Hostelworld plunges after flagging up £3.5 million hit from coronavirus

Hostelworld on Wednesday warned coronavirus could hit first-quarter profits by up to £3.5 million as the online booking platform grappled with a drop in demand.

The company said the virus had sparked a fall in bookings and a rise in cancellations, prompting a splurge on advertising to attract customers.

Chief executive Gary Morrison said the forecast was “caveated”, adding: “If the coronavirus were to take hold in a brand-new region like the US, then that would affect the guidance we have just given.”

Hostelworld’s pre-tax profits fell 55% to €3 million (£2.6 million) for the year to December, as bookings dropped 5%. Sales also slipped 2% to €80.7 million for the period.

Morrison said there were signs his strategy to reboot the business was working after sales rose 1% in the final three months of last year.

Hostelworld said it would cut its payout to shareholders to fund a takeover spree, which will push the business towards offering travel experiences as well as hostels.

The shares plunged 11% to 92.9p.