Hostelworld Group (LSE:HSW), the online travel marketplace, said third-quarter net revenue rose 7% year-on-year to €27.9m, even as the Middle East conflict and broader long-haul weakness cut into transaction volumes.
It now expects full-year 2026 revenue growth of approximately 10%, with adjusted EBITDA guided to a range of €20m to €21m, representing a margin of around 20%, in line with the company's medium-term targets. For 2027, the company said net revenue growth is now expected to come in at a mid-single-digit rate, reflecting the current long-haul environment and assuming no recovery in volumes on affected routes.
Net transactions fell 2% in the third quarter to 1.6m, with management estimating the Middle East conflict reduced volume growth by around four percentage points, up from around three percentage points in the first half, concentrated on routes between Europe and Asia or Oceania.
Softness in long-haul demand has since spread beyond those routes, with higher travel costs and stronger destination currencies weighing on bookings between Europe and the Americas, alongside lower organic web traffic industry-wide as AI absorbs more search activity.
The effective commission rate climbed to 17.8% in the quarter, up from 16.3% a year earlier, taking the year-to-date rate to a record 17.7%, supported by continued adoption of the company's Elevate monetisation tool.
App bookings, described as the group's most profitable segment, accounted for 64% of net bed-nights in the quarter, while unique chat users grew 37% and messages sent rose 77% year-on-year.
Social members who joined on their first trip saw net transactions grow 10% in the quarter and now account for almost two-thirds of total group transactions, while non-member transactions declined.
Quarterly adjusted EBITDA rose to €8.3m from €7.9m a year earlier, though margin slipped to 30% from 31% on continued investment in product and technology; year-to-date adjusted EBITDA reached €16.5m, up from €15.4m, a 21% margin.
The group closed the quarter with cash of €14.6m and net cash of €3m, against net cash of €6.6m a year earlier, after paying an interim dividend of 0.83 euro cent per share on 18 September following April's completed £5m share buyback.
"Transaction volumes were 2% lower in the quarter. We estimate that underlying growth was circa 4%, the same as in the first half of the year," said chief executive Gary Morrison, adding that "social members continue to book more frequently and at materially higher margin than non-members, and our newer products are making a growing contribution to volumes."
With Asia and Oceania entering their seasonal peak in the fourth quarter, the company said it expects the Middle East conflict and softer long-haul demand between Europe and the Americas to continue weighing on volumes for the remainder of the year and into 2027, with further detail on 2027 growth plans, including an AI-enabled product roadmap, to follow alongside full-year results.