Hostelworld expects a financial hit of up to €5 million due to “unprecedented challenges” presented by the coronavirus outbreak.
The figure for the first quarter of the year is worse than the €3 million to €4 million range estimated by the global OTA at the time of the group’s preliminary results on March 4.
The firm said in a trading statement today: “Since early March booking trends have continued to deteriorate as the outbreak expanded, and while the group took immediate steps to mitigate the financial impact, we now expect the overall ebitda [earnings] reduction in Q1 2020 to be circa €5 million.
“During the first half of March 2020 a series of actions were taken to protect the health and safety of our employees, including restricting travel and meetings and the adoption of flexible working arrangements for colleagues.
“Detailed contingency plans were also drawn up to ensure business continuity in the light of evolving government guidelines.”
The company took a further step to of implement a full working from home policy for all staff in Europe on March 13.
Hostelworld added: “Deferred revenue, reflecting customer deposits made under the free cancellation booking product, amounted to €2.5 million.
“While the rate of cancellation under this booking option has increased due to changes in travel patterns in response to Covid-19 outbreak, we are working to minimise any negative cashflow impacts to the business, by offering credits in lieu of cash refunds.”
The company is cancelling its final dividend payment but has more than €20 million of available cash and no debt obligations.
The group stressed that it remained “resilient in volatile market conditions”.
Chief executive Gary Morrison said: “The Covid-19 outbreak has had an enormous impact on the hostelling industry, the wider travel market, and the communities we live in.
“Right now, the Hostelworld team and I are fully focused on supporting our employees, our customers and our hostel partners; just as we have done so over the last 20 years and will continue to do so for the next 20 years to come.
“Given the strength of our balance sheet and the initiatives we have taken in recent weeks I am confident that when this crisis passes, as it inevitably will, we will emerge stronger than ever.”