Production Efficiency

Sources for use with Extract C Hostelworld reports dip in revenue and operating profit Hostelworld is an Irish company that provides an online booking platform for cheap accommodation worldwide. It operates in a market that is described as being ‘highly competitive’ . In 2018, it reported a decrease in revenue and profit. However, this decrease is similar to many of its competitors and it is optimistic about its future due to favourable market conditions and overall growth in the market. Hostelworld said revenue fell by 5% to €82.1m and operating profit fell to €6.7m in 2018, down from €11.9m the previous year. Finance costs (interest payments) remained constant at €0.6m. However, Chief Executive, Gary Morrison said, “We have a well known brand that is trusted by loyal customers. Our objective is to return to growth in 2020” . Hostelworld enables travellers to make bookings on its website or its app. It reported a 22% increase in bookings from the app, which accounted for 40% of all bookings in 2018. This shows the introduction of the app was a worthwhile cost to the business. “To encourage customers to use Hostelworld we have to adapt to suit their busy lifestyles. Having an option of how to book offers customers convenience and flexibility,” continued Mr. Morrison. In 2018, Hostelworld said it was proposing to pay a dividend to shareholders of €0.138 per share and intends to use share capital to help fund its growth strategy. The strategy will take advantage of growth in the market and focus on increasing market share for Hostelworld. This will be through investment in advanced technology, increased awareness of customer needs, refocused marketing activities and a strengthened management team. 5 10 15 20

4 Extract D International tourist arrivals forecast to reach 1.8 billion by 2030 20 000 18 000 16 000 14 000 12 000 10 000 800 600 400 200 0 1950 International tourist arrivals received (million) 1960 1970 1980 1990 2000 2010 Forecast 2020 2030 Year Actual

Analyse two ways Hostelworld's efficiency might be affected by having an option
of how to make a booking.