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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Hostelworld Group Plc | LSE:HSW | London | Ordinary Share | GB00BYYN4225 | ORD EUR0.01 |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.50 | 0.34% | 147.00 | 147.50 | 149.50 | 153.00 | 146.00 | 146.00 | 11,292 | 16:35:23 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Hotels And Motels | 93.26M | 5.14M | 0.0415 | 35.54 | 181.13M |
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. ------------------------- ----------------------------------- ------------------------------------ ----------- 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. ------------------------- ----------------------------------- ------------------------------------ ----------- 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.
------------------------- ----------------------------------- ------------------------------------ ----------- 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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