Hostelworld CEO Sees Profit Rebound, Growth of Chat Tool

16.04.2024 - 14:13 / skift.com / Elizabeth Casolo

For 25 years, Hostelworld has stood apart from other online travel agencies by connecting travelers with hostels. In 2022, it became the first agency to offer a chat tool that lets guests talk before staying at the same hostel. Earlier this month, the Dublin-based company reported its annual results.

Skift checked in with Hostelworld CEO Gary Morrison to get an update on the company. Here are some highlights:

The interview with Morrison has been condensed for clarity and brevity.

And, for those planning a hostel trip, yes, there is a chance Morrison could be your bunkmate. He stays in hostels, too.

Skift: Hostelworld’s annual report indicates net revenue grew, but the average booking value decreased in 2023. What’s the deal?

Most of the revenue growth has been powered by net bookings. They were up 37% actually. So net revenue’s up 34% (and) net bookings (are) up 37%. And the (average booking value)… that actually went down by 4%.

But if you then just scratch below the surface, what we see is there was bed price inflation again, but it was more than overcompensated (for) by a geographic mix, which is many, many more bookings in Asia: two and a half times. It’s the highest number of Asian bookings we’ve ever had. North Asia was up four times. Oceania was up double. You know, basically what we see is our customers are choosing to hostel in ever greater numbers, but they’re going to cheaper destinations.

Skift: How has it been collaborating with hostels on Hostelworld’s new Staircase to Sustainability initiative?

These are small owner-operated businesses, and they needed a mechanism to be able to show what they’re doing (for sustainability) in some recognizable way. And we partnered up with the (Global Sustainable Tourism Council) to create a unique bespoke framework for them to be able to do that.

We see more and more hostels that are loading in their credentials, and we show it to our consumers. It’s a bit early to see if it’s actually changing consumers’ purchasing decisions. It’d be interesting. I mean, when you look across the online travel landscape, what you generally see is, if you ask people to pay more for something because it’s green, that generally doesn’t work very well… But if you present two options, one is green and one is not, then you do see people changing their mind.

But so far, (we have) the combination of Staircase to Sustainability and partnering with Bureau Veritas to do external research to prove that if you stay for a night in a hostel, you will emit roughly 25% the amount of carbon that you do than if you stay in a hotel. So, if you really care about sustainability, you should be staying in hostels.

A lot of people who run hostels are ex-hostellers and generally would care