TIDMHSW
RNS Number : 1660V
Hostelworld Group PLC
03 April 2023
LEI: 213800OC94PF2D675H41
3 April 2023
Hostelworld Group plc
("Hostelworld" or the "Company")
Publication of Annual Report for 2022 and Notice of 2023 Annual
General Meeting
Annual Report and Accounts
Hostelworld, the world's leading hostel-focused online booking
platform, is pleased to announce that its Annual Report 2022 has
been posted or is being made available to shareholders today.
Annual General Meeting
The Company confirms that its Annual General Meeting will be
held at 12 noon on Tuesday 9 May 2023 at the offices of the
Company, Charlemont Exchange, Charlemont Street, Dublin 2, Ireland.
A Circular, containing the Chairman's Letter and Notice of 2023
Annual General Meeting, and a Form of Proxy have also been posted
or are being made available to shareholders today.
Documents available for inspection
The following documents:
-- Annual Report 2022;
-- Circular containing the Chairman's Letter and Notice of 2023 Annual General Meeting; and
-- Form of Proxy;
have been submitted to the Financial Conduct Authority via the
National Storage Mechanism, and the Irish Stock Exchange (trading
as Euronext Dublin), and will shortly be available for inspection
at the following locations:
National Storage Mechanism :
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
and:
Euronext Dublin :
Companies Announcements Office,
Euronext Dublin,
28 Anglesea Street,
Dublin 2
and https://direct.euronext.com/#/oamfiling
The Annual Report 2022 has also been filed with the Central Bank
of Ireland.
The Annual Report 2022 (ESEF compliant format), the Circular
containing the Chairman's Letter and Notice of the 2023 Annual
General Meeting and the Form of Proxy are available on the
Company's website at www.hostelworldgroup.com.
Regulated Information
In accordance with DTR 6.3.5(1A), the unedited full text of the
regulated information required to be made public under DTR 4.1 is
contained within the 2022 Annual Report which has been uploaded to
the National Storage Mechanism and is available on the Company's
website www.hostelworldgroup.com.
The information set out in the Appendix, which is extracted from
the Annual Report 2021, is included for the purposes of complying
with Regulation 33(5)(b)(ii) of the Irish Transparency Regulations
2007 (as amended) and its requirements on how to make public annual
financial reports. The information in the Appendix should be read
in conjunction with the Company's preliminary results for the year
ended 31 December 2022 released on 22 March 2023 which can be
viewed at www.hostelworldgroup.com. Together, these constitute the
material required by Regulation 33(5)(b)(ii) to be communicated in
unedited full text through a Regulatory Information Service.
Contacts:
Hostelworld Group plc
Caroline Sherry, Chief Financial Officer
John Duggan, General Counsel & Company Secretary
Tel: +353 (0) 86 022 3553
Appendix :
Directors' Responsibilities Statement
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. The Directors are required to
prepare the Group financial statements in accordance with
UK-adopted international accounting standards and applicable law.
The Directors have also elected to prepare the Group financial
statements in accordance with International Financial Reporting
Standards adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the European Union and to prepare the parent Company
financial statements in accordance with FRS 101 Reduced Disclosure
Framework (Relevant Financial Reporting Framework) and applicable
law. Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the assets, liabilities and financial position of the Group
and Company and of the profit or loss of the Group for that
period.
In preparing the parent Company financial statements, the
Directors are required to:
-- Select suitable accounting policies and then apply them consistently;
-- Make judgments and accounting estimates that are reasonable and prudent;
-- State whether Financial Reporting Standard 101 Reduced
Disclosures Framework has been followed, subject to any material
departures disclosed and explained in the financial statements;
and
-- Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
In preparing the Group financial statements, International
Accounting Standard 1 requires that Directors:
-- Properly select and apply accounting policies;
-- Present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
-- Provide additional disclosures when compliance with the
specific requirements in IFRSs are insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the Group's financial position and financial
performance; and
-- Make an assessment of the Company's ability to continue as a going concern.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Responsibility Statement
We confirm that to the best of our knowledge:
-- The financial statements, prepared in accordance with the
Relevant Financial Reporting Framework, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole;
-- The Strategic Report includes a fair review of the
development and performance of the business and the position of the
Company, and the undertakings included in the consolidation taken
as a whole, together with a description of the principal risks and
uncertainties that they face; and
-- The Annual Report and financial statements, taken as a whole,
are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company's position and
performance, business model and strategy.
This responsibility statement was approved by the Board of
Directors on 21 March 2023 and is signed on its behalf by:
John Duggan
Company Secretary
21 March 2023
Principal Risks and Uncertainties
The Board takes overall responsibility for identifying the
nature and extent of the risks to be managed by the Group to ensure
the successful delivery of its strategic and business priorities.
The Audit Committee monitors certain risk areas and the internal
control system, as set out in the report on governance. The Group's
Risk Register identifies key risks including emerging risks and
monitors progress in managing and mitigating these risks and is
reviewed regularly during the year by the Audit Committee and at
least annually by the Board. Emerging risks are identified from
areas of uncertainty, which may not have a significant impact on
the business currently but may have the potential to adversely
affect the Group in the future.
The Group's Risk Register process is based upon a standardised
approach to risk identification, assessment and review with a focus
on mitigation. Each risk identified is subject to an assessment
incorporating likelihood of occurrence and potential impact on the
Group.
The Group's Risk Register is subject to review by the Executive
Leadership Team (ELT) prior to reporting to the Audit Committee and
the Board.
The Board has reviewed the principal risks and uncertainties
against the wider macroeconomic environment which Hostelworld
operates in currently, taking into consideration inflationary and
other financial related risks as well as consideration of the risks
associated with continuing geopolitical conflicts, climate risk and
COVID-19. We recognise, in particular, that climate change poses a
number of physical (such as extreme weather events affecting
customer willingness to travel or the availability of hostels) and
transition-related (such as stakeholder perception) risks and
opportunities for our business. We take a risk-based collaborative
and strategic approach to climate change. We are aligning internal
processes with the recommendations of the TCFD. The Group has a
detailed climate related Risk and Opportunities Register which is
included in the Sustainability at Hostelworld report within the
annual report.
The most material risks facing the Group are set out in the
following table, together with comments on how they are managed to
minimise their potential impact. While the following table is not
prioritised nor an exhaustive list of all risks that may impact the
Group, it is the Board's view of the principal risks at this point
in time. Individually or together, these risks could affect the
Group's ability to operate as planned and could have a significant
impact on revenue and shareholder returns. Additional risks and
uncertainties, including those that have not been identified to
date or are currently deemed immaterial, may also, individually or
together, have a negative impact on the Group's revenue, returns,
or financial condition.
The Board also considered its obligations in relation to
providing both the annual viability and going concern statements
and its conclusions can be found in the Directors Report within the
annual report and in note 1 to the consolidated financial
statements within the annual report.
No Category Description and Impact Management and Mitigation Direction
of change
1 Macro-economic The Group's financial performance Management and the Board Increased
Conditions is largely dependent on regularly monitor a range
the wider availability of trading, market and
of, and demand for, travel economic indicators to
services. determine any risk to
financial performance
Travel services are enabled due to macroeconomic uncertainties,
by the freedom of movement and any potential
of people nationally and mitigating actions required.
internationally without
prohibitive restrictions. The Group's revenue and
Moreover, it is supported customer base is global,
by affordable air, ferry with a dispersed population
and train fares at significant of users, and a geographically
scale, and similarly good dispersed set of destinations.
access to accommodation. While market conditions
may decline in certain
The demand for travel services regions, the globally
is influenced by a range diversified nature of
of macroeconomic circumstances the business helps to
and their impact on consumers mitigate this with circa
discretionary spending 60% of destination markets
levels. Economic activity, in Europe and circa 40%
employment levels, inflation, in rest of world.
interest rates, currency
movements and access to Rising inflation rates
credit are among the factors can impact customer discretionary
that can impact travel spending and reduce their
demand. ability to travel. However,
this is potentially offset
by the evidence of pent-up
demand across the industry
as a result of an inability
to travel through COVID-19.
In circumstances where
events cause a material
decline in consumer travel
behaviours and patterns
on a global scale, management
will take necessary actions
to conserve cash.
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2 Impact of COVID-19, There remains a risk of Our target 18-34-year-old Decreased
terrorism, geopolitical travel restrictions relating population tend to be
conflicts, and to new strains or waves flexible as to destination
other uncontrollable of COVID-19. This could and are less risk adverse.
events on leisure adversely affect the Group's Their trips tend to be
travel business in impacted regions. a 'rite of passage' rather
We are also exposed to than a more discretionary
the ability of other businesses or optional vacation resulting
within the travel industry in less aversion to these
to meet increased demands risks and more flexibility
as restrictions ease. Employee in configuring trips around
staff shortages and flight restrictions.
cancellations negatively
impact our business.
The continued threat of
terrorist attacks in key
cities and on aircraft
in flight may reduce the
appetite of the leisure
traveller to undertake
trips, particularly to
certain geographies, resulting
in declining revenues.
Geopolitical conflicts,
climate change, natural
disasters or other adverse
events outside of the control
of the Group may also reduce
demand for or prevent the
ability to travel to affected
regions.
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3 People The Group is dependent The Group is taking meaningful Increased
on its ability to attract, action to retain employees
retain and develop creative, and has implemented HR
committed and skilled employees policies and people processes
so as to achieve its strategic to enable retention of
objectives. Due to the key talent; namely moving
impact of the COVID-19 permanently to a hybrid
pandemic, the Group took working
actions to restructure model and the introduction
the organisation which of an Agile Working policy,
commenced in 2020 and concluded a Working From Abroad
in 2022, to ensure the policy, paid wellness
organisation is designed days and volunteering
to optimally deliver our days to promote engagement,
strategic priorities. Such flexibility and work-life
restructures, which included blending.
reducing headcount, can
impact employee morale The Group have recognised
and engagement levels. that an increased investment
in career development
The Group had been feeling and training of our people
the effects of the global is key to employee engagement
increase in attrition related and in 2022 recruited
to COVID-19 ("the great a dedicated learning and
resignation"), and although development specialist
attrition has slowed in within our HR team, with
2022, the Group is finding robust plans to support
it increasingly difficult the development of individuals
to remain competitive to as well as the people
attract talent, which has management population
the potential to further across 2023.
disrupt the business.
Robust external benchmarking
The Group has a key dependency has ensured there is better
on attracting and retaining understanding of the
employees in engineering, competitiveness
quality assurance, product of the reward offering.
management and data roles Employees identified as
to facilitate delivery key talent/critical skills
of projects and maintain were awarded various retention
site and infrastructure plans in a bid to retain.
stability. Identifying
and securing top talent Having completed a headcount
is becoming increasingly reduction in response
difficult in a competitive to COVID-19, the Group
market. Due to the increased closely monitor headcount.
demands in terms of remuneration While larger technology
and benefits in the talent companies were making
market, in addition to announcements relating
expectations around location to significant headcount
and flexibility, particularly cuts, we avoided this
in the technology sector, and will continue to assess
there is a risk that attrition headcount needs in 2023.
will rise again unless
we continue to keep pace The Group currently operates
with the market and ensure from five global offices,
our total reward offering which provides flexibility
for new and existing hires for location of key talent,
is on-par with the industry and has further increased
standard. its reach to attract talent
by new locations in Germany,
All of this presents several Spain and Italy. The Group
significant risks, including also engages with a 3rd
increased attrition, difficulty party 'Employer of Record'
retaining valuable key to be able to hire talent
employees, increased time from countries where we
to hire, weakening of our don't have an entity.
employer brand and therefore
ability to attract high A Non-Executive Director
calibre talent, potential fulfils a workforce engagement
negative impact on employee role as set out in the
morale, productivity and 2018 UK Corporate Governance
overall engagement, an Code.
adverse impact on our culture,
and resource constraints;
any of which could adversely
impact our business and
reputation.
------------------------- ----------------------------------- ------------------------------------ -----------
4 Data security We are an innovative technology The Group takes the protection Unchanged
company dependent on sophisticated of our customer and employee
software applications and personal data very seriously.
computing infrastructure. We maintain controls and
policies to comply with
The security of confidential laws that apply to our
business information we business, address evolving
generate when engaging security threats, and
in e-commerce and the personal support business innovation
data we capture from customers and growth.
and employees is essential
to maintaining consumer All employees undertake
and travel service provider comprehensive IT security
confidence in our services. and data protection training
As an online platform, at induction and complete
we are constantly exposed annual refresher training.
to cyber security related
threats in the form of We have a robust and comprehensive
internal and external attacks data privacy, security
or disruption on our systems and protection compliance
or those of our third-party programme in place. We
suppliers. operate a supplier onboarding
process that includes
Our flexible hybrid working a detailed review of the
model, our work from anywhere data flows, GDPR considerations
policy as well as our engagement and interrogation of the
of contractors dispersed integrity of the IT security
in various jurisdictions, of the supplier. We constantly
increases the data security risk assess our vendors,
challenges faced by the the personal data they
business. process and the maturity
of controls in relation
As the business pursues to information security
its social strategy and and data protection, and
this strategy evolves, schedule periodic reviews
data security shifts into of controls in place.
sharper focus with the
extended categories of Our information security
data shared. controls are aligned to
leading industry standards,
In 2022, the migration ISO27001:2017 and NIST
of the e-commerce platform Cyber Security Frameworks.
to the cloud was completed. We are PCI compliant with
The security risks of cloud the guidelines of the
computing vary depending payment card industry
on the delivery model used, and are audited to these
but many of the risks extend standards.
into every type of cloud
solution. We have a data protection
compliance framework in
The Group's IT Platforms place that is aligned
must comply with GDPR regulations to our on-going obligations
and stay scalable, robust under the GDPR, ePrivacy
and reliable. Directive and other applicable
laws. We have invested
and continue to invest
in our own data protection
compliance resources to
monitor and ensure compliance
including a bespoke data
privacy management software
tool. We employ a Data
Protection Officer (DPO)
who is responsible for
informing, advising and
monitoring compliance
on all matters relating
to the protection of personal
data in the Group. Our
DPO is supported by designated
data protection champions
throughout the business.
Due to our hybrid working
policy we continually
assess the risks of remote
access. We use Single
Sign On and Multi Factor
Authentication to ensure
adequate protection.
We work closely with an
expert solution provider
in the architecture and
provisioning of cloud
services, as well as a
certified security company
for independent vulnerability
and security scanning.
We work closely with our
product teams to review
evolutions in our social
strategy to ensure privacy
by design in respect of
all projects and iterations
of existing projects.
------------------------- ----------------------------------- ------------------------------------ -----------
5 Cyber The Group is susceptible The Group expends significant Increased
to cyberattacks which could resources to protect against
compromise the integrity cybersecurity breaches
of our systems and the and regularly increase
security of our data. Cyberattacks our security-related expenditures
by individuals, groups to maintain or increase
of hackers, and state sponsored our systems' security.
organisations are increasing Due diligence is performed
in frequency and sophistication on all third-party vendors
and are constantly evolving. to ensure that sufficient
The Group expects this and appropriate security
risk to become more difficult controls exist to protect
to manage as the tools Hostelworld data and systems.
and techniques used in
such attacks become ever The Group have an arrangement
more sophisticated. in place with a specialist
third party firm to monitor
The recent move of internal network activity and to
systems to the cloud brings detect, neutralise, and
further cybersecurity challenges. report any unusual activity
There is a risk that the to our corporate IT function.
Group's current technical,
administrative, and physical IT policies, procedures,
IT security framework may and cyber security initiatives
not be successful in safeguarding are reviewed and updated
our information assets regularly to address the
against cybersecurity attacks. changing regulatory environment,
This may result in bad including data privacy
actors stealing customer regulations, and to mitigate
information, transaction the evolving cyber security
data or other proprietary threat.
information. There is also
a risk of infiltration Procurement processes
of the Group's systems have been developed to
through cyberattacks carried ensure that third party
out on third party vendors onboarding includes thorough
or contractors of the Group. due diligence prior to
the execution of agreements.
There is a risk that internal Cloud-relevant training
resources will not have has been identified and
the necessary skills to internal resources continue
ensure that data and systems to be upskilled in this
hosted in the cloud will area.
not be exposed due to inexperience
or misconfiguration.
There is a risk that insurance
companies will impose limitations
on cover to prevent adequate
insurance protection in
the event of a cybersecurity
attack.
------------------------- ----------------------------------- ------------------------------------ -----------
6 Financial The Group's activities The Group proactively Unchanged
expose it to a variety manages financial risk
of financial risks. The by seeking to minimise
Group's revenues and costs potential adverse effects
are impacted by rising on its
inflation rates, which financial performance.
may also deter our customers
from travelling. Foreign exchange movements
may impact travel decisions
Foreign exchange movements and travel patterns by
may impact travel decisions customers, but typically
and travel patterns by there is a degree of inherent
customers, as travel from hedging. In a normal trading
one market into another environment, USD revenue
(operating with a different receipts approximate related
currency) becomes more USD marketing outflows
expensive. Furthermore, which mitigates FX translation
the Group is exposed to risk. The Group minimises
translation risk which holdings of excess non-euro
occurs if the Group has currency above anticipated
a surplus or deficit in outflow requirements.
a foreign currency which
changes in value over time. The Group has established
a disciplined framework,
The Group has a EUR30m including key ratios and
term loan facility in place KPIs, of forecasting and
with certain investment reporting which is regularly
funds and accounts of HPS reviewed and challenged
Investment Partners LLC by management to ensure
(or subsidiaries or affiliates compliance with the loan
thereof). The Group's term facility's obligations
loan facility creates repayment and covenants, and affordability
obligations and covenants, of repayment terms including
reporting to the involved interest.
brokers and lenders, and
requires constant monitoring
of our leverage position
and liquidity metrics.
The facility bears an interest
at a margin of 9.0% per
annum over EURIBOR. Increases
in interest rates increases
the cost of the facility.
Without a return to strong
trading levels it is not
certain that the Group
can meet the covenants
set out under the term
loan facility agreement.
------------------------- ----------------------------------- ------------------------------------ -----------
7 Competition The risks posed by competition Our primary mitigation Unchanged
could adversely impact is the execution of our
our market share and future strategy and to capitalise
growth of the business. on our unique market position.
While we face a number
of key risks under competition, We target new customer
in each the competitor acquisition and grow the
we reference is likely most profitable customer
to have more resources cohorts (with focus on
than we do to enable them Customer Lifetime Value/Customer
to compete more effectively. Acquisition Cost) by optimising
overall marketing investment.
There is risk in relation We strengthen the Group's
to supply whereby competition core platform in order
from direct competitors, to improve its flexibility
alternative accommodation and the experience of
operators, and disruptive our customers.
new entrants may lead to
a loss of key accommodation We focus on expanding
suppliers. They may achieve our global footprint,
this through their ability meeting emerging demand
to absorb revenue losses while also strengthening
and/or additional costs our overall product offering.
in order to compete on
price or bidding strategy, We leverage the capabilities
their ability to grow core of our partnerships to
inventory base (both in ensure we are delivering
terms of property count best in class and the
and destination coverage), most advanced technology-based
and their ability to enhance solutions for our customers
product features faster and hostel partners.
through depth of resources.
We evaluate strategic
There is risk posed by opportunities to diversify
Google or other large market away from exclusive dependence
players broadening their on OTA business and develop
offering and becoming a a broader experiential
direct competitor. based travel offering
to our customers.
Changes in customer behaviour
(for instance post COVID-19 We roll out commercial
a customer may prefer a agreements to secure competitive
private room to a public rates and inventory across
dorm) may lead to a loss our property base. We
in customer traffic and make use of the "solo
demand for our services system" and "social cues"
and/or an increase in customer strategy to gain access
acquisition costs. to increased inventory
and ward off other platforms
There is a risk that the from competing in this
hostels on which we are space.
reliant give their supply
as exclusive inventory
to our competitors.
------------------------- ----------------------------------- ------------------------------------ -----------
8 IT Platforms Over recent years the We focus on staying current Increased
and technological ever-increasing with new trends in technology
innovation pace of change of new technology, development and customer
new infrastructure, and behaviour.
new software offerings
have changed how customers We invest a significant
research, purchase, and amount of our product
experience travel. Notable and user experience functions
shift changes include mobile on research and
networks, mobile applications, development and interacting
meta-search providers, with similar companies
display advertising, and both within and external
social communities. to travel.
Unless we continue to stay We leverage the capabilities
abreast of technology innovation of partnerships to ensure
and change, we risk becoming we are delivering best
irrelevant to the modern in class and the most
customer. Technology evolves advanced tech-based solutions
rapidly, and updates can for our customers and
become quickly obsolete. hostel partners.
The Counter business currently The Group has continued
sits outside the main with the ongoing modernisation
Hostelworld.com of our underlying platform
development environment to enable us to support
and needs to be consolidated faster execution across
which could mean a risk our core platform. We
of disruption to service. will work on onboarding
the Counter business into
our Hostelworld development
environment in 2023 so
that it benefits from
this modernisation and
investment.
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9 Third party reliance We rely on hostel accommodation We focus on maintaining Unchanged
providers to supply us good relationships with
with our inventory. The hostels and vendors.
majority of our revenue
is generated by hostels We work closely with hostel
who are connected to third partners and hostel associations
party channels. If these to monitor all key developments
channels do not make required in the
updates that allow hostels market. We regularly temperature
access our latest features, check the sector both
we may fall behind competitive broadly through mass communications
offerings. If these parties and surveys or using more
suffer from an outage, focused means including
it will lead to a potential face to face meetings
loss in supply. or one on one calls to
ensure that our recorded
Given COVID-19 and ongoing data is as up to date
financial pressures, with as possible.
our hostel partners in
particular, there is increased Risk assessment and due
risk of properties going diligence controls are
out of business, no longer carried out in respect
operating in the hostel of each third-party provider.
category, or removing significant We try to identify alternative
hostel elements from their providers where possible
properties. which includes consideration
of the effort of transferring
We rely on a number of services. Material vendors
key third party providers are subject to an annual
in relation to systems business review, which
and service providers. is coordinated by the
Any interruption in service dedicated internal procurement
from any of these providers function, where all key
may lead to a loss in revenue, risk areas are reviewed.
loss in site and app In addition, all vendor
functionality, contracts and requests
increased input from customer must be processed through
services and engineer time, the Group's purchasing
and ultimately if we experience & contract review process.
multiple failures we risk
reputational and brand For services providers
damage. we ensure contractual
obligations dictate minimum
The Group relies on payment functionality and speedy
processors and payment resolution of issues.
card schemes to execute We put alerts in place
certain components of the to immediately capture
payments process. We generally any downtime and replicate
pay these third parties as much functionality
interchange fees and other as possible in-house.
processing and gateway
fees to help facilitate The Group has made preparations
payments from customers in the event hostel partners
to our travel service provider and/or key service providers
partners. There is a risk fail. The Group closely
that the Group may not monitors the financial
maintain its relationships health of key suppliers
with these third parties and taking steps to mitigate
on favourable terms or risks.
that these transaction
fees imposed by these providers
are increased.
------------------------- ----------------------------------- ------------------------------------ -----------
10 Search engine A large proportion of traffic The Group invests heavily Unchanged
algorithms to our websites is generated in recruiting and retaining
through internet search key personnel with the
engines such as Google, requisite skills and capabilities
from non-paid (organic) in paid and non-paid searches.
searches, and through the
purchase of traffic from This in-house expertise
travel related user is supplemented by the
queries/searches deployment of leading
(paid searches). technology tools and their
continuous development
We therefore rely significantly to align and match changes
on practices such as Search in search engine algorithms.
Engine Optimisation (SEO)
and Search Engine Marketing The search marketing team
(SEM) to improve our visibility works closely with Google
in relevant search results. to understand any changes
Search engines, including in functionality to the
Google, frequently update Google Ads platform so
and change the logic that that we can avail of any
determines the placement efficiencies in our search
and display of results traffic. The Group participates
of a user's search, which in alpha and beta feature
can negatively impact placement tests that give Hostelworld
of our paid and organic first mover advantage
results in search results. with new functionality
Google algorithms have that can help drive efficiency.
become very sophisticated.
We also use algorithms We continue to enhance
to determine the optimal our skillsets in house
bid (price) for each user and capabilities by partnering
acquisition. with third party vendors
to enhance our search
We risk being significantly engine optimisation.
behind in our marketing
strategy. Particularly,
in respect of paid searches,
our costs to improve or
maintain our placement
in search results can increase.
This could result in a
decrease in bookings, and
thus revenue, and an increase
in costs. It could also
result in having to replace
free traffic with paid
traffic, which would negatively
impact margins.
Furthermore, the algorithms
that determine our customer
acquisition price are dependent
on user level data that
may not be provided where
users do not consent. Since
we are placing a bid for
each relevant user query
to be acquired, the granularity
and precision is extremely
important for efficient
investment allocation.
Changes and developments
in the algorithms can happen
in a rapid fashion and
it is critical for Hostelworld
to remain up to date.
------------------------- ----------------------------------- ------------------------------------ -----------
11 Climate change, Climate change and sustainability Climate change issues Increased
sustainability continue to be areas of may impact travel decisions
and corporate increased focus for the and travel patterns by
social responsibility Group and are further evolving customers but is mitigated
as areas of heightened to
concern with our internal the extent that our business
and external stakeholders. is a global one, with
a dispersed population
There is a request for of users, and a geographically
more accountability from dispersed set of destinations.
our customers, employees, We take climate risk into
and other stakeholders consideration in our forecasting
as to what the Group is and budgeting processes.
doing to limit its direct Further detail is included
and indirect impact on in the Viability Statement
climate change. within the annual report
and the Sustainability
Listing rule developments at Hostelworld report
require tangible reporting within the annual report.
on climate disclosures
(by virtue of TCFD) including For ESG and TCFD the related
identified metrics and steercos received specific
targets to measure the training from a third-party
Group's progress on its provider. We also engage
sustainability journey. with third parties' specialists
Other legal and regulatory for additional support
requirements also impact where required, including
reporting required from monitoring the environment
the Group and keeping abreast for any changes in requirements
of all developments in that could affect the
the area is a key risk. Group.
Physical climate change As an e-commerce business
risks such as extreme weather based in five office locations
events could affect our around the world with
inventory competitiveness 241 employees, whilst
and results of operations. our Scope 1 and Scope
In addition, transitional 2 carbon footprint is
climate change risks such relatively small, we recognise
as changes in stakeholder that the Group has a role
expectations, travel patterns, to play in protecting
technologies, and policy our environment. We have
and regulation may affect set out the metrics and
the Group and results of targets we use to monitor
operations. our footprint in the Sustainability
at Hostelworld report
There is a risk that we within the annual report.
do not meet shareholder
expectations regarding Our goal is to work with
our target setting and hostels on their own Staircase
performance against creating to Sustainability initiatives.
a more sustainable operating We have begun to work
environment. on a hostel facing sustainability
plan to address asks from
We also know that our consumer both the consumer audience
base feels strongly about and the hostel partners.
making sustainable travel This work will see hostel
choices and our hostels efforts being showcased
look to us for guidance on the platform, allowing
in the area of sustainability, customers to see precisely
requiring us to help to what areas a hostel has
support this group of made progress in. The
stakeholders. first step in the execution
of this work will be an
educational programme
for partner hostels to
surface the bespoke framework
we have created for the
sector. We are also recognising
efforts, in the areas
of Community and Eco particularly,
in our annual HOSCAR awards.
------------------------- ----------------------------------- ------------------------------------ -----------
12 Regulation Regulatory and legal requirements The Group has an internal Unchanged
and uncertainties around legal team and external
these could subject the legal advisors to advise
Group to business constraints, the Group on current and
increased regulatory and anticipated legal requirements.
compliance costs or otherwise Our legal advisors monitor
harm our business. and advise on regulatory
matters in locations in
Our business is global which we provide services
and highly regulated. We with a particular focus
are exposed to issues regarding on those areas where we
competition, licensing have local operations.
of local accommodation
and experiences, language Suitably experienced resources
usage, web-based trading, have been engaged to ensure
consumer compliance, tax, consumer compliance requirements,
intellectual property, compliance with the Listing
trademarks, data protection Rules, the UK Financial
and information security Reporting Council Corporate
and commercial disputes Governance Code and the
in multiple jurisdictions. Market Abuse Regulations.
The recommendations of We have a clear TCFD governance
the Task Force on Climate-Related structure in place, and
Financial Disclosures (TCFD) we utilise third parties
place an onus on the Group to monitor the landscape
to disclose its compliance. for any further climate
The Group needs to stay and sustainability related
aware of all future regulation changes which may impact
and policy changes within the Group.
sustainability.
The Group have been working
Payment Services Directive with the Central Bank
Two (PSD2) is an EU Directive of Ireland to ensure the
that applies to payment Group is compliant with
services in the EU and the PSD2 EU Directive.
regulates the authentication
process for accepting credit We have appointed external
cards, which the Group insurance brokers to help
need to comply with. The us ensure we have the
Group is also subject to appropriate insurance
payment card association in place on the best possible
rules and obligations under terms. In April 2022 we
our contracts with the carried out an audit in
card schemes and our payment conjunction with an independent
card processors, including insurance broker to ensure
the Payment Card Industry that our insurance policies
Data Security Standard and limits reflect the
(PCI DSS). risk environment and reflect
industry standard.
The EU Package Travel Directive
(the PTD) sets out broad We have expanded our ability
requirements such as local to offer customers their
registration, certain mandatory preferred method of payment
financial guarantees, disclosure in the most efficient
requirements and other manner on all our platforms.
rules regulating the provision
of travel packages and The provisions of the
linked travel arrangements. Digital Services Act have
been subject to a detailed
Changes to the rules regarding review and the implications
the use of "cookies" on in relation to social
our website and mobile functionality and customer
applications have the potential review have been fully
to impact on our ability assessed and necessary
to serve our customers. processes are being updated
Cookies are valuable tools in advance of statutory
for the Group that we use application.
to enhance our customers'
experiences and increase The wider legal framework
conversion. The GDPR and is also kept under review
ePrivacy Directive require pertaining to online safety
"opt-in" consent before and media regulation requirements.
certain cookies can be
placed on a user's computer
or mobile device.
The e-Commerce Directive
currently means that the
Group cannot be held liable
for content merely published
on its platform, however
the Digital Services Act
seeks to place greater
obligations on companies
in relation to content
moderation as well as transparency
reporting with the imposition
of fines for non-compliance.
As the Group's social strategy
evolves, the scope of content
which may require moderation
increases drastically.
The development of social
features also places greater
focus on our GDPR compliance
in relation to transparency,
legitimacy of processing
and data security and data
retention.
The Group is also subject
to new sign-up regulations
including the DAC 7 EU
Tax directive. Any addition
of new regulatory material
that needs to be collated
upon sign up, will slow
down the operations of
GMT and could impact the
number of properties added
to the site each year.
If there is a reclassification
of what is a 'hostel' in
any locality, this could
impact how we choose to
display property categorisations
on our site. Also, even
if a licence is collated
upon sign up, the laws
within each city can change,
resulting in a closure
of properties and removal
of beds from Hostelworld.
------------------------- ----------------------------------- ------------------------------------ -----------
13 Business continuity Failure in our IT systems As an e-commerce organisation, Unchanged
or those on which we rely the Group's BCP focuses
such as third party hosted on the continued operation
services could disrupt of consumer facing products
availability of our booking and related services to
engines and payments platforms, ensure our e-commerce
or availability of administrative trading systems can continue
services at our office to process
locations. bookings. The Group has
worked with external advisors
Failure of business continuity to produce robust documented
planning (BCP) could result business continuity and
in significant disruption disaster recovery capabilities.
to service.
The ongoing modernisation
programme of both Corporate
IT and the website to
cloud based services increases
resilience to business
interruption.
We updated our standard
supplier terms to provide
more robust and comprehensive
contractual provisions
regarding force majeure
(covering epidemics/pandemics)
and BCP (requiring suppliers
to implement the provisions
of our BCP at any time).
The Group's BCP and disaster
recovery plan was successfully
implemented to support
the business in its response
to COVID-19. Both this
plan and the supporting
backup and failover facilities
are regularly reviewed
to ensure their continued
validity.
------------------------- ----------------------------------- ------------------------------------ -----------
14 Brand and reputation A central pillar of Hostelworld's The paid marketing teams Increased
strategy is the continued have continued to invest
evolution of the app's in promoting our app,
social features which has specifically the new social
functionality to fulfil features and encouraging
the growing solo traveller targeted audiences to
market's need to meet other download the app. The
travellers. brand marketing teams
have
Given strict cost discipline worked to keep all owned
in place, there has been channels functioning and
reduced spend on brand active, ensuring that
marketing over the last wherever possible we retain
two years. This has undoubtedly audiences. There has been
impacted both brand consideration a small investment in
within the existing audience social media content creators
and brand recognition for who produce peer-to- peer
emerging audiences. The video content. We are
inability to quickly process seeing a return on investment
customer refunds from the with increased engagement
initial COVID-19 cancellations and a growing follower
is also likely to have account across both TikTok
eroded existing customers' and Instagram.
trust. Organic channels
have declined in terms An ongoing CRM strategy
of reach and engagement alerts the existing customer
since early 2020. The owned base to the social features
social media channels lost at touchpoints throughout
a huge audience and are the customer journey.
seeing a slow rate of growth
in terms of fans/followers. As an organisation we
have communicated to customers
A successful cyberattack via CRM and social media
resulting in significant our stance on emotive
downtime or loss of data issues such as the war
could cause reputational in Ukraine, providing
damage. If a cyberattack ways in which our customers
was realised there is a can support hostels in
risk that the fallout both impacted areas.
internally and externally
could damage the reputation We have external PR advisors
of the company causing supporting us to manage
customers to move to a any corporate PR incidents.
competitor platform. The crisis communications
plan is being updated
Poor customer experiences to reflect the use of
can also impact brand damage. external advisors.
There are cases where a
customer has a poor experience Hostelworld invest heavily
at the hostel, either through in security controls to
employee interactions or protect the platform and
booking issues. It can the network from malicious
be difficult for the customer cyber activity. Regular
to separate the experience reviews ensure that all
in the hostel from the controls are current and
platform they booked with. effective. The crisis
With the expansion of our communications plan has
offerings, the scope for been updated to reflect
reputational impact from the potential for a cyber
customer experiences increases, security attack. We will
coupled with the ongoing use our external PR agency
trend of seeking redress to minimise impact.
in a public rather than
a private forum. We have put in place an
ESG Steerco to oversee
If Hostelworld is identified our sustainability agenda,
as an organisation that and where needed we utilise
makes false claims about third parties to mitigate
its Diversity and Inclusion against the risk of bad
or Sustainability activities, press including engaging
the reputational damage with a reputable third-party
could be devastating. Greenwashing South Pole on our climate
claims are a risk to any neutral journey and using
organisation that is reporting our public relation partner
on its climate change and to review any sustainability
sustainability objectives material on our site,
and goals. in press releases or in
our annual report.
Hostelworld may also face
scrutiny in their response, Our customer service team
as well as their speed strive to ensure that
of response, to developments customers have a positive
in the greater geopolitical experience at all stages
climate. Failure to respond of interacting with us.
in line with mainstream The Group has a crisis
public opinion or a delayed management policy in place
response impacts companies which includes appropriate
brand and perceived integrity. escalation which is regularly
reviewed for relevance
and requires input from
senior management.
------------------------- ----------------------------------- ------------------------------------ -----------
15 Taxation The Group can be subject Our tax risk is managed Unchanged
to digital services tax by the employment of suitably
(DST). Some countries have qualified personnel and
taken steps to introduce close engagement with
DST to address the issue big four tax advisors.
of multinational businesses In collaboration with
carrying on business in our tax advisors, a large
their jurisdiction without professional services
a physical presence and firm, we
are therefore generally assess possible tax impacts
not subject to income tax in the jurisdictions in
in those jurisdictions. which we operate to ensure
our tax obligations are
The Group can also be subject aligned to the operational
to new vat rules being nature of our business.
implemented and new reporting We receive briefings to
requirements. Hostelworld Board by our tax advisors,
currently operates a B2B where required, on tax
(Hostelworld to Hostel) risks and any changes
VAT model and are VAT registered in tax legislation which
in Ireland. Non-EU countries impacts on current tax
are introducing local rules structure of the Group.
in relation to electronically
supplied services (ESS) A biannual review is performed
whereby if a business does with our tax advisors
not have a VAT/GST number on DST and ESS, and their
a B2C (Hostelworld to Traveller) impact on our Group as
relationship is assumed trade and turnover (on
and VAT/GST should be charged which the tax is levied)
on supply. The EU are introduced continues to pick up.
DAC 7 which increases the
reporting requirement of We are reviewing our internal
digital platforms. processes and information
gathered from the properties
There is an increase to on our website to ensure
the income and corporation compliance with local
tax risk profile of the ESS regimes and the requirements
Group due to the increasing of DAC 7 reporting.
global workforce footprint
of the Group, the relocation We closely monitor our
of some executive leadership global footprint and put
outside of Ireland, and the appropriate tax structures
the introduction of a 30-day in place when applicable.
work from abroad policy. We also monitor business
A tax authority may consider travel and have in place
a permanent establishment a strict work from abroad
to exist in a country by policy.
virtue of some activity
being carried on there. We approve where the key
A tax authority may deem functions are located
an employer to have a payroll within the Group and align
withholding tax and social transfer pricing policies
security obligation if to reflect this.
an individual finds themselves
personally tax resident
in a country.
The Hostelworld Group structure
is driven by our Intellectual
Property (IP). Ireland
acts as the Group entrepreneur
and directs the activities
of the overseas service
providers. Key functions,
assets or risks undertaken/managed
outside Ireland may cause
tax leakage.
If those tax authorities
take a different view than
the Group as to the basis
on which the Group is subject
to tax, it could result
in the Group having to
account for tax that it
currently does not collect
or pay, which could have
a material adverse effect
on the Group's financial
condition and results of
operation if it could not
reclaim taxes already accounted
for in the jurisdictions
the Group considers relevant.
Changes to tax legislation
or the interpretation of
tax legislation, changes
to tax laws based on
recommendations
made by the OECD in relation
to its Action Plan on Base
Erosion and Profits Shifting
2.0 (BEPS) or made by national
governments can result
in additional material
tax positions being suffered
by the Group.
------------------------- ----------------------------------- ------------------------------------ -----------
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April 03, 2023 06:13 ET (10:13 GMT)
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