Company Announcements

Revenue is derived from the wider leisure travel sector.

The COVID-19 pandemic and the resulting measures, including travel restrictions, implemented by governments around the world to reduce the spread of COVID-19 has resulted in an unprecedented decline in consumer spending, travel and related activities. This pandemic has adversely affected our business and the outlook for the future remains uncertain at present and it is not yet known when international travel will return to normal levels.

Perceived or actual economic conditions, including slowing or negative economic growth, rising unemployment rates,

weakening currencies, higher taxes or tariffs could impair customer spending and adversely affect travel demand. In addition, events beyond our control such as unusual or extreme weather, travel related health concerns including the COVID-19 pandemic mentioned above or travel-related accidents

can disrupt travel and result in declines in travel demand. Because these events or concerns are largely unpredictable, influencing customer demand and behaviour, they can adversely affect our business and results of operations.

Significant movements in FX rates can have a material impact on travel demand and travel patterns therefore impacting revenue.

Resulting from the detrimental impact that COVID-19 has had on the travel sector there

has been a significant impact on our working capital resources, which creates a risk that

the Group will not be able to continue in operation and meet its liabilities as they fall due. The Group has prepared a five-year budget which assumes a return to growth.

There is a risk that the travel sector will not return to trading volumes in line with expectations.

Our ability to invest and grow is further constrained by our financial resources.

The Group has reviewed its capital structure and strengthened its capital base with two landmark transactions in June 2020:

• Equity Placing

• Debt Raising

Since the IPO in 2015, the Group had neither placed equity nor raised debt. These two transactions carry inherent risks. Equity placing leads to higher scrutiny from shareholders both participating and non-participating.

In 2021 the group entered a new term loan facility for €30m. Debt, by creating repayment obligations and covenants, requires constant monitoring of the Group's leverage and

liquidity.

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.

Increased incidence of terrorism impacts consumer confidence and can shift demand away from certain destinations.

The risks posed by competition could adversely impact our market share and future growth of the business, these include:

• Supply: competition from direct competitors, alternative accommodation operators and disruptive new entrants leading to a loss of key accommodation

suppliers.

• Customers: changes in customer behaviour leading to a loss in customer traffic and demand for our services and / or increase in customer acquisition costs. Consumer preferences could change as a result

of the COVID-19 pandemic which may be disadvantageous to our business and may benefit existing and new competitors. With global travel restrictions, there may be a shift towards domestic travel and alternative

accommodations.

• There has been a rise in cancellations and vouchers issued in lieu of cash refunds for the Group and with our competitors. This increases competition for the Group as it locks customers into those companies issuing the credit notes, thereby potentially reducing the demand for the Group's offering.

• Technology and Product: Over recent years the ever-increasing pace of change of new technology, new infrastructure and new software offerings have changed how customer's research, purchase and experience

travel. Notable shift changes include mobile networks, mobile applications, meta-search providers, display advertising, social communities etc.

Unless we continue to stay abreast of technology innovation and change, we

risk becoming irrelevant to the modern customer.

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 purchase of travel related

keywords (paid search).

We therefore rely significantly on practices such as Search Engine Optimisation ("SEO")

and Search Engine Marketing ("SEM") to improve our visibility in relevant search results. Search engines, including Google, frequently update and change the logic that determines the placement and display of results of a user's search, which can negatively impact placement of our paid and organic results in search results. This could result in a decrease in bookings and

thus revenue. It could also result in having to replace free traffic with paid traffic, which would negatively impact margins.

Consumer trust in our brand is essential to ongoing revenue growth. Negative publicity around our products or services could negatively impact on traveller and accommodation provider confidence and result in loss of revenue. Negative publicity could impact brand perception and consumer loyalty and ultimately revenue.

Our exceptional refund policy for COVID-19 refunds has the potential to adversely affect our brand.

We capture personal data from our customers, including credit card details and retain this

on our systems. There is always a risk of a cyber security related attack or disruption, including by criminals, hacktivists or foreign

governments on our systems or those of third-party suppliers. Cybercrime including unauthorised access to confidential information and systems would have significant reputational impact and could result in financial and/or other penalties.

The shift to remote working during COVID-19 (beginning 12 March 2020) changed the risk

profile of certain data processing activities and gives rise to ongoing data security

challenges and a widening threat landscape more targeted at endpoint controls.

As we plan for a level of return of colleagues to our offices, the COVID-19 Return to Work

Protocol (Ireland) and Working Safely During Coronavirus Guidelines (UK) require us to capture from colleagues and office visitors, new categories of sensitive personal health data that we would not have obtained before.

The General Data Protection Regulation ("GDPR") places significant data security and

regulatory compliance obligations on us when

processing such data.

Third party vendors that we engage with may not have the appropriate Information Security controls in place leading to a potential breach of customer data.

For 2021, Hostelworld plan to migrate parts of the e-commerce platform to the Cloud. Whilst risk is minimal, there still is risk that security

gaps may manifest during the migration.

The global nature of our business means we are exposed to issues regarding competition, licensing of local accommodation, language

usage, web-based trading, consumer compliance, tax, intellectual property, trademarks, data security and commercial disputes in multiple jurisdictions.

Compliance with new regulations can mean incurring unforeseen costs, and noncompliance could result in penalties and reputational damage.

COVID-19 has led to increased focus by consumer rights regulators on the online sales practices of tourism and travel focused companies and may have an impact on the Group's brand if the Group's sales practices were investigated and assessed to be noncompliant.

COVID-19 has heightened our obligations under employment and health and safety laws to protect the safety, health and welfare of colleagues in the workplace.

GDPR imposes particular compliance obligations with respect to our COVID-19

response measures with risk of fines and other enforcement mechanisms being imposed by a data protection authority.

Our position on customer refunds may give rise to customer complaints to consumer regulators such as the Irish Competition and Consumer Protection Commission or UK Competition and Markets Authority who have a range of enforcement powers including fines.

PSD2 is a new EU Directive that applies to payment services in the EU. The deadline for the Group to incorporate and be compliant with this Directive was 31 December 2020.

The taxation of e-commerce businesses is constantly being evaluated and developed by tax authorities around the world. There is a risk relating to the identification of and evaluation of tax legislative changes and the

impact of these on the Group.

Due to the global nature of our business, tax authorities in other jurisdictions may consider that taxes are due in their jurisdiction, for example because the customer is resident in that jurisdiction or the travel service is

deemed to be supplied in such jurisdiction.

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 or changes to tax laws based on recommendations made by the OECD in relation to its Action Plan on Base Erosion and Profits Shifting ("BEPS") or national governments may result in additional material tax being suffered by the Group.

We are currently monitoring the introduction of the digital services taxes, and its impact on our Group.

Failure in our IT systems or those on which we rely such as third party hosted services could disrupt availability of our booking engines and payments platforms, or availability of administrative services at our office locations, with an adverse impact to our customer service.

The outbreak of COVID-19 led to substantial business and operational disruptions across

the Group and resulted in Hostelworld and our third-party suppliers seeking to suspend or be excused from certain contractual obligations.

The Group is dependent on ability to attract, retain and develop creative, committed and skilled employees so as to achieve its strategic objectives.

Due to the possibility of a long recovery period for the travel industry resulting from the COVID-19 pandemic and the redundancies and restructurings which have taken place within the company, employees may not view employment with us as positively as they did

prior to the pandemic. This may adversely affect our ability to attract and retain highly skilled employees.

The Group is exposed to Brexit-related risks and uncertainties in relation to its continued impact on global markets and currency exchange rate fluctuations. The uncertainties in relation to the movement of people may result in the reduction of bookings particularly into and from the UK travel market and from UK nationals which could impact on Group revenue. In the year ended 31 December 2020, the UK as a destination represented 6% of total Group bookings (2019: 6%) and 16% of Group bookings were from UK nationals (2019: 14%).

Overall a decline in macroeconomic conditions

in the UK could negatively impact consumer confidence and reduce spending in all areas

including the wider leisure travel sector.

On 1 January 2021, the UK became a third country for the purposes of the GDPR and any transfer of personal data to HW UK or a supplier must now comply with the data transfer rules in the GDPR. Failure to comply can lead to fines from the regulator and a negative impact on market reputation.

Climate change and sustainability came into

sharp focus in 2019 and has further evolved as an area of heightened concern with consumers and stakeholders in 2020.

There is a request for more accountability from our customers, employees, other stakeholders as to what the Group is doing to

limit its indirect impact on climate change.