Hostelworld Group PLC has announced its interim results for the six-month period ended June 30, 2023. The company achieved its largest H1 revenue on record, with a net GMV of €339.5 million and generated revenue of €51.5 million, both representing a 57% year-on-year increase. Hostelworld experienced robust booking growth across all regions, with Central America, South Asia, and southern European countries surpassing pre-COVID-19 levels. The company's marketing efficiency improved, driven by its social strategy, and it achieved increased operating leverage through marketing efficiency and cost discipline. Hostelworld also completed a debt refinancing with lower interest rates, further strengthening its cash conversion and operating cashflows.
The company is well-positioned for further profitable growth, with strong category growth and the resumption of cross-border travel post-Omicron. Hostelworld continues to invest in its social platform, enhancing profiles, messaging capabilities, and launching Linkups, which are hostel-hosted events. The business model remains highly cash generative, and the company is on track to meet its FY 2023 earnings guidance of adjusted EBITDA between €16.5 million and €17.0 million. Hostelworld is also firmly on track to meet its growth targets set during its November 2022 Capital Market Day.
Financial highlights for the period include a net GMV of €339.5 million, a net revenue of €45.8 million (a 64% year-on-year increase), and net bookings totaling 3.40 million (a 64% year-on-year increase). The net average booking value (ABV) decreased by 4% to €15.15, primarily due to a greater proportion of Asian destination bookings offset by bed price inflation. Direct marketing costs as a percentage of revenue decreased to 51% from 60% in H1 2022. The company achieved an adjusted EBITDA of €5.1 million, compared to a loss of €5.2 million in H1 2022.
Hostelworld's balance sheet as of June 30, 2023, shows total cash and cash equivalents of €10.7 million and total net debt of €16.2 million. The company completed the refinancing of its €30.0 million legacy debt facility, replacing it with a new €20.0 million facility from AIB. The new facility includes a €10.0 million term loan, a €7.5 million RCF (reduced to €5.0 million in July), and a €2.5 million undrawn overdraft. The interest rate on the AIB debt facility was reduced from 3.75% to 3.25% over EURIBOR in July, resulting in a €2.5 million reduction in the RCF balance to €5.0 million. Hostelworld's net asset position as of June 30, 2023, was €45.7 million.
CEO Gary Morrison expressed delight in reporting record generated revenues and improving adjusted EBITDA margins for the first half of the year. He attributed the performance to the company's social strategy and operational cost discipline. Morrison also highlighted the double-digit bednight growth in the global hostelling category and Hostelworld's even stronger growth with the resumption of cross-border travel. The company made progress in modernizing its platform and was recognized for its ESG strategy.
In terms of trading update, Hostelworld experienced strong year-on-year growth in net bookings (3.4 million, +64%) and net revenue (€45.8 million, +64%) as customers resumed booking hostelling trips. The company noted a contraction in ABVs by 4% year-on-year, primarily due to a greater proportion of Asian destination bookings offset by bed price inflation. Direct marketing costs as a percentage of net revenue reduced compared to 2022, driven by the social strategy. Hostelworld expects direct marketing costs to remain within the guidance range of 50-55% of net revenue as it optimizes marketing investments for long-term growth.
Overall, Hostelworld's interim results demonstrate strong financial performance, strategic progress, and a positive outlook for further profitable growth.