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Why Hostelworld could shell out up to €22m in special dividends
Investors could be in for a late Easter treat when Hostelworld (HSW) reports its full year results on 10 April as a special dividend could be on the cards, according to stockbroker Berenberg.
Hostelworld is the largest online hostel-booking platform allowing budget-conscious travellers to book accommodation at the click of a button. Nearly half of Hostelworld travellers use the company’s app during their trips, according to the company.
Berenberg analyst Owen Shirley says if Hostelworld were to pay out all of its net cash, it could return up to €22m to shareholders on top
of its normal dividend.
One of Hostelworld’s competitive advantages is its asset-light model as it does not own or maintain any hostels, underpinning generous pay-outs.
In the year to 31 December 2016, the company paid out €10m in special dividends alone.
Looking ahead, Shirley argues the global hostel market is anticipated to grow 7% annually, driven by supply growth and higher-quality and higher-priced hostels.
Hostelworld can ride this market growth and also target small, family-owned local hostels that may be overlooked by its rivals in a competitive space. (LMJ)