 3.20-3.30pm 3.30-4.00pm CAPITAL MARKETS DAY NOV 2022 | 3
Slide 4: Overview
Overview
Slide 5: HWG by the numbers
HWG by the numbers €470M €70M 4.8M 2022E 2022E 2022E Net GMV1 Net Revenue2 Net Bookings 1.9M 7.8M 17M 2022E 2022E 2022E Unique Customers Total Travellers (PAX) Net Bednights 170 14.1M 250 Countries Property reviews Employees in with Properties 11 countries CAPITAL MARKETS DAY NOV 2022 | 5 1. Net GMV
Slide 6: The hostelling category is unique in the travel landscape
The hostelling category is unique in the travel landscape Demand Supply 60% solo travellers Dorm and private rooms 80% 18-35 years old with large communal areas 🏨 Multi Destination Trips, 66% have 50 or less beds with new customers making 80% are independent owner ~1.7 bookings in the first 28 days
Slide 7: Our Mission: Help travellers find people to hangout with
Our Mission Help travellers find people to hangout with
Slide 8: Our pioneering social network is the cornerstone of our strategy
Our pioneering social network is the cornerstone of our strategy Revenue Growth ● New customer growth Unique customer need led growth strategy ● Strong retention rates Margin Growth X EBITDA/FCF ● Reduces CAC App centric Increased ● Lower marketing cost as a % EBITDA growth delivery model of net rev
Slide 9: Key operational metrics trends already validating our approach
Key operational metrics trends already validating our approach 2022 monthly Generated Marketing costs as a OPEX3 as a Revenue2 as a % of 2019 % of Generated Revenue2 percentage of 2019 120% 100% 100% Airport 110% 90% Disruption 90% 100% 80% 80% 90% 70% 70% 80% 70% 60% 60% 60% 50% 50% 50% 88% 86% 40%
Slide 10: Positioned to win in our category
Positioned to win in our category Customers are Customers are looking to meet and share looking for convenient experiences online places to stay Customers are looking to We can bring them together as meet people in real life… we know where they are going CAPITAL MARKETS DAY NOV 2022 | 10
Slide 11: Opportunity
Opportunity
Slide 12: Booking volumes recovering across key geographies
Booking volumes recovering across key geographies Monthly net bookings by destination (as a % of 2019) 180% Africa Asia 160% Central America Europe (Ex UK) 140% Oceania South America 120% UK US & CA 100% 80% 60% Bookings as 40% % of 2019 20% 0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct CAPITAL MARKETS
Slide 13: Many countries already surpassing 2019 levels
Many countries already surpassing 2019 levels MTD1 November Net Bookings 2022 vs. 2019 Italy +4% Spain +2% Turkey +67% Portugal +19% Greece +14% Mexico +55% Guatemala Egypt +106% Laos +33% +87% Costa Rica +51% Thailand +16% Vietnam +16% Colombia +6% Indonesia +3% Ecuador +10% Chile +4% CAPITAL MARKE
Slide 14: Strong customer growth expected over the coming years
Strong customer growth expected over the coming years Millennial / Gen Z Strong appetite for Solo Travel will drive global among Millennial / Gen Z cohort travel growth 4.9bn +7% Millennial and Gen Z people Searches for “Solo Travel” – largest population cohorts @wildroverhostels 2022 vs 20193 in th
Slide 15: Category perfectly aligned to GenZ/Millennial travel needs
Category perfectly aligned to GenZ/Millennial travel needs Experiential Travel Hostels are the most demand growing sustainable travel option 8 in 10 25% Millennial and Gen Z Hostel vs. hotel emissions tCO2e travellers want a unique @ashleyiswell on a bed per bed basis4 experience in next trip1 +34%
Slide 16: Category well positioned to continue to attract investment
Category well positioned to continue to attract investment The category is an Hostels continuing to invest in attractive asset class technology <7% +7% Sector continues to represent Increase in % of hostels an under-supplied asset using 3rd party connectivity @homelisbonhostel class of European in 2
Slide 17: Overall: strong category growth expected into 2025
Overall: strong category growth expected into 2025 Total stayed bednights (M) Total market GMV (€Bn) ~ 10-13% ~ 10-12% CAGR 2022-25 CAGR 2022-25 Upper range of Upper range of market research market research 300 forecasts1 7 forecasts1 250 6 5 200 4 150 3 100 2 50 1 0 0 2022E 2023E 2024E 2025E 2022E
Slide 18: Growth
Growth Me…
Slide 19: We connect travellers into highly relevant social networks
We connect travellers into highly relevant social networks Customer invited Customer leaves Customer signs up to into City and Hostel City and Hostel Chat our Social Network Books on any platform Chat Groups Groups (web, iOS, or Android) 14 days before 3 days after check-in check-out OTA only custom
Slide 20: The network is expanding rapidly
The network is expanding rapidly Percentage of total bookings made by Percentage of Members who use Social Network Members1 Social features2 50% 80% 45% 48% 76% 46% 70% 73% 43% 70% 40% 40% 60% 65% 35% 37% 61% 50% 30% 32% 47% 25% 40% 42% 25% 20% 30% 33% 15% 20% 13% 10% 10% 5% 0% 0% 3 3 Apr May Jun Ju
Slide 21: Due to its broad appeal to all customer types
Due to its broad appeal to all customer types █ New Customer █ Group New vs. Existing Customer Mix1 PAX Mix2 █ Existing Customer █ Couple █ Solo 100% 100% 57% 66% 14% 12% 90% 90% 80% 33% 31% 80% 70% 70% 60% 60% 50% 50% 57% 53% 40% 40% 43% 30% 34% 30% 20% 20% 10% 10% 0% 0% All Customers Social Member
Slide 22: The network attracts and retains high value customers
The network attracts and retains high value customers New Customers acquired April – Sept 2022 Social Members are 4x more likely to …and make 1.9x the bookings over the …and almost twice as likely to make be recruited via the App… first 6 weeks than non members… those bookings via App 1.9x 4x 1.9x 5
Slide 23: Social Network Members become powerful brand advocates
Social Network Members become powerful brand advocates CAPITAL MARKETS DAY NOV 2022 | 23
Slide 24: Expanding functionality to (further) deliver on our Mission
Expanding functionality to (further) deliver on our Mission Roamies Hostel Local Group Events Getaways Tours CAPITAL MARKETS DAY NOV 2022 | 24
Slide 25: And continuing to invest to deliver exceptional customer value
And continuing to invest to deliver exceptional customer value Extend network capabilities AI Personalisation engine Richer user profiles Connect like-minded travellers Broader messaging Suggest things travellers capabilities might want to do New ways to connect Suggest places travellers with other
Slide 26: Strategy also underpins our long term competitive position with our hostel partners
Strategy also underpins our long term competitive position with our hostel partners What HW provides… ● Higher value ”hosteller” customers ● Lower cost distribution ● Market leading rate / availability competitiveness ● Exclusive inventory What HW receives… CAPITAL MARKETS DAY NOV 2022 | 26
Slide 27: Expanding our hostel supply coverage
Expanding our hostel supply coverage Estimated hostel bednights sold FY 2022E, Millions1 USA & Canada Western Europe Eastern Europe North Asia 3% 40% 10% 8% Market Market Market Market 6M 92% 78M 78% 20M 56% 16M 64% Global Central America 100% 5% MEA South Asia Australia Market 4% 15% N. Zealand Mar
Slide 28: Growing importance of sustainability in travel
Growing importance of sustainability in travel More than half of our Growing recognition customers report that of “Over Tourism” as a global issue “Sustainability plays a role in where I stay” Emergence of sustainable travel standards bodies (GSTC, Travalyst) More than half of our Emergence of hoste
Slide 29: Making sustainability a competitive advantage over time
Making sustainability a competitive advantage over time Marketing Category Staircase to Sustainability Reducing our Credentials program own emissions ● Commissioning research proving ● Partnered with the GSTC to adapt ● Disclosed corporate scope 1, 2 and 3 Hostels are the most sustainable their stan
Slide 30: Integral part of our ESG strategy
Integral part of our ESG strategy Environmental Social Governance ● Achieved South Pole’s Climate ● Employee policies promoting ● Cross-functional ESG Steering Neutral Company label flexibility and agile working Committee led by CFO ● Commitment to further reduce ● Focus on employee wellbeing ● On-g
Slide 31: Clear path to ~28m bednights equating to ~1.6x growth by FY25
Clear path to ~28m bednights equating to ~1.6x growth by FY25 Total bednights2 sold 2022-2025 forecast, millions Upper range of market ~ 17% CAGR = research forecasts1 1.6x ~ 7% CAGR 2022-25 ~ 10% CAGR 2022-25 ● Market share growth ● Coverage growth ● 2023 v 2022 = + 20% ● 2023-2025 CAGR = ~ 5% 28 2
Slide 32: Outlook
Outlook
Slide 33: Near Term Guidance
Near Term Guidance FY 2022 FY 2023 Guidance Trends Net Bookings 4.8m ~ 25% Net GMV €470m ~ 20% Net Revenue c. €70m ~ 20% Marketing % of Revenue 55% - 60% 50% - 55% Adj. EBITDA c. €1m Mid to high-teens margin % CAPITAL MARKETS DAY NOV 2022 | 33
Slide 34: Proven model delivering valuable repeat revenue
Proven model delivering valuable repeat revenue FY Net Generated Revenue, millions, segmented by customer by year of acquisition €100 New customer revenue Return customer revenue 2023E €80 2022 2021 2020 €60 2019 2018 2017 €40 2016 2015 €20 2014 2013 Pre-2013 €0 2013 2014 2015 2016 2017 2018 2019 20
Slide 35: Medium Term Drivers
Medium Term Drivers Key FY 2025 Drivers Net GMV 15% CAGR vs. FY’22 Market growth and increased market share Net Revenue 15% CAGR vs. FY’22 Commission rates unchanged Marketing % of 45% - 55% Powered by social & repeat customers Revenue Adj. EBITDA Margin ~ 20% Top-line growth and margin improvement
Slide 36: Capital allocation priorities focussed on maximising shareholder returns
Capital allocation priorities focussed on maximising shareholder returns Principle objective is to deliver growth that Re-finance existing €30m term loan to reduce drives long-term sustainable value creation leverage and interest costs ● Asset light business model generating substantial cash flow ●
Slide 37: Summary
Summary
Slide 38: Significant value creation potential for customers, hostel partners and shareholders
Significant value creation potential for customers, hostel partners and shareholders over the next 3 years For Customers… ● Delivers on the core need of the category: helping travellers find people to hangout with ● Increasing value over time: Social network becomes more useful as more customers joi
Slide 39: Well positioned, well financed and on track
Well positioned, well financed and on track Well positioned… ● Growth strategy is already working as anticipated ● Uniquely positioned to win in this category vs. other OTAs Well financed… ● Expect to end the year with a closing cash position of €19m ● Refinancing discussions already underway, which
Slide 40: Q&A
Q&A