Hostelworld Group Plc · LSE:HSW
Hostelworld — Investor Day (November 2018)
44 slides from Hostelworld's investor day presentation, Nov 29, 2018
Slide 1: Capital Markets Day
CAPITAL MARKETS DAY Thursday 29th November 2018 1
Slide 2: Disclaimer
Disclaimer NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO ANY JURISDICTION IN WHICH SUCH DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL This presentation is has been prepared by Hostelworld Group plc (the "Company") for informational and background purposes only. The fol
Slide 3: What you will hear today
What you will hear today ▸ Overview and performance since IPO ▸ Market dynamics ▸ Our strengths ▸ Our strategy ▸ Progress to date ▸ Growth roadmap 2019 - 2020 ▸ Summary 3
Slide 4: 4
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Slide 5: Hostelworld at a glance
Hostelworld at a glance Global, hostel-focused online booking platform Hostelworld in numbers* Over c.280 10M c.36,000 employees properties reviews 170 57% 135M countries bookings from visits to website mobile devices and apps in 2017 Available globally in Over 2M 19 social media languages followers
Slide 6: Overview and performance since IPO
Overview and performance since IPO
Slide 7: Strong emphasis on category advertising
Strong emphasis on category advertising Performance since IPO 2016 : 22.4m views* 2017 : 33.5m views* 2018 : 67m views* Significant investments in category advertising did not drive core business growth 7 * YouTube Statistics
Slide 8: Tech resources insufficient to maintain competitiveness
Performance since IPO Tech resources insufficient to maintain competitiveness Core platform releases since IPO ▸ Total product plus engineering headcount across the Dublin and London offices has been in decline since 2016 Non refundable rate plan 2015 ▸ Recent addition of 36 new engineering/data sci
Slide 9: Commission & Elevate rates raised over time
Performance since IPO Commission & Elevate rates raised over time 20% 19.3% 19% 18.2% 17.5% 17.8% 18% 17.0% 17% 16.4% 16.0% Blended Commission rate 16% 15.3% 15% 14.3% increased by ~8% H1’18 YoY 14.0% 14.2% 13.7% 14% 13.3% 13.0% 13% 13.8% 12.8% 12.9% 13.0% 12% 12.5% 12.6% 12.7% 11% 10% H1 2015 H2 20
Slide 10: Overall, strong returns to shareholders
Performance since IPO Overall, strong returns to shareholders FY Payout % £'m £'m Adjusted PAT Valuation at IPO, October 2015 176.8 FY15 Final dividend 2.0 75% £41.8m/€48.1m returned FY16 Total dividend 21.4 127% to shareholders in three FY17 Total dividend 14.4 75% years since IPO FY18 Interim divi
Slide 11: Hostels switching to 3rd party platforms
Hostels switching to 3rd party platforms Performance since IPO Inventory management/distribution platform* over time 100% ▸ 50% of hostels (~65% of capacity) 90% 33% now using 3rd party platforms 80% 37% 41% 44% 44% 50% 70% ▸ 3rd party platforms (generally) 60% provide seamless connections to 50% mu
Slide 12: Driving increased competition from sophisticated OTAs
Driving increased competition from sophisticated Performance since IPO OTAs Example feature sets from lodging focused OTAs Rich hostel descriptions Wide range of sign In options Wide range of booking options Consumer Facing ▸ Unique, detailed descriptions ▸ Sign in with social networks ▸ Pay now/Pay
Slide 13: Consequently, topline growth has stalled
Performance since IPO Consequently, topline growth has stalled Growth YoY Hostelworld Brand Hostelworld Group FY 16 FY 17 H1 18 FY 16 FY 17 H1 18 Total Transaction Value (Gross) 1% 11% (1%) (12%) 3% (5%) Gross Bookings 18% 13% 6% (1%) 6% 2% Net Bookings incl Cancellations 18% 13% 3% (1%) 6% (0%) Ave
Slide 14: Strategy review findings
Strategy review findings Hostelworld challenges Market dynamics ▸ Reliance on category advertising to drive ▸ Growth market customer acquisition ▸ OTA share will outpace market growth ▸ Insufficient investment in core platform ▸ Large proportion of high quality ▸ Reliance on monetisation levers inde
Slide 15: Market dynamics
Market dynamics
Slide 16: We operate in a growing market
Market dynamics We operate in a growing market Total hostel bookings by channel share*, 2014-2020 Hostel bookings ($Bn) 0.8 0.8 0.8 Offline Intermediaries 0.8 0.8 0.7 0.6 2.8 3.2 3.4 OTA 2.4 2.6 2.1 2.2 Offline Direct 1.3 1.3 1.2 1.2 1.1 1 1.3 Hostel Websites 0.8 0.8 0.9 0.9 1 1.1 0.7 2014 2015 2016
Slide 17: Fragmented market and growing supply base
Market dynamics Fragmented market and growing supply base Significant investment – some consolidation Hostel market remains very fragmented (Top 481 cities, ~655k beds)* 100% 4% 3% 90% 16% 15% 80% 4% 70% 21% 60% 50% 40% 78% 30% 58% ▸ Institutional Investment: ~€0.9bn recent and planned 20% investmen
Slide 18: Diverse selection of high quality product
Market dynamics Diverse selection of high quality product Hostels* By Hostel type & Review Score Hostel Capacity* By Hostel type & Review Score 9-10 79% 15% 3% 9-10 62% 24% 5% 9% Review Score Band 8-9 Review Score Band 8-9 74% 17% 6% 52% 22% 4% 21% 7-8 75% 17% 6% 7-8 55% 20% 23% 6-7 79% 16% 6-7 60%
Slide 19: Our strengths
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Slide 20: Our key strengths
Our key strengths ▸ A highly trusted brand ▸ Provide relevant customers for hostel partners ▸ Exclusive access to hostel inventory ▸ Highly profitable and very engaged customer base ▸ Underutilised data assets ▸ Very strong native app development skills 20
Slide 21: Our core customers trust our brand
Hostelworld strengths Our core customers trust our brand Why did you choose to use <brand> more than once in the last 24 months?* 60% 52% 51% 50% 44% 40% 34% 34% 30% 28% 26% 24% 22% 19% 19% 20% 14% 10% 0% Trust this company more than others My ‘go to’ site/app, the one I usually use The most / the b
Slide 22: We provide relevant customers to hostels
Hostelworld strengths We provide relevant customers to hostels Comparison of review scores across Hostelworld and a leading OTA (like for like hostels) Higher review score on Hostelworld 79% Sample size Parity review score 13% 126 Properties 18 Cities Lower review score on Hostelworld 8% Hostelworld
Slide 23: Hostelworld has access to exclusive inventory
Hostelworld strengths Hostelworld has access to exclusive inventory Comparison of inventory availability and price competitiveness across Hostelworld and a leading OTA Hostelworld has Hostelworld has a exclusive Inventory cheaper price 479 (27%) 233 (13%) Sample size Total Same Inventory on Same Pri
Slide 24: Highly profitable & engaged core customer base
Hostelworld strengths Highly profitable & engaged core customer base Value of multi destination trip customers vs single destination trip customers* 2-3 Destinations/Trip 4+ Destinations/Trip Revenue/Customer 2.1x 4.4x 1.3x Direct Margin (%) 1.2x 1.3x Review Submission Rate** 1.2x 1.6x 12.2x • Activ
Slide 25: We have significant underutilised data assets
We have significant underutilised data assets Hostelworld strengths Top 4 European cities booked by source market • Dublin • Galway • Paris • Belfast • Bordeaux • London • Bilbao • Barcelona • Amsterdam • Rotterdam • Bruges • Brussels • Naples • Rome • Florence • Cinque Terre Hostelworld has million
Slide 26: And other decision related data
Hostelworld strengths And other decision related data Single destination trip customer preferences* Multi destination trip customer preferences* Hostelworld can use this data to generate highly relevant, personalised, recommendations 26 * Hostelworld internal data
Slide 27: Significant strengths in native app development
Hostelworld strengths Significant strengths in native app development App bookings (% of total HWG) ▸ First app launched 2010 ▸ Native iOS & Android apps launched 2014 ▸ Continued growth in app bookings since IPO ▸ iOS app consistently featured ‘App of the Day’ 38% ▸ Android app awarded Android Exce
Slide 28: Our strategy: progress to date
Our strategy : progress to date
Slide 29: Strengthened management team
Strengthened management team Progress to date Gary Morrison CEO INTERNAL PROMOTION INTERNAL PROMOTION HIRING NEW HIRE INTERNAL PROMOTION Breffni Horgan Noel Maher Paul Halpenny TJ Kelly Catriona Flood Stuart Priday ANALYTICS HUMAN PRODUCT TECHNOLOGY MARKETING SUPPLY FINANCE & DATA RESOURCES 29
Slide 30: Move to an agile organisation
Move to an agile organisation Progress to date From organisations as machines To organisations as living entities Teams built around Top- down end to end Leadership sets hierarchy accountability direction and enables action Bureaucracy Goal oriented, Silos focused on Fast iterative Detailed outcomes
Slide 31: Move to an agile organisation
Move to an agile organisation Progress to date Agile teams Domain focused Results oriented Tech Lead Product Owner Product QA Designer Developers Shifting the mindset across the organisation 31
Slide 32: Refocusing our marketing to core customer acquisition
Refocusing our marketing to core customer acquisition Progress to date • Data driven customer targeting • Improved channel attribution Unique relevant content eCommerce funnel optimisation Focused app downloads Display AdWords Hotel Ads Leveraging our data to grow the most profitable customer segmen
Slide 33: Improved core search experience
Improved core search experience Progress to date Example app search results Sort order optimisation strategy From :- To :- ▸ Relatively static ▸ Dynamically optimised ▸ Function of :- ▸ Function of :- ▸ Hostel competitiveness featured ▸ Hostel competitiveness ▸ Search parameters listings ▸ Elevate u
Slide 34: Our Strategy: growth roadmap 2019-2020
Our Strategy : growth roadmap 2019-2020
Slide 35: 2019: Upgrade platform connectivity
Growth roadmap 2019 2019 : Upgrade platform connectivity Hostel website / Booking Property engine management system Bookings Channel Availability manager Other OTA.com 35
Slide 36: 2019: Strengthen core platform
2019 : Strengthen core platform Growth roadmap 2019 2018 2019 Rate plan Rate restrictions & promotional rate plans portfolio Channel manager API connectivity Provide greater flexibility Online change/cancel NEW Expand hostel Unique hostel descriptions content types Improved site & hostel content loc
Slide 37: 2019: Continue expanding our app capability
2019 : Continue expanding Growth roadmap 2019 our app capability Search ● Book ● Experience ● Socialise ● Share 37 Tim Cook at Hostelworld Dublin office, June 2018
Slide 38: 2020: Return to growth
2020 : Return to growth Growth roadmap 2020 Book Inspire Plan Share Experience Search Socialise Leverage Hostelworld’s data assets and native app development strengths to exploit our unique and focused position in the hostel ecosystem 38
Slide 39: Summary
Summary
Slide 40: Strategy re-cap
Summary Strategy re-cap 2018 2019 2020+ Near term actions ▸ Strengthened management team ▸ Refocused marketing strategy ▸ Shift to agile organisation ▸ Improve core search experience (ongoing into 2019) Strengthen the core platform ▸ Unique hostel content and improved localisation ▸ Improved booking
Slide 41: 2018 trading performance to date
Summary 2018 trading performance to date Free Cancellation product cancellations by month ▸ 2018 trading is in line with expectations 20% ▸ Global rollout of free cancellation product 19% Global Rollout completed in July 2018 18% 17% ▸ Underlying cancellation rates are staying 16% 15% within the exp
Slide 42: Capital allocation strategy
Summary Capital allocation strategy Capital allocation Returning capital Growing organically M&A opportunities to shareholders ▸ Ongoing appraisal of ▸ Continual assessment of capital ▸ Strengthen the core platform complementary target acquisitions allocation approach in line with ▸ Return to growth
Slide 43: A bright future – investing for growth
Summary A bright future – investing for growth ▸ Attractive, growing market ▸ Hostelworld is uniquely positioned to capitalise on this opportunity ▸ Trusted brand with relevant, valuable customer base ▸ Significant data assets ▸ Native app development skills ▸ Near term actions taken to strengthen t
Slide 44: Q&A
Q&A