Outgoing Hostelworld chief on paid ‘gardening leave’ for year

Outgoing Hostelworld chief executive Feargal Mooney will continue to be paid his salary, benefits and pension payments while on "gardening leave" until the expiration of his contract in June of next year, the company has said.

It has previously been reported that Mr Mooney received total remuneration last year of €768,800. This included a salary payment of €410,000, and a bonus of €308,894, the company’s annual report showed.

The online booking platform announced in recent months that Mr Mooney was to step down as chief executive and as a board director after its annual general meeting on Monday. He has been replaced by Gary Morrison.

In a statement to investors, the company said Mr Mooney would "remain employed" by the company, and "continue to be available to it", until June 11th, 2019. However, a spokeswoman told The Irish Times he will spend this period on "gardening leave".

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Mr Mooney will continue to be eligible to receive an annual bonus for the 2018 financial year, “subject to performance against the relevant financial and personal targets which will be tested following the 2018 year end”.

Separately, Hostelworld chairman Michael Cawley told shareholders at the AGM that it faces "headwinds" from adverse foreign exchange movements, and that it had "limited visibility" on bookings for the forthcoming peak season.

“Hostelworld’s customer-first focus has been enhanced by the introduction in March of a new free cancellation product, which significantly improves our product offering and has resulted in growth in both volume and average value of bookings,” he said.

Limited visibility

“The growth in penetration of mobile has increased the level of activity per customer but has led to a decline in bed nights per booking.

“The board is committed to a strategy which increases our technology investment and accelerates our product development so that we can continue to offer our customers the best experience in hostel booking.

“While competition has increased into Europe and we face headwinds from adverse foreign exchange movements and we have limited visibility on bookings in the forthcoming peak season we reaffirm our expected earnings estimate for fiscal 2018.”

In a note to clients, an analyst with Davy said the stockbroker was “encouraged” by the early signs of increased volume and average value levels accompanying Hostelworld’s new free cancellation booking option.

“In our view, this product will significantly enhance Hostelworld’s ability to capture longer lead-time bookings, particularly those of a higher-value nature,” he said.

“While competition in Europe and FX headwinds will drag on 2018 performance, the reaffirmation of earnings expectations also signals the robustness of the model.”

Davy said it expects adjusted earnings before interest, taxes, depreciation, and amortisation of €23.8 million, which is down 10 per cent on 2017, “reflecting the different accounting treatment for free cancellation bookings”.

On a like-for-like basis, it said it expects growth of about 4 per cent in 2018.