Hostelworld Group

Report Publication Announcement • Apr 3, 2023

Publication of Annual Report and Notice of AGM

Released : 03 Apr 2023 11:13 RNS Number : 1660V Hostelworld Group PLC 03 April 2023

LEI: 213800OC94PF2D675H41

3 April 2023

Hostelworld Group plc

("Hostelworld" or the "Company")

Publication of Annual Report for 2022 and Notice of 2023 Annual General Meeting

Annual Report and Accounts

Hostelworld, the world's leading hostel‐focused online booking platform, is pleased to announce that its Annual Report 2022 has been posted or is being made available to shareholders today.

Annual General Meeting

The Company confirms that its Annual General Meeting will be held at 12 noon on Tuesday 9 May 2023 at the offices of the Company, Charlemont Exchange, Charlemont Street, Dublin 2, Ireland. A Circular, containing the Chairman's Letter and Notice of 2023 Annual General Meeting, and a Form of Proxy have also been posted or are being made available to shareholders today.

Documents available for inspection

The following documents:

• ∙ Annual Report 2022;
• ∙ Circular containing the Chairman's Letter and Notice of 2023 Annual General Meeting; and
• ∙ Form of Proxy;

have been submitted to the Financial Conduct Authority via the National Storage Mechanism, and the Irish Stock Exchange (trading as Euronext Dublin), and will shortly be available for inspection at the following locations:

National Storage Mechanism: https://data.fca.org.uk/#/nsm/nationalstoragemechanism

and:

Euronext Dublin:

Companies Announcements Office,

Euronext Dublin,

28 Anglesea Street,

Dublin 2

and https://direct.euronext.com/#/oamfiling

The Annual Report 2022 has also been filed with the Central Bank of Ireland.

The Annual Report 2022 (ESEF compliant format), the Circular containing the Chairman's Letter and Notice of the 2023 Annual General Meeting and the Form of Proxy are available on the Company's website at www.hostelworldgroup.com.

Regulated Information

In accordance with DTR 6.3.5(1A), the unedited full text of the regulated information required to be made public under DTR 4.1 is contained within the 2022 Annual Report which has been uploaded to the National Storage Mechanism and is

available on the Company's website www.hostelworldgroup.com.

The information set out in the Appendix, which is extracted from the Annual Report 2021, is included for the purposes of complying with Regulation 33(5)(b)(ii) of the Irish Transparency Regulations 2007 (as amended) and its requirements on how to make public annual financial reports. The information in the Appendix should be read in conjunction with the Company's preliminary results for the year ended 31 December 2022 released on 22 March 2023 which can be viewed at www.hostelworldgroup.com. Together, these constitute the material required by Regulation 33(5)(b)(ii) to be communicated in unedited full text through a Regulatory Information Service.

Contacts:

Hostelworld Group plc Caroline Sherry, Chief Financial Officer John Duggan, General Counsel & Company Secretary Tel: +353 (0) 86 022 3553

Appendix:

Directors' Responsibilities Statement

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. The Directors are required to prepare the Group financial statements in accordance with UK‐adopted international accounting standards and applicable law. The Directors have also elected to prepare the Group financial statements in accordance with International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union and to prepare the parent Company financial statements in accordance with FRS 101 Reduced Disclosure Framework (Relevant Financial Reporting Framework) and applicable law. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the assets, liabilities and financial position of the Group and Company and of the profit or loss of the Group for that period.

In preparing the parent Company financial statements, the Directors are required to:

• · Select suitable accounting policies and then apply them consistently;
• · Make judgments and accounting estimates that are reasonable and prudent;
• · State whether Financial Reporting Standard 101 Reduced Disclosures Framework has been followed, subject to any material departures disclosed and explained in the financial statements; and
• · Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

In preparing the Group financial statements, International Accounting Standard 1 requires that Directors:

• · Properly select and apply accounting policies;
• · Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
• · Provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group's financial position and financial performance; and
• · Make an assessment of the Company's ability to continue as a going concern.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility Statement

We confirm that to the best of our knowledge:

· The financial statements, prepared in accordance with the Relevant Financial Reporting Framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole;

• · The Strategic Report includes a fair review of the development and performance of the business and the position of the Company, and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and
• · The Annual Report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

This responsibility statement was approved by the Board of Directors on 21 March 2023 and is signed on its behalf by:

John Duggan

Company Secretary 21 March 2023

Principal Risks and Uncertainties

The Board takes overall responsibility for identifying the nature and extent of the risks to be managed by the Group to ensure the successful delivery of its strategic and business priorities. The Audit Committee monitors certain risk areas and the internal control system, as set out in the report on governance. The Group's Risk Register identifies key risks including emerging risks and monitors progress in managing and mitigating these risks and is reviewed regularly during the year by the Audit Committee and at least annually by the Board. Emerging risks are identified from areas of uncertainty, which may not have a significant impact on the business currently but may have the potential to adversely affect the Group in the future.

The Group's Risk Register process is based upon a standardised approach to risk identification, assessment and review with a focus on mitigation. Each risk identified is subject to an assessment incorporating likelihood of occurrence and potential impact on the Group.

The Group's Risk Register is subject to review by the Executive Leadership Team (ELT) prior to reporting to the Audit Committee and the Board.

The Board has reviewed the principal risks and uncertainties against the wider macroeconomic environment which Hostelworld operates in currently, taking into consideration inflationary and other financial related risks as well as consideration of the risks associated with continuing geopolitical conflicts, climate risk and COVID‐19. We recognise, in particular, that climate change poses a number of physical (such as extreme weather events affecting customer willingness to travel or the availability of hostels) and transition‐related (such as stakeholder perception) risks and opportunities for our business. We take a risk‐based collaborative and strategic approach to climate change. We are aligning internal processes with the recommendations of the TCFD. The Group has a detailed climate related Risk and Opportunities Register which is included in the Sustainability at Hostelworld report within the annual report.

The most material risks facing the Group are set out in the following table, together with comments on how they are managed to minimise their potential impact. While the following table is not prioritised nor an exhaustive list of all risks that may impact the Group, it is the Board's view of the principal risks at this point in time. Individually or together, these risks could affect the Group's ability to operate as planned and could have a significant impact on revenue and shareholder returns. Additional risks and uncertainties, including those that have not been identified to date or are currently deemed immaterial, may also, individually or together, have a negative impact on the Group's revenue, returns, or financial condition.

The Board also considered its obligations in relation to providing both the annual viability and going concern statements and its conclusions can be found in the Directors Report within the annual report and in note 1 to the consolidated financial statements within the annual report.

No	Category	Description and Impact	Management and Mitigation	Direction of
				change
1	Macro‐economic	The Group's financial	Management and the Board	Increased
	Conditions	performance is largely dependent	regularly monitor a range of
		on the wider availability of, and	trading, market and economic
		demand for, travel services.	indicators to
			determine any risk to financial
		Travel services are enabled by the	performance due to

		freedom of movement of people	macroeconomic uncertainties,
		nationally and internationally	and any potential
		without prohibitive restrictions.	mitigating actions required.
		Moreover, it is supported by
		affordable air, ferry and train	The Group's revenue and
		fares at significant scale, and	customer base is global, with a
		similarly good access to	dispersed population of users,
		accommodation.	and a geographically dispersed
			set of destinations. While market
		The demand for travel services is	conditions may decline in certain
		influenced by a range of	regions, the globally diversified
		macroeconomic circumstances	nature of the business helps to
		and their impact on consumers	mitigate this with circa 60% of
		discretionary spending levels.	destination markets in Europe
		Economic activity, employment	and circa 40% in rest of world.
		levels, inflation, interest rates,
		currency movements and access	Rising inflation rates can impact
		to credit are among the factors	customer discretionary spending
		that can impact travel demand.	and reduce their ability to travel.
			However, this is potentially offset
			by the evidence of pent‐up
			demand across the industry as a
			result of an inability to travel
			through COVID‐19.
			In circumstances where events
			cause a material decline in
			consumer travel behaviours and
			patterns on a global scale,
			management will take necessary
			actions to conserve cash.
2	Impact of COVID‐19,	There remains a risk of travel	Our target 18‐34‐year‐old	Decreased
	terrorism,	restrictions relating to new	population tend to be flexible as
	geopolitical	strains or waves of COVID‐19. This	to destination and are less risk
		could adversely affect the Group's	adverse. Their trips tend to be a
	conflicts, and other
	uncontrollable	business in impacted regions. We	'rite of passage' rather than a
	events on leisure	are also exposed to the ability of	more discretionary or optional
	travel	other businesses within the travel	vacation resulting in less
		industry to meet increased	aversion to these risks and more
		demands as restrictions ease.	flexibility in configuring trips
		Employee staff shortages and	around restrictions.
		flight cancellations negatively
		impact our business.
		The continued threat of terrorist
		attacks in key cities and on
		aircraft in flight may reduce the
		appetite of the leisure traveller to
		undertake trips, particularly to
		certain geographies, resulting in
		declining revenues.
		Geopolitical conflicts, climate
		change, natural disasters or other
		adverse events outside of the
		control of the Group may also
		reduce demand for or prevent the ability to travel to affected

		regions.
3	People	The Group is dependent on its	The Group is taking meaningful	Increased
		ability to attract, retain and	action to retain employees and
		develop creative, committed and	has implemented HR policies and
		skilled employees so as to achieve	people processes to enable
		its strategic objectives. Due to the	retention of key talent; namely
		impact of the COVID‐19 pandemic,	moving permanently to a hybrid
		the Group took actions to	working
		restructure the organisation	model and the introduction of an
		which commenced in 2020 and	Agile Working policy, a Working
		concluded in 2022, to ensure the	From Abroad policy, paid
		organisation is designed to	wellness days and volunteering
		optimally deliver our strategic	days to promote engagement,
		priorities. Such restructures,	flexibility and work‐life blending.
		which included reducing
		headcount, can impact employee	The Group have recognised that
		morale and engagement levels.	an increased investment in career
			development and training of our
		The Group had been feeling the	people is key to employee
		effects of the global increase in	engagement and in 2022 recruited
		attrition related to COVID‐19 ("the	a dedicated learning and
		great resignation"), and although	development specialist within our
		attrition has slowed in 2022, the	HR team, with robust plans to
		Group is finding it increasingly	support the development of
		difficult to remain competitive to	individuals as well as the people
		attract talent, which has the	management population across
		potential to further disrupt the	2023.
		business.
			Robust external benchmarking
		The Group has a key dependency	has ensured there is better
		on attracting and retaining	understanding of the
		employees in engineering, quality	competitiveness of the reward
		assurance, product management and data roles to facilitate	offering. Employees identified as key talent/critical skills were
		delivery of projects and maintain	awarded various retention plans
		site and infrastructure stability.	in a bid to retain.
		Identifying and securing top talent
		is becoming increasingly difficult	Having completed a headcount
		in a competitive market. Due to the	reduction in response to COVID‐
		increased demands in terms of	19, the Group closely monitor
		remuneration and benefits in the	headcount. While larger
		talent market, in addition to	technology companies were
		expectations around location and	making announcements relating
		flexibility, particularly in the	to significant headcount cuts, we
		technology sector, there is a risk	avoided this and will continue to
		that attrition will rise again	assess headcount needs in 2023.
		unless we continue to keep pace
		with the market and ensure our	The Group currently operates
		total reward offering for new and	from five global offices, which
		existing hires is on‐par with the	provides flexibility for location of
		industry standard.	key talent, and has further
			increased its reach to attract
		All of this presents several	talent by new locations in
		significant risks, including	Germany, Spain and Italy. The
		increased attrition, difficulty	Group also engages with a 3rd
		retaining valuable key employees,	party 'Employer of Record' to be
		increased time to hire, weakening	able to hire talent from countries

of our employer brand and

where we don't have an entity.

		therefore ability to attract high
		calibre talent, potential negative	A Non‐Executive Director fulfils a
		impact on employee morale,	workforce engagement role as set
		productivity and overall	out in the 2018 UK Corporate
		engagement, an adverse impact on	Governance Code.
		our culture, and resource
		constraints; any of which could
		adversely impact our business
		and reputation.
4	Data security	We are an innovative technology	The Group takes the protection of	Unchanged
		company dependent on	our customer and employee
		sophisticated software	personal data very seriously. We
		applications and computing	maintain controls and policies to
		infrastructure.	comply with laws that apply to
			our business, address evolving
		The security of confidential	security threats, and support
		business information we generate	business innovation and growth.
		when engaging in e‐commerce and
		the personal data we capture from	All employees undertake
		customers and employees is	comprehensive IT security and
		essential to maintaining	data protection training at
		consumer and travel service	induction and complete annual
		provider confidence in our	refresher training.
		services. As an online platform,
		we are constantly exposed to	We have a robust and
		cyber security related threats in	comprehensive data privacy,
		the form of internal and external	security and protection
		attacks or disruption on our systems or those of our third‐	compliance programme in place. We operate a supplier
		party suppliers.	onboarding process that includes
			a detailed review of the data
		Our flexible hybrid working	flows, GDPR considerations and
		model, our work from anywhere	interrogation of the integrity of
		policy as well as our engagement	the IT security of the supplier. We
		of contractors dispersed in	constantly risk assess our
		various jurisdictions, increases	vendors, the personal data they
		the data security challenges faced	process and the maturity of
		by the business.	controls in relation to
			information security and data
		As the business pursues its social	protection, and schedule periodic
		strategy and this strategy evolves,	reviews of controls in place.
		data security shifts into sharper
		focus with the extended categories	Our information security controls
		of data shared.	are aligned to leading industry
			standards, ISO27001:2017 and
		In 2022, the migration of the e‐	NIST Cyber Security Frameworks.
		commerce platform to the cloud	We are PCI compliant with the
		was completed. The security risks	guidelines of the payment card
		of cloud computing vary	industry and are audited to these
		depending on the delivery model	standards.
		used, but many of the risks extend
		into every type of cloud solution.	We have a data protection
			compliance framework in place
		The Group's IT Platforms must	that is aligned to our on‐going
		comply with GDPR regulations and	obligations under the GDPR,
		stay scalable, robust and reliable.	ePrivacy Directive and other
			applicable laws. We have
			invested and continue to invest in

			our own data protection
			compliance resources to monitor
			and ensure compliance including
			a bespoke data privacy
			management software tool. We
			employ a Data Protection Officer
			(DPO) who is responsible for
			informing, advising and
			monitoring compliance on all
			matters relating to the protection
			of personal data in the Group.
			Our DPO is supported by
			designated data protection
			champions throughout the
			business.
			Due to our hybrid working policy
			we continually assess the risks of
			remote access. We use Single Sign
			On and Multi Factor
			Authentication to ensure
			adequate protection.
			We work closely with an expert
			solution provider in the
			architecture and provisioning of
			cloud services, as well as a
			certified security company for
			independent vulnerability and
			security scanning.
			We work closely with our product
			teams to review evolutions in our
			social strategy to ensure privacy
			by design in respect of all
			projects and iterations of existing
5	Cyber	The Group is susceptible to	projects. The Group expends significant	Increased
		cyberattacks which could	resources to protect against
		compromise the integrity of our	cybersecurity breaches and
		systems and the security of our	regularly increase our security‐
		data. Cyberattacks by individuals,	related expenditures to maintain
		groups of hackers, and state	or increase our systems' security.
		sponsored organisations are	Due diligence is performed on all
		increasing in frequency and	third‐party vendors to ensure that
		sophistication and are constantly	sufficient and appropriate
		evolving. The Group expects this	security controls exist to protect
		risk to become more difficult to	Hostelworld data and systems.
		manage as the tools and
		techniques used in such attacks	The Group have an arrangement
		become ever more sophisticated.	in place with a specialist third
			party firm to monitor network
		The recent move of internal	activity and to detect, neutralise,
		systems to the cloud brings	and report any unusual activity to
		further cybersecurity challenges. There is a risk that the Group's	our corporate IT function.
		current technical, administrative, and physical IT security	IT policies, procedures, and cyber security initiatives are reviewed

		framework may not be successful	and updated regularly to address
		in safeguarding our information	the changing regulatory
		assets against cybersecurity	environment, including data
		attacks. This may result in bad	privacy regulations, and to
		actors stealing customer	mitigate the evolving cyber
		information, transaction data or	security threat.
		other proprietary information.
		There is also a risk of infiltration	Procurement processes have been
		of the Group's systems through	developed to ensure that third
		cyberattacks carried out on third	party onboarding includes
		party vendors or contractors of	thorough due diligence prior to
		the Group.	the execution of agreements.
			Cloud‐relevant training has been
		There is a risk that internal	identified and internal resources
		resources will not have the	continue to be upskilled in this
		necessary skills to ensure that	area.
		data and systems hosted in the
		cloud will not be exposed due to
		inexperience or misconfiguration.
		There is a risk that insurance
		companies will impose
		limitations on cover to prevent
		adequate insurance protection in
		the event of a cybersecurity attack.
6	Financial	The Group's activities expose it to	The Group proactively manages	Unchanged
		a variety of financial risks. The	financial risk by seeking to
		Group's revenues and costs are	minimise potential adverse
		impacted by rising inflation rates,	effects on its
		which may also deter our	financial performance.
		customers from travelling.
			Foreign exchange movements may
		Foreign exchange movements may	impact travel decisions and travel
		impact travel decisions and travel	patterns by customers, but
		patterns by customers, as travel	typically there is a degree of
		from one market into another	inherent hedging. In a normal
		(operating with a different	trading environment, USD revenue
		currency) becomes more	receipts approximate related USD
		expensive. Furthermore, the Group	marketing outflows which
		is exposed to translation risk	mitigates FX translation risk. The
		which occurs if the Group has a	Group minimises holdings of
		surplus or deficit in a foreign	excess non‐euro currency above
		currency which changes in value	anticipated outflow requirements.
		over time.
			The Group has established a
		The Group has a €30m term loan	disciplined framework, including
		facility in place with certain	key ratios and KPIs, of forecasting
		investment funds and accounts of	and reporting which is regularly
		HPS Investment Partners LLC (or	reviewed and challenged by
		subsidiaries or affiliates thereof).	management to ensure
		The Group's term loan facility	compliance with the loan
		creates repayment obligations	facility's obligations and
		and covenants, reporting to the	covenants, and affordability of
		involved brokers and lenders, and	repayment terms including
		requires constant monitoring of	interest.
		our leverage position and
		liquidity metrics. The facility bears an interest at a margin of

		9.0% per annum over EURIBOR.
		Increases in interest rates
		increases the cost of the facility.
		Without a return to strong trading
		levels it is not certain that the
		Group can meet the covenants set
		out under the term loan facility
		agreement.
7	Competition	The risks posed by competition	Our primary mitigation is the	Unchanged
		could adversely impact our	execution of our strategy and to
		market share and future growth of	capitalise on our unique market
		the business. While we face a	position.
		number of key risks under
		competition, in each the	We target new customer
		competitor we reference is likely	acquisition and grow the most
		to have more resources than we	profitable customer cohorts (with
		do to enable them to compete	focus on Customer Lifetime
		more effectively.	Value/Customer Acquisition Cost)
			by optimising overall marketing
		There is risk in relation to supply	investment. We strengthen the
		whereby competition from direct	Group's core platform in order to
		competitors, alternative	improve its flexibility and the
		accommodation operators, and	experience of our customers.
		disruptive new entrants may lead
		to a loss of key accommodation	We focus on expanding our global
		suppliers. They may achieve this	footprint, meeting emerging
		through their ability to absorb	demand while also strengthening
		revenue losses and/or additional	our overall product offering.
		costs in order to compete on price
		or bidding strategy, their ability to	We leverage the capabilities of
		grow core inventory base (both in	our partnerships to ensure we are
		terms of property count and	delivering best in class and the
		destination coverage), and their	most advanced technology‐based
		ability to enhance product	solutions for our customers and
		features faster through depth of	hostel partners.
		resources.
			We evaluate strategic
		There is risk posed by Google or	opportunities to diversify away
		other large market players	from exclusive dependence on
		broadening their offering and	OTA business and develop a
		becoming a direct competitor.	broader experiential based travel
			offering to our customers.
		Changes in customer behaviour
		(for instance post COVID‐19 a	We roll out commercial
		customer may prefer a private	agreements to secure competitive
		room to a public dorm) may lead	rates and inventory across our
		to a loss in customer traffic and	property base. We make use of the
		demand for our services and/or	"solo system" and "social cues"
		an increase in customer	strategy to gain access to
		acquisition costs.	increased inventory and ward off
			other platforms from competing
		There is a risk that the hostels on	in this space.
		which we are reliant give their
		supply as exclusive inventory to
		our competitors.
8	IT Platforms and	Over recent years the ever‐	We focus on staying current with	Increased
	technological	increasing pace of change of new	new trends in technology
	innovation	technology, new infrastructure,	development and customer

		and new software offerings have changed how customers research, purchase, and experience travel. Notable shift changes include	behaviour. We invest a significant amount of our product and user experience
		mobile networks, mobile applications, meta‐search	functions on research and development and interacting with
		providers, display advertising,	similar companies both within
		and social communities.	and external to travel.
		Unless we continue to stay abreast of technology innovation and change, we risk becoming irrelevant to the modern customer.	We leverage the capabilities of partnerships to ensure we are delivering best in class and the most advanced tech‐based
		Technology evolves rapidly, and updates can become quickly obsolete.	solutions for our customers and hostel partners.
		The Counter business currently sits outside the main	The Group has continued with the ongoing modernisation of our underlying platform to enable us
		Hostelworld.com development environment and needs to be	to support faster execution across our core platform. We will work
		consolidated which could mean a	on onboarding the Counter
		risk of disruption to service.	business into our Hostelworld
			development environment in 2023
			so that it benefits from this modernisation and investment.
9	Third party reliance	We rely on hostel accommodation	We focus on maintaining good	Unchanged
		providers to supply us with our	relationships with hostels and
		inventory. The majority of our	vendors.
		revenue is generated by hostels
		who are connected to third party	We work closely with hostel
		channels. If these channels do not	partners and hostel associations
		make required updates that allow hostels access our latest features,	to monitor all key developments in the
		we may fall behind competitive	market. We regularly temperature
		offerings. If these parties suffer	check the sector both broadly
		from an outage, it will lead to a	through mass communications
		potential loss in supply.	and surveys or using more
			focused means including face to
		Given COVID‐19 and ongoing	face meetings or one on one calls
		financial pressures, with our	to ensure that our recorded data
		hostel partners in particular, there is increased risk of	is as up to date as possible.
		properties going out of business,	Risk assessment and due
		no longer operating in the hostel	diligence controls are carried out
		category, or removing significant	in respect of each third‐party
		hostel elements from their	provider.
		properties.	We try to identify alternative providers where possible which
		We rely on a number of key third	includes consideration of the
		party providers in relation to	effort of transferring services.
		systems and service providers.	Material vendors are subject to
		Any interruption in service from	an annual business review, which
		any of these providers may lead to	is coordinated by the dedicated
		a loss in revenue, loss in site and app functionality, increased input	internal procurement function, where all key risk areas are
		from customer services and	reviewed. In addition, all vendor
		engineer time, and ultimately if we	contracts and requests must be

		experience multiple failures we risk reputational and brand damage.	processed through the Group's purchasing & contract review process.
		The Group relies on payment processors and payment card schemes to execute certain components of the payments	For services providers we ensure contractual obligations dictate minimum functionality and speedy resolution of issues. We
		process. We generally pay these third parties interchange fees and	put alerts in place to immediately capture any downtime and
		other processing and gateway fees to help facilitate payments from	replicate as much functionality as possible in‐house.
		customers to our travel service provider partners. There is a risk	The Group has made preparations
		that the Group may not maintain its relationships with these third	in the event hostel partners and/or key service providers fail.
		parties on favourable terms or that these transaction fees	The Group closely monitors the financial health of key suppliers
		imposed by these providers are increased.	and taking steps to mitigate risks.
10	Search engine algorithms	A large proportion of traffic to our websites is generated through internet search engines such as Google, from non‐paid (organic) searches, and through the	The Group invests heavily in recruiting and retaining key personnel with the requisite skills and capabilities in paid and non‐ paid searches.	Unchanged
		purchase of traffic from travel related user queries/searches	This in‐house expertise is
		(paid searches).	supplemented by the deployment of leading technology tools and
		We therefore rely significantly on practices such as Search Engine	their continuous development to align and match changes in
		Optimisation (SEO) and Search Engine Marketing (SEM) to	search engine algorithms.
		improve our visibility in relevant search results. Search engines,	The search marketing team works closely with Google to understand
		including Google, frequently update and change the logic that	any changes in functionality to the Google Ads platform so that
		determines the placement and display of results of a user's	we can avail of any efficiencies in our search traffic. The Group
		search, which can negatively impact placement of our paid and	participates in alpha and beta feature tests that give Hostelworld
		organic results in search results. Google algorithms have become	first mover advantage with new functionality that can help drive
		very sophisticated. We also use algorithms to determine the	efficiency.
		optimal bid (price) for each user acquisition.	We continue to enhance our skillsets in house and
		We risk being significantly behind	capabilities by partnering with third party vendors to enhance
		in our marketing strategy. Particularly, in respect of paid	our search engine optimisation.
		searches, our costs to improve or maintain our placement in search
		results can increase. This could result in a decrease in bookings,
		and thus revenue, and an increase in costs. It could also result in
		having to replace free traffic with

		paid traffic, which would
		negatively impact margins.
		Furthermore, the algorithms that
		determine our customer
		acquisition price are dependent
		on user level data that may not be
		provided where users do not
		consent. Since we are placing a
		bid for each relevant user query to
		be acquired, the granularity and
		precision is extremely important
		for efficient investment allocation.
		Changes and developments in the
		algorithms can happen in a rapid
		fashion and it is critical for
		Hostelworld to remain up to date.
11	Climate change,	Climate change and sustainability	Climate change issues may	Increased
	sustainability and	continue to be areas of increased	impact travel decisions and travel
	corporate social	focus for the Group and are	patterns by customers but is
	responsibility	further evolving as areas of	mitigated to
		heightened concern with our	the extent that our business is a
		internal and external	global one, with a dispersed
		stakeholders.	population of users, and a
			geographically
		There is a request for more	dispersed set of destinations. We
		accountability from our	take climate risk into
		customers, employees, and other	consideration in our forecasting
		stakeholders as to what the Group	and budgeting processes. Further
		is doing to limit its direct and	detail is included in the Viability
		indirect impact on climate change.	Statement within the annual
			report and the Sustainability at
		Listing rule developments require	Hostelworld report within the
		tangible reporting on climate	annual report.
		disclosures (by virtue of TCFD)
		including identified metrics and	For ESG and TCFD the related
		targets to measure the Group's	steercos received specific training
		progress on its sustainability	from a third‐party provider. We
		journey. Other legal and	also engage with third parties'
		regulatory requirements also	specialists for additional support
		impact reporting required from	where required, including
		the Group and keeping abreast of	monitoring the environment for
		all developments in the area is a	any changes in requirements that
		key risk.	could affect the Group.
		Physical climate change risks	As an e‐commerce business based
		such as extreme weather events	in five office locations around the
		could affect our inventory	world with 241 employees, whilst
		competitiveness and results of	our Scope 1 and Scope 2 carbon
		operations. In addition,	footprint is relatively small, we
		transitional climate change risks	recognise that the Group has a
		such as changes in stakeholder	role to play in protecting our
		expectations, travel patterns,	environment. We have set out the
		technologies, and policy and	metrics and targets we use to
		regulation may affect the Group	monitor our footprint in the
		and results of operations.	Sustainability at Hostelworld
			report within the annual report.

		There is a risk that we do not meet
		shareholder expectations	Our goal is to work with hostels
		regarding our target setting and	on their own Staircase to
		performance against creating a	Sustainability initiatives. We
		more sustainable operating	have begun to work on a hostel
		environment.	facing sustainability plan to
			address asks from both the
		We also know that our consumer	consumer audience and the hostel
		base feels strongly about making	partners. This work will see hostel
		sustainable travel choices and	efforts being showcased on the
		our hostels look to us for	platform, allowing customers to
		guidance in the area of	see precisely what areas a hostel
		sustainability, requiring us to	has made progress in. The first
		help to support this group of	step in the execution of this work
		stakeholders.	will be an educational
			programme for partner hostels to
			surface the bespoke framework
			we have created for the sector. We
			are also recognising efforts, in the
			areas of Community and Eco
			particularly, in our annual
			HOSCAR awards.
12	Regulation	Regulatory and legal requirements	The Group has an internal legal	Unchanged
		and uncertainties around these	team and external legal advisors
		could subject the Group to	to advise the Group on current
		business constraints, increased	and
		regulatory and compliance costs	anticipated legal requirements.
		or otherwise harm our business.	Our legal advisors monitor and
			advise on regulatory matters in
		Our business is global and highly	locations in which we provide
		regulated. We are exposed to	services with a particular focus
		issues regarding competition,	on those areas where we have
		licensing of local accommodation	local operations.
		and experiences, language usage,
		web‐based trading, consumer	Suitably experienced resources
		compliance, tax, intellectual	have been engaged to ensure
		property, trademarks, data	consumer compliance
		protection and information	requirements, compliance with
		security and commercial disputes	the Listing Rules, the UK Financial
		in multiple jurisdictions.	Reporting Council Corporate Governance Code and the Market
		The recommendations of the Task	Abuse Regulations.
		Force on Climate‐Related
		Financial Disclosures (TCFD)	We have a clear TCFD governance
		place an onus on the Group to	structure in place, and we utilise
		disclose its compliance. The	third parties to monitor the
		Group needs to stay aware of all	landscape for any further climate
		future regulation and policy	and sustainability related
		changes within sustainability.	changes which may impact the
			Group.
		Payment Services Directive Two
		(PSD2) is an EU Directive that	The Group have been working with
		applies to payment services in the	the Central Bank of Ireland to
		EU and regulates the	ensure the Group is compliant
		authentication process for	with the PSD2 EU Directive.
		accepting credit cards, which the
		Group need to comply with. The	We have appointed external
		Group is also subject to payment	insurance brokers to help us

card association rules and obligations under our contracts with the card schemes and our payment card processors, including the Payment Card Industry Data Security Standard (PCI DSS).

The EU Package Travel Directive (the PTD) sets out broad requirements such as local registration, certain mandatory financial guarantees, disclosure requirements and other rules regulating the provision of travel packages and linked travel arrangements.

Changes to the rules regarding the use of "cookies" on our website and mobile applications have the potential to impact on our ability to serve our customers. Cookies are valuable tools for the Group that we use to enhance our customers' experiences and increase conversion. The GDPR and ePrivacy Directive require "opt‐in" consent before certain cookies can be placed on a user's computer or mobile device.

The e‐Commerce Directive currently means that the Group cannot be held liable for content merely published on its platform, however the Digital Services Act seeks to place greater obligations on companies in relation to content moderation as well as transparency reporting with the imposition of fines for non‐ compliance.

As the Group's social strategy evolves, the scope of content which may require moderation increases drastically. The development of social features also places greater focus on our GDPR compliance in relation to transparency, legitimacy of processing and data security and data retention.

The Group is also subject to new sign‐up regulations including the DAC 7 EU Tax directive. Any

ensure we have the appropriate insurance in place on the best possible terms. In April 2022 we carried out an audit in conjunction with an independent insurance broker to ensure that our insurance policies and limits reflect the risk environment and reflect industry standard.

We have expanded our ability to offer customers their preferred method of payment in the most efficient manner on all our platforms.

The provisions of the Digital Services Act have been subject to a detailed review and the implications in relation to social functionality and customer review have been fully assessed and necessary processes are being updated in advance of statutory application.

The wider legal framework is also kept under review pertaining to online safety and media regulation requirements.

		addition of new regulatory
		material that needs to be collated
		upon sign up, will slow down the
		operations of GMT and could
		impact the number of properties
		added to the site each year. If
		there is a reclassification of what
		is a 'hostel' in any locality, this
		could impact how we choose to
		display property categorisations
		on our site. Also, even if a licence
		is collated upon sign up, the laws
		within each city can change,
		resulting in a closure of
		properties and removal of beds
		from Hostelworld.
13	Business continuity	Failure in our IT systems or those	As an e‐commerce organisation,	Unchanged
		on which we rely such as third	the Group's BCP focuses on the
		party hosted services could	continued operation of consumer
		disrupt availability of our booking	facing products and related
		engines and payments platforms,	services to ensure our e‐
		or availability of administrative	commerce trading systems can
		services at our office locations.	continue to process
			bookings. The Group has worked
		Failure of business continuity	with external advisors to produce
		planning (BCP) could result in	robust documented business
		significant disruption to service.	continuity and disaster recovery
			capabilities.
			The ongoing modernisation
			programme of both Corporate IT
			and the website to cloud based
			services increases resilience to
			business interruption.
			We updated our standard
			supplier terms to provide more
			robust and comprehensive
			contractual provisions regarding
			force majeure (covering
			epidemics/pandemics) and BCP
			(requiring suppliers to implement
			the provisions of our BCP at any
			time).
			The Group's BCP and disaster
			recovery plan was successfully
			implemented to support the
			business in its response to
			COVID‐19. Both this plan and the
			supporting backup and failover
			facilities are regularly reviewed
			to ensure their continued validity.
14	Brand and	A central pillar of Hostelworld's	The paid marketing teams have	Increased
	reputation	strategy is the continued evolution	continued to invest in promoting
		of the app's social features which	our app, specifically the new
		has functionality to fulfil the	social
		growing solo traveller market's	features and encouraging targeted

need to meet other travellers.

Given strict cost discipline in place, there has been reduced spend on brand marketing over the last two years. This has undoubtedly impacted both brand consideration within the existing audience and brand recognition for emerging audiences. The inability to quickly process customer refunds from the initial COVID‐19 cancellations is also likely to have eroded existing customers' trust. Organic channels have declined in terms of reach and engagement since early 2020. The owned social media channels lost a huge audience and are seeing a slow rate of growth in terms of fans/followers.

A successful cyberattack resulting in significant downtime or loss of data could cause reputational damage. If a cyberattack was realised there is a risk that the fallout both internally and externally could damage the reputation of the company causing customers to move to a competitor platform.

Poor customer experiences can also impact brand damage. There are cases where a customer has a poor experience at the hostel, either through employee interactions or booking issues. It can be difficult for the customer to separate the experience in the hostel from the platform they booked with. With the expansion of our offerings, the scope for reputational impact from customer experiences increases, coupled with the ongoing trend of seeking redress in a public rather than a private forum.

If Hostelworld is identified as an organisation that makes false claims about its Diversity and Inclusion or Sustainability activities, the reputational damage could be devastating. Greenwashing claims are a risk to audiences to download the app. The brand marketing teams have worked to keep all owned channels functioning and active, ensuring that wherever possible we retain audiences. There has been a small investment in social media content creators who produce peer‐to‐ peer video content. We are seeing a return on investment with increased engagement and a growing follower account across both TikTok and Instagram.

An ongoing CRM strategy alerts the existing customer base to the social features at touchpoints throughout the customer journey.

As an organisation we have communicated to customers via CRM and social media our stance on emotive issues such as the war in Ukraine, providing ways in which our customers can support hostels in impacted areas.

We have external PR advisors supporting us to manage any corporate PR incidents. The crisis communications plan is being updated to reflect the use of external advisors.

Hostelworld invest heavily in security controls to protect the platform and the network from malicious cyber activity. Regular reviews ensure that all controls are current and effective. The crisis communications plan has been updated to reflect the potential for a cyber security attack. We will use our external PR agency to minimise impact.

We have put in place an ESG Steerco to oversee our sustainability agenda, and where needed we utilise third parties to mitigate against the risk of bad press including engaging with a reputable third‐party South Pole on our climate neutral journey and using our public relation partner to review any sustainability material on our

		any organisation that is reporting	site, in press releases or in our
		on its climate change and	annual report.
		sustainability objectives and
		goals.	Our customer service team strive
			to ensure that customers have a
		Hostelworld may also face	positive experience at all stages
		scrutiny in their response, as well	of interacting with us. The Group
		as their speed of response, to	has a crisis management policy in
		developments in the greater	place which includes appropriate
		geopolitical climate. Failure to	escalation which is regularly
		respond in line with mainstream	reviewed for relevance and
		public opinion or a delayed	requires input from senior
		response impacts companies	management.
		brand and perceived integrity.
15	Taxation	The Group can be subject to	Our tax risk is managed by the	Unchanged
		digital services tax (DST). Some	employment of suitably qualified
		countries have taken steps to	personnel and close engagement
		introduce DST to address the issue	with big four tax advisors. In
		of multinational businesses	collaboration with our tax
		carrying on business in their	advisors, a large professional
		jurisdiction without a physical	services firm, we
		presence and are therefore	assess possible tax impacts in the
		generally not subject to income	jurisdictions in which we operate
		tax in those jurisdictions.	to ensure our tax obligations are
			aligned to the operational nature
		The Group can also be subject to	of our business. We receive
		new vat rules being implemented	briefings to Board by our tax
		and new reporting requirements.	advisors, where required, on tax
		Hostelworld currently operates a	risks and any changes in tax
		B2B (Hostelworld to Hostel) VAT	legislation which impacts on
		model and are VAT registered in	current tax structure of the Group.
		Ireland. Non‐EU countries are
		introducing local rules in relation	A biannual review is performed
		to electronically supplied services	with our tax advisors on DST and
		(ESS) whereby if a business does	ESS, and their impact on our
		not have a VAT/GST number a B2C	Group as trade and turnover (on
		(Hostelworld to Traveller)	which the tax is levied) continues
		relationship is assumed and	to pick up.
		VAT/GST should be charged on
		supply. The EU are introduced DAC	We are reviewing our internal
		7 which increases the reporting	processes and information
		requirement of digital platforms.	gathered from the properties on
			our website to ensure compliance
		There is an increase to the income	with local ESS regimes and the
		and corporation tax risk profile of the Group due to the increasing	requirements of DAC 7 reporting.
		global workforce footprint of the	We closely monitor our global
		Group, the relocation of some	footprint and put the appropriate
		executive leadership outside of	tax structures in place when
		Ireland, and the introduction of a	applicable. We also monitor
		30‐day work from abroad policy. A	business travel and have in place
		tax authority may consider a	a strict work from abroad policy.
		permanent establishment to exist
		in a country by virtue of some	We approve where the key
		activity being carried on there. A	functions are located within the
		tax authority may deem an	Group and align transfer pricing
		employer to have a payroll	policies to reflect this.
		withholding tax and social

security obligation if an
individual finds themselves
personally tax resident in a
country.
The Hostelworld Group structure
is driven by our Intellectual
Property (IP). Ireland acts as the
Group entrepreneur and directs
the activities of the overseas
service providers. Key functions,
assets or risks
undertaken/managed outside
Ireland may cause tax leakage.
If those tax authorities take a
different view than the Group as to
the basis on which the Group is
subject to tax, it could result in
the Group having to account for
tax that it currently does not
collect or pay, which could have a
material adverse effect on the
Group's financial condition and
results of operation if it could not
reclaim taxes already accounted
for in the jurisdictions the Group
considers relevant.
Changes to tax legislation or the
interpretation of tax legislation,
changes to tax laws based on
recommendations made by the
OECD in relation to its Action Plan
on Base Erosion and Profits
Shifting 2.0 (BEPS) or made by
national governments can result
in additional material tax
positions being suffered by the
Group.

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