Hostelworld warns FY earnings will miss consensus expectations

(Sharecast News) - Hostelworld warned on Wednesday that its full-year earnings would fall short of analysts' expectations, partly due to the conflict in the Middle East weighing on volumes.

The company now expects to deliver FY26 revenue growth of around 10%, and adjusted earnings before interest, tax, depreciation and amortisation of �20m to �21m, up from �19.9m a year earlier but below consensus expectations of �22.9m.

"With Asia and Oceania entering their seasonal peak in Q4, we now expect the Middle East conflict, together with the softer long-haul demand between Europe and the Americas, to continue to weigh on volumes for the remainder of the year and into 2027," it said.

In the third quarter, net revenue grew 7% year-on-year to �27.9m, with net average transaction value of �15.3, up 11%.

Hostelworld said the Middle East conflict dampened long-haul volumes, with net transactions down 2% year-on-year to 1.6m.

At 1250 BST, the shares were down 7.4% at 94.50p.

Berenberg reiterated its 'buy' rating on the stock after the update but cut its price target to 150p from 171p.

"We reduce our FY26- 28E EBITDA estimates by 16%, 28% and 24% respectively to reflect the prolonged conflict in the Middle East, assuming the worst-case scenario and no improvement in FY27 and FY28, offering upside if the outlook improves," it said.

"The move to the social platform continues to support the long-term growth and moat around the business and, despite the downgrade, Hostelworld still trades on an FY26E P/E of just 10x."

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