Online booking site Hostelworld has seen its shares slump as it warned of a hit to bookings after the World Cup and European heatwave dented demand.
Shares in the London-listed group – whose latest advertising campaign is fronted by pop diva Mariah Carey – tumbled by as much as 11% after new boss Gary Morrison said peak summer bookings have been soft and are likely to remain flat on a like-for-like basis over the full year if trading trends continue.
He said Hostelworld was keeping a “rigorous” control on costs to help offset some of the bookings woes, while marketing spend will also fall.
Mr Morrison – formerly Expedia’s head of retail operations, who took on the top job at Hostelworld in June – said: “As previously reported, the market, particularly in Europe, is increasingly competitive.
“In addition, the World Cup and the unusually hot weather in Europe have also led to a softness in bookings in the peak summer months of July and August.”
A raft of other travel firms and airlines have also noted an impact from the World Cup and heatwave on last-minute bookings, such as low-cost carrier easyJet.
Hostelworld’s warning came as its half-year results showed pre-tax profits almost halving to 2.8 million euros (£2.5 million) for the six months to June 30, down from 5.2 million euros (£4.7 million) a year earlier, as its move to offer a free cancellation booking option had pushed revenues and profits into later accounting periods.
On an basis, earnings fell 24% to 9.8 million euros (£8.8 million), but Hostelworld said earnings would have been 9% higher with the referred revenue impact stripped out.
The latest share price slump comes after the stock had already been under pressure in recent months after revealing the deferred revenue impact, as well as the departure of its previous chief executive of 10 years, Feargal Mooney, and its chief finance officer, Mari Hurley.
Hostelworld announced alongside its interim results that TJ Kelly has now been hired as the new finance chief.
Tim Barrett, an analyst at Numis Securities, said: “Weak summer trading creates uncertainty for the second half, but we remain positive on the medium-term outlook.”