Good morning, ladies and gentlemen, and welcome to the Hostelworld PLC Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. Please simply type in your questions at any time and press Send. The company may not be in a position to answer every question it receives during the meeting itself. The company review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, we'd like to commit the following poll, and if you could give that your kind attention, I'm sure the company will be most grateful. I'd now like to hand over to Gary Morrison, CEO. Good morning.
Good morning, everyone. Thank you for joining us. I'm joined here by Caroline Sherry, our CFO. I'm Gary Morrison, the CEO, gives us great pleasure to talk about our first half results this year. You know, absolutely fantastic growth, lots of interesting things around our social features, we'll talk a little bit about some of our future aspirations. With that said, I will take the usual disclaimers as read and go straight into our highlights. From a financials perspective, we had record-breaking first half GMV of GBP 340 million this first half year, and also generated revenue, which is GBP 51.5 million. The GBP 45.8 is the revenue that we record in our P&L. Some of that revenue we defer because we have a free cancellation product. Caroline will walk you through.
Just from a sheer generated revenue, net GMV, we've had the biggest half year on record, so obviously immensely proud. That revenue was generated across 3.4 million net bookings, which is up 64%, half-year-over-half-year. If you look at the net ABV, how we generated the revenue, it's actually down 4%, half-year-over-half-year. That sounds like a bad thing. In fact, it's a very high-class problem. The reason why it is down is we've seen such enormous growth from the lower-cost destinations in the world, places like South Asia, Central America, and so on, that it is actually a geographic mix effect. There is a very slight changes in our profile, which I'll talk about, but the net ABV is really driven by mix. We come to net bed nights.
Net bed nights are up 12.3 million. That's 53%, half-year over half-year. Not as quite as fast as the net bookings, there's really, you know, a couple of things that are driving that here. One is the change in our customer mix. In pre-COVID era, about 60% of our bookings were made by solo travelers. This half-year, it's actually 66%. As you might imagine, if you have 1 person staying for 3 nights, that's 3 bed nights. If you have 2 people staying, of course, that's 6. That's most of the change. There's been a very slight contraction in length of stay, but nothing of any material nature. That great growth has been generated at the low end of our guidance range.
You might remember in Capital Markets Day, and also in our preliminary results, we had given a guidance for the year between 50% and 55%. Pleased to report that we're at the low end of that guidance range of 51%. Obviously, much more revenue at the low end of guidance. That's generated an awful lot of margin. That margin, in terms of our OpEx base, on a like-for-like basis, our OpEx is slightly lower this half year than it was last year. The business is generating unbelievable operating leverage. We. That generates our EBITDA. A chunk of that EBITDA, of course, is revenue that is parked on the balance sheet because of the deferred revenue, revenue that we will recognize in second half. Again, Caroline will go into that detail.
We also did a lot of operations on our balance sheet in the first half. We started out the year with about EUR 19 million cash on the balance sheet. We generated EUR 8.4 in operating cash. We retired EUR 34 million of our legacy COVID debt, which was very expensive. We paid down some of it, we refinanced the rest on a materially lower interest rate going forward. That gives us closing cash EUR 10.7, our net debt position is EUR 16.2. I'm now going to turn it over to Caroline, who will sort of talk about the geographic spread, go through all of the walks, net margin, EBITDA cash, and so on.
Then I'm going to come back and talk to you about some of the strategic process, some progress that we've made over the first half. Over to you, Caroline. Actually, my bad. I want to just summarize some of the things before we do that. In terms of the strong financial delivery, we pretty much covered most of that on the prior page. To note that we have robust bookings growth across all of the regions, but in particular, very strong growth in Central America, South Asia, and Southern Europe. Actually, what we're seeing is it's the lower-cost destinations, you know, which have really had the high growth half-year over half-year. We talked about the marketing efficiency. That's really powered by the social strategy.
The increased operating leverage come because we have so much more margin that's going on an OpEx base, which is actually slightly less like-for-like. We capitalize very little, so most of that is now converting through into cash. We talked about the debt front refinancing, materially lower interest rates. In terms of how we think about the half year from strategically, the progress we've made from a product perspective, and also into, you know, the rest of the, the year and into the year going on, that growth that we talked about, that huge bed night growth, 53%. When you actually take out and divide it into how much was category and how much did Hostelworld grow on top, we think the category growth was about 14%, and our own growth was 34% on top.
We really get materially larger market share, half year over half year. Again, that's coming up at the lower end of our marketing as a percent of net revenue. We are not buying that market share. Our product is winning in the market space, something we're very proud about. In terms of that product, you know, we're not standing still. We're continuing to invest in our social platform, both from a messaging perspective, profiles. That was the social network that we launched in April last year. We built a new platform on top of that, which is called Linkups. We think that has tremendous potential for the future. We have a few slides on that, which I'll cover off. Broadly speaking, the business always has been, and always will be, very highly cash generative.
You know, we've now taken significant steps to re- deleverage the balance sheet. We will continue to do so over the next six, 12, 18 months. We're reiterating the earnings guidance that we gave, sort of, in, I think it was early May time, so we were four months into the first half. We've moved the guidance up for the, the rest of the year. At that point, we're a bit, like, a month and a bit into second half, so we're just seeing, seeing how things are going. I can say we remain, you know, significantly ahead in bookings terms, ahead of where we were in 2022. We're very excited for the future.
Clearly, in terms of the guidance that we gave long-term in Capital Markets Day, over a three-year basis, you know, I can report, even after the first six months, we are very much firmly on track to meet those longer term targets. Overall, we're super happy with where we are. Now I will pass it to Caroline.
Great. Thank you so much. Thanks, Gary. lovely to be with you all this morning to talk you through our results. I'm just gonna take a little bit of time to talk through the H1 performance. As Gary has said, H1 2023 was a significant milestone for the business. Largest H1 on record from both a GMV and a generated revenue perspective. Looking first to the left-hand side of the slide, we can see that net GMV, which is the total value of the bookings posted through the platform, is up 57%, $340 million. In the middle block, we're looking at generated revenue. Generated revenue being gross revenue, less cancellations.
That's flat to GMV, up 57% versus the prior year also, and that's very much we left our commission rates flat, so it has remained unchanged over the period at a very competitive 15%. When we look at net bookings, the growth is higher again, up 54%. The reason the booking growth rate is higher than the revenue growth rate is really because we saw a small contraction in ABV, as Gary mentioned. ABV, half year on half year, is negative 4%. When we look at H1 2022 versus H1 2023, ABV contracted 4%. This is something we had expected. We'd flagged at Capital Markets Day, actually the component parts of that contraction is slightly different to what we were expecting.
We had anticipated the level of bed price of deflation, sorry, bed price deflation in 2023. Given bed prices were quite elevated last year, and with cost of living increases, et cetera, we thought perhaps the hostels would reduce their bed prices. In fact, bed prices have continued to grow, grow, up 15% versus H1 2022. In fact, the contraction versus H1 2022 was a resurgence of volume and demand in lower bed price destinations, predominantly Asia. We're now gonna look at how that growth has manifested at a regional level. Just taking a moment to describe this graph. The orange arrows represent, pardon me, represent the revenue, and the green arrows represent bookings. Again, we're looking at generated revenue, which is gross revenue, less cancellations, and then the net booking equivalent, i.e., gross bookings, less cancellations.
Really very much the revenue that was generated off of these bookings. Looking at the middle block first, Europe. Europe is our largest market from both a volume and value perspective. Europe has recorded significant growth year-on-year, and particularly in the Southern European destinations. Key destinations for us, which are our biggest destinations, Spain, Italy, Portugal, are all bigger now than they were in 2019. Northern Europe, key destinations such as Paris, Amsterdam, London, saw significant bed price inflation. We feel actually that that did have an impact on demand, and that's why those regions have not gotten to the 2019 or exceeded the 2019 levels. Looking outside of Europe, and first looking over to the Americas, and looking first at Central America.
The rate of growth there versus last year is not as strong as the other regions. Actually, Central America, this time last year, had already exceeded 2019 levels. You may recall that in Central America, destinations such as Mexico, they had very relaxed travel restrictions and in fact, had virtually none. We saw a huge uplift in demand in Central America last year, being that it was a destination that people could go to unencumbered about restrictions when traveling into the region. Very pleased to see that actually that region did not contract this year, and in fact, have continued to grow. Latin America, another key destination for us, seeing strong growth. Air prices are cheaper in destinations such as Latin America and Asia. In fact, we actually think that that has really, really helped demand there.
In fact, if you look over to the right-hand side of the map, and you look at Asia, phenomenal growth. This time last year, Asia was beginning to reopen to international travel. We had seen that actually, bookings were of circa 50% of where they were in 2019, so a real lag in last year's performance. Now, there's a real tailwind to this year's performance, growing, and particularly in the Southeast Asia destinations, materially ahead of where they were in 2019. All in all, some fantastic growth across the different geographies. Moving on, we're going to look at how that growth in volume drove margin. Working left to right in the graph, we can see that huge volume uplift that we've talked about, driving very strong margin growth versus H1 2022. We talked about the big uplift in GMV.
We've talked about the regional growth from volume and a revenue perspective. Another really key driver in the margin improvement is, of course, marketing efficiency. Marketing, as a percentage of revenue, reduced from 60% in H1 2022 to 51% in H1 2023. Our social strategy is the key linchpin for that marketing efficiency. Gary will talk to social in a little bit more detail in terms of what are the features of the type of social customer that we're seeing. The other element, other, a negative, just EUR 1 million. Predominantly, most of that is deferred revenue. This is revenue relating to free cancellation products. A customer books free cancellation products, we take in the cash, we record the marketing cost associated with acquiring that customer if they came through paid channels.
We do not recognize the revenue until such time as the last day the customer has canceled, has passed, i.e., the cancellation window has to have passed before we can recognize the revenue in the P&L. That's an accounting treatment of revenue recognition. Typically, in the H1 P&L, deferred revenue is a negative number, and then a positive number in H2. That revenue that we've generated from bookings we received in H1 is sitting on a provision on the balance sheet and will unwind as margin in H2. A small portion, typically about 10%, cancel, but that is upside margin to come through in H2 P&L. Working our way down through the P&L, looking at our cost base. Gary said we have kept a very tight lid on cost. Maintaining a tight cost base is something that's very important to us.
We want the volume growth, the marketing efficiency, that drive in growing margins to fall through to the bottom line and not be absorbed by an increased cost base. We've worked hard on ensuring that we continue to show improvements in our operating leverage, and OpEx discipline is a key component of that. Looking at the different blocks, we show H1 2019, which was our operating cost base pre-COVID, where we were last year, and where H1 2023, where we are this year. Working bottom up, the orange block represents wages and salaries. Now, these are operating costs. They don't include paid marketing spend. Wages and salaries account for circa 70% of our operating cost base.
Naturally, like all businesses, we've seen an element of wage inflation, so we have managed our headcount carefully, making sure that we are growing in the right areas that are going to be revenue-generating outputs. Year-over-year, costs have gone up, as said, an element of wage inflation, but also in H1 last year, we received EUR 400,000 of a wage subsidy benefit from the Government of Ireland COVID relief supports. So when we take that out, that closes the gap versus H1 2023. The pink block are contractors. Last year, we brought in a number of squads to help expedite the delivery of the social features in the app. Again, it's bringing the product to market in the quickest and most efficient way, and then when that product has been delivered and we're satisfied with it, that cost then comes out of the P&L.
Contractors down year-on-year. The next piece, which is the yellow piece, is our in-house tech investments, predominantly our Google Cloud costs. Very pleasingly, that cost is going down year-on-year, despite the material increase in volume. These are unit volume costs. We have worked very hard to make sure that our cloud consumption costs are as efficient as possible. Despite the fact that we have increased volume, the unit volume cost is actually reducing. Finally, all other costs, which include rent and rates, training, recruitment, legal and professional costs, et cetera, have all reduced year-on-year, and materially versus the pre-COVID days of 2019. Again, we were very cognizant of coming into a year of cost inflation and managing our cost base as tightly as possible. Taking it all together, what has that delivered?
Looking at our EBITDA performance, EUR 5.1 million of EBITDA positive profit in H1 this year versus a loss of EUR 5.2 last year. The big swing factor of that plus EUR 10 million EBITDA performance is the volume in ABV that we've talked about. Huge resurgence in volume, huge recovery across all of the regions, very strong net price inflation, driving our ABV as well. Another huge upside has been the marketing efficiency. Getting that marketing as a percentage of revenue down to 51%, keeping it at the lower end of the guidance that we gave of 50%-55%. Other being deferred revenue. Again, that benefit will unwind as margin upside in H2, and then a slight increase in operating costs year-over-year.
Again, stripping out the wage subsidy that we would have received last year, our costs have actually gone down year-on-year. An EBITDA margin in the first half of 11%, with EUR 5.6 million of revenue deferred to the H2 P&L. Next slide talks to the balance sheet. As Gary has said, very pleased with our H1 performance. Strong EBITDA generation, generating cash, allowing us to do significant work on the balance sheet. We had said at our Capital Markets Day presentation, key strategic priority for us this year was to repair the balance sheet, was to refinance the expensive debt that we drew down in 2021, in February, at the height of the COVID pandemic. Very pleased to have made a voluntary repayment to that of EUR 10 million on that in April.
Refinancing the full balance in May, totally taking that off the balance sheet, then replacing it then with the new facility that we agreed with AIB, having won a competitive process with all of the main Irish pillar banks, and indeed, international banks that have an Irish presence. We agreed a 3-year, EUR 10 million term loan with AIB, a EUR 7.5 million RCF, and a EUR 2.5 million overdraft, which remains undrawn. The EUR 7.5 million RCF has since reduced to EUR 5 million. Again, cash we're generating, putting it to work, de-leveraging the balance sheet, reducing our interest costs.
Our net debt to adjusted EBITDA is now such that the interest rate has reduced from an initial 3.75 down to 3.25, because our net debt to adjusted EBITDA is less than 2 times. By end of year, we anticipate that the interest rate will have reduced to a further 2.65%. Again, the improvement in net debt to adjusted EBITDA being less than 1 time. We have a net debt position of EUR 16.2 million, being our AIB facility, and the payroll taxes that we owe Revenue Commissioners of just over EUR 9 million, on a cash balance of EUR 10.7 million. Just to speak to the payroll taxes for a moment. The payroll taxes were taxes that we warehoused in 2020 and 2021. They were occurring 0% interest.
In May of this year, Government of Ireland started to charge an interest rate of 3%, and they will start the collection of this liability in May 2024. We have spoken to Revenue Commissioners. We continue to engage with them on the topic. They published guidance last December, communicating that all businesses, sole traders, SMEs, large corporates, privates, PLCs, would all be pushed out to May 2024, and they would begin the collection of this facility in May 2024. We hope by the end of this year, that we will have come to an agreement with Revenue on the repayment of this facility. The standard repayment plan is typically an initial down payment of 15%-25% of the outstanding liability, with a monthly installment thereafter for a period of up to five years.
That is the balance sheet. A very, very strong cash conversion, as we've talked about. Adjust your free cash flow of EUR 9.3 million on an EBITDA of EUR 5.1 million. Excluding the impact of deferred revenue, our cash conversion goes from 183%, but again, we have an element of deferred revenue. When I strip that out, cash conversion of over 80%. The last topic I'm going to speak about this morning is with regard to ESG and sustainability. It's just something that we wanted to take a moment to address, because it's very, very important to us culturally, but also a lot of what, at the core of what the hostelling category stands for. Hostelling is, by its nature, an extremely inclusive category. It is all about community. It's all about giving back.
It is a low price point, so it is not exclusive. There is no barrier to entry from a price perspective. We've done an awful lot of work with the hostelling category to help them find a way to surface up their sustainability credentials. Hostelling produces far less carbon emissions than any other accommodation type. Typically, 25% of the carbon that a hotel would produce on a per bed night basis. This is work we did with Bureau Veritas to substantiate this, and we published a report last year, which we are building on. Very pleased, we're working with the Global Sustainable Tourism Council on a sustainability framework, which we're calling Staircase to Sustainability. We will be launching it at our upcoming conference in mid-October at Copenhagen, and then it will go live start of next year.
This is really a way for the hostels to showcase their sustainability credentials in an accredited, accredited way. The only way they have at the moment of surfacing up sustainability is by using a framework that has been developed for the hotel category, which is not fit for purpose for the hostelling community. The slide deals with other things that we are doing within our own local communities, what we're doing culturally within the Hostelworld, how we are an inclusive environment, and how our work and efforts we've been doing have been recognized by others. Very, very pleased with all the work we're doing. I'm very happy to take questions on it because, again, it's something we feel very passionately about.
We have a fantastic series running called, Sustainability Stories, that you can see on our website, which showcases some of the work that the hostel community are doing. With that, I am going to hand you back to Gary.
Thank you very much. Let's talk about strategy. What have we been building, and what do we think the future potential is? I'm gonna start with the format of a slide that I used in Capital Markets Day. You might remember, I said over the three-year period, we would increase our bed nights by 1.6 times. This, if you like, is the first half, the first six months scorecard of how we are doing. If I look at our total bed night growth, half-year-over-half-year, it's 53%. Now, if I unpack that and say: How much of this is category growth? Then how much did Hostelworld grow on top faster than the category?
Using an awful lot of our internal data, external data that we scrape, we're able to build up a picture of how, how much the category has grown in bed nights, the same as the hotel industry would talk about room nights, and it's about 14%. The 34% that we grew on top is pure market share gain. Let's deal with the category. What we saw with the category, a lot of growth in South Asia. You've already seen that, you've already seen that with what Caroline was talking about. Our growth was even faster. Also growth in Oceania, Middle East, Africa. Central America was well ahead of pre-COVID levels last year. It still remains very much higher than pre-COVID levels.
If I look at that 14%, roughly 50% of that growth is because there's increased capacity, new hostels coming into the industry, and the other 50% is a slight rise in occupancy rates. I expect those two trends just to continue as we go through this year and go into next year. Turning to our growth, which is on top of that. What we saw is incredible growth in Central America, South Asia and Southern Europe. Central America already was higher than pre-COVID levels last year. It's continuing to grow, but what we can also see is that South Asia and Southern Europe are all above pre-COVID levels. You know, phenomenal growth in those lower-cost destinations in the world. There was growth in Northern Europe and U.S. and Canada, but not at the same levels.
Now, as I mentioned earlier, that social strategy, we believe, is what is driving those share gains. We have a much better product in the marketplace, which is winning out, and part of the reason why I say that is because that growth is coming at the low end of our marketing as a percent of net revenue. We are not buying that market share. It's because our product is better, and it's winning in the marketplace. In terms of our own hostel supply, we added, at least a little bit over 1,000 hostels, you know, half-year, over half-year. The rate at which we are adding them is approximately the same rate that the category is growing. In Capital Markets Day, I talked about the fact that we would want to grow a little bit faster than that.
We will seek to accelerate that as we go through this year into next year. Overall, strong market share gains, but also strong category growth as well. Thinking a little bit about our strategy, I'm just gonna recap a little bit about why the strategy is like it is, and then I'll go on to some of the progress that we've made. Recapping, our mission, totally unchanged: Help travelers find people to hang out with. 66% of our travelers, 66% of our bookings are made by solo travelers, up from 60% in pre-COVID times. The reason why we have invested so heavily in social is really, you know, plays out as you think about the business model and the P&L. This notion of helping travelers find others to hang out with, it's a highly prevalent need.
It's a very powerful need. If you go onto places like Trustpilot or Twitter or Instagram and you look at what people write about our company, it's all about the wonderful experiences that the social platform is now delivering, and that generates its own word of mouth. We are the only people in our category that are building these kinds of products. What that means from a revenue perspective is we're seeing very strong new customer growth, stronger retention rates. We deliver those features through our app, so you can make a booking on any platform, but if you want to use the social features which deliver on that mission, you have to use them in the app.
As a consequence of having far more apps out in the marketplace, and I'm talking about iOS and Android, more of the bookings are naturally flowing through our app. The app bookings are growing at a much faster rate than the bookings that we are getting from all other channels, including paid. Of course, that reduces our customer acquisition costs, and it lowers marketing as a cost of the, I'm sorry, lowers marketing as a percent of net revenue. We operate a marketplace. It's very, very scalable. As Caroline has said, our OpEx base is actually down on a like-for-like basis, half year, over half year. The combination of these three things, revenue growth, margin growth, and operating model that scales very well. That gives increased EBITDA growth. We capitalize very little, so therefore increased free cash flow growth.
That's the essence of how the strategy translates into financial returns. Let's talk about those social members. I did want to give you another snapshot as an update to Capital Markets Day, to continue to give everybody comfort that these people who are attracted to our mission, they want to find companies like ours that help them find people to hang out with. Those kinds of customers that are out there in the category are super profitable. The reason we can say that is that when we look at the customers that we acquire over the last 91 days, and we look at customers who've joined the social platform versus those that do not, and it's a simple opt-in when you make your booking, the vast majority of people make that decision on their first booking.
What we can see is people who are social members, who've opted in, they make 2x the number of bookings over the first 91 days. They're 3x more likely to make the app, and they represent over half of our bookings. Even with that huge growth, half-year over half-year, you know, 60% net bookings growth, we are continuing to grow both of those cohorts, the social members and the non-social. Of course, the non-social members are continuing to grow because the inventory that we have in the platform is more competitive than our competitors do. The reason that we have managed to do that is we keep our commission rates very low. We don't give opportunities for our hostels to buy their way up to the top of the sort order.
The only way that they can get to the top of the sort order is if they give us more competitive inventory than they do other distributors, and if they have a better proposition than their local peer group in the destination. The network is continuing to attract and retain those really high-value customers, and that plays out into some fantastic recurring revenue dynamics. You may remember this chart from the Capital Markets Day. It's very slightly different because we're only looking at first half generated revenue. For each of these years, the first half generated revenue. Let's take 2016 as an example. The green bar at the top, above the dotted line, is the revenue that we generated from the customers that we acquired in 2016.
The green bars that you see in successive years are those customers, their contribution to the revenue in future years. It's your classic cohort chart. I'd like to draw your attention to 3 things, if I may. If you look at the revenue that we generated from customers that we acquired in 2022, and that's the pink bar. Now look at that pink bar in 2023. This is the revenue from those customers that we acquired in 2022. If you look at the proportions, you can see there's a much greater proportion of that revenue showing up in 2023. That proportion is far greater than any time in our history, which is another proof point that the product is more sticky. More people are coming back, and when they come back, they are spending more.
You can see how that revenue is going to start to compound in the future, because the gradient of the dotted line between 2022 and 2023 is now much greater. The second thing is just a bit of a comfort. If you look at 2019 revenue, the revenue on the blue bar, you can see that, that blue bar is coming back in 2022 and 2023. Even though there has been, obviously the COVID years, where nobody was traveling, still, those customers that we acquired in prior years are now continuing to show up as we go forward. The third point, if you look at 2023, and you look at the size of the gray bar, that's the revenue from customers that we acquired this year in the first half.
That gray bar is bigger than at any time in our history. Put differently, you could get your rulers and pencils out and almost predict what our first half recurring revenue in 2024 is going to look like. When you look at this fact, and you can see this strong revenue compounding, this is because we are choosing to continue to operate at 51% marketing as a percent of net revenue. We could bring this down, but the rate of revenue growth in the future would be less. We think it's in the best interest of long-term value creation to continue this very strong revenue growth over a lower OpEx base. This, I hope, will give you some real data that proves that the business model is also driving strong growth in recurring revenue year-over-year.
Let's talk a little bit about the social features and what we've been doing over the first half. To put this in context, we now have three platforms. We have our core OTA platform. We had that pre-COVID, we have it now. We've obviously been working hard to make the pages better, checkout better, the funnel better, the inventory is better. In April last year, we launched the social network platform on iOS in April, in Android in June, this is really comprises three things. First, much richer profiles. You know, if you look on the first graphic on the left-hand side, look at Lucas, we're capturing his interests. We're starting to pull in some content from Instagram. You can message him directly. The second graphic in the middle, we've been spending a lot of time, continuing to improve the messaging experience.
It now is almost as good as you would see in WhatsApp. You can do send URLs, you can send photos, you can send videos, you can use emoticons, you can reply in line. The third piece, which is not on the page, which is exactly the same as before, is the only people that you can see in the messaging platform are people who are going to be in the same destination when you're there. Overlapping stay dates. Nobody else has this capability. If I'm booking Joe's Hostel in Barcelona, when I look at the Joe's Hostel channel, it'll be all the other customers who are staying in Joe's Hostel on my stay dates.
Then if I look at the Barcelona channels, it'll be all the other customers that we have who are staying in Barcelona, and we give separate segments, separate channels, people who are interested in drinks and dancing or walking tours or cooking or dinner tonight. You know, a whole range of different interests. The combination in this second platform of these features means that the monthly message sent volume, people actually using it, is growing very, very fast. Without giving you absolute numbers, if you look at the volume of messages that were sent over the network in January and index that to 1, and you look at the volume in July 2023, it's now 2.6 times the volume, which obviously is much greater than our bookings growth, or much greater than our customer growth.
We can see that people are using this platform more and more and more. If I turn to the next platform, so we now have three, the third platform. At Capital Markets Day, we did say that we wanted to build a platform to give people opportunities to meet people while traveling in the destination. This platform that we've built, that we call Linkups, is like an event management platform. We built this really in response to our hostel partners. Before we go any further, it's interesting to note how hostels make money. What's the rest of their margin profile? They sell beds at pretty low gross margin. What they're trying to do is to get as many people in the hostel as they can. That generates a good atmosphere.
It also gives you the captured customer base, people who are going to consume drinks at the bar, people who will go to events, people who will go to excursions, and they make a lot more gross margin off those than they do over the sale of the beds. The platform that we've built allows a hostel to load all of their event catalog, whether it's excursions, events, or events in the hostel, and load that onto our platform. What we then do is broadcast. We publish that to everybody who is going to be in the city.
Before this platform, if you, as a hostel, wanted to tell your customers, you basically had a blackboard behind the, the check-in counter, and as people were checking in, you would say, "Hey, this is what's going on today." What we are now able to do is to take that blackboard, put it online, and show it to everybody in Barcelona. You, as a customer, when you look at St Christopher's and you're shopping on our site, you can see what Linkups, what events they're showing on the dates that you're shopping on. Once you've booked, if you join one of those Linkups, you would see the second graph, the second little graphic. St Christopher's are having a walking tour. They called it Let's Meet in Barcelona. You can see the date, the time, where it is, whether it's a free, whether it's paid.
Crucially, you can see who else is going. Remembering 66% of our bookings and growing are made by solo travelers. It's not just the event that they are interested in, it's crucially, who else is going? Are they looking like people like me? Are these the people I'd like to hang out with? People who I'm going to meet and hang out with while traveling. In terms of the inventory, how big is the inventory? If you look at January and February, we rolled out this platform in London and Lisbon. We added on a few more cities in March and April. In May and June, we extended it to a few more cities in Asia. All the while, we're refining the product, we're taking our feedback from our hostel partners, we're looking at how our customers are using it, and we went global in July 2023.
What does the 54% mean? About 56% of our bookings are made by social members. If you look at those bookings, in July, half of them, every single customer, half of them can see already at least one thing to do on their stay dates. If I were to add August month to date, that's now 75%. We're seeing a huge take-up from our hostel partners in terms of loading their inventory. In many destinations, people who are going for a long weekend can see 20 or 30 things to do. Which is a new high-class problem to solve, because what we need to be able to do is to show our customers, "I'm going for a long weekend.
Out of the 20 or 30 things that I could do, which are the ones that I should do? For the balance of this year, we're going to spend our time and think about: How do we add a review system? How do we add themes? How do we add filters? How do we allow people to sort by the number of people who are going or sort by solo travelers? All of these things that would help people navigate that choice and make sure it surfaces the events that are right for you. As we go into next year, there are 2 things that we're thinking about. Obviously, when you look at the inventory, some of it is free and some of it is paid. Hostels are generating value from this product, so we're going to start thinking about how could we monetize it in a sensible way.
Does it make more sense to take a commission from the paid events? Does it make more sense to just charge a platform fee, like a SaaS fee or a subscription? We do feel that there is a significant monetization potential that we will realize in second half next year through monetizing the hostel inventory. I would add one very, very crucial thing. The customers who are using this, we have already bought through our OTA platform. Any revenue that we generate from this product falls all the way to EBITDA. It is a very rich product from that perspective. I think one of the other things we will do is we will start thinking about what other third-party inventory types could we add to this platform, to this captive network.
Maybe a good way of thinking about that is if you look at Amsterdam. Amsterdam, in low season, we have several hundred people every single day. In high season, we have several thousand people every single day. We have more than enough density in, let's say, the top 500 cities of the world, to be able to talk to a nightclub or a festival promoter or some other local business that has some quirky event or excursion to give our customers more choice, and of course, for our company, more revenue potential. We're very, very excited. It's very early days for this product. First order of business, build out the hostel-hosted inventory. Second, add reviews, filters, themes, sorting. Third, think about the revenue potential that we can generate from using the hostel inventory.
Then fourth, what other, you know, third-party inventory types that we could add to the platform. We do expect it to generate some revenue in second half next year. Moving on. Just to reiterate the guidance. As I said earlier, in May last year-- oh, sorry, May last year. May, in the first half, we changed our guidance, and we moved it up to 16-17 range. We're now a month and a half into second half. It's looking very good. We're still materially ahead of where we were in 2022. You know, we'd like to wait a little bit longer to get through the rest of summer and so on. For now, the guidance has remained unchanged from what we said earlier, 30% growth across net bookings, net GMV, net revenue.
Marketing as a percent of net revenue, the guidance was 50%-55%. First half, it was 51%. You know, it's going to be in the 51%-52% range, you know, on a full year basis, and that leads you to the EBITDA of EUR 16.5 million-EUR 17 million. Summarizing what we've heard today, I do think we're super well-positioned. You know, the social strategy is uniquely positioned to win in this category. It's a very powerful need, it's a very prevalent need, and we can already see in the first 6 months of execution that it's gaining market share, and it is doing that at the low end of marketing as a percent of net revenue. The team has done a fantastic job, addressing the legacy COVID debt, repairing the, the balance sheet. We did that ahead of schedule.
We thought it was going to be around summer. We managed to get it away by April. It's a materially lower amount and also materially lower interest cost. In terms of the business model, it's always going to be extremely highly cash generative. We're going to continue to deleverage that balance sheet as we go into the future. In terms of, you know, where we are in the year, definitely on track for the full year, and I hope you've gained a lot of comfort that we're absolutely firmly on track to meet our midterm ambitions that we outlined in the Capital Markets Day. Thank you for listening to Caroline and I. I hope you're as excited about our prospects as we are. With that, we'll throw it over for any questions. David?
That's great. Thank you very much. Thanks very much indeed. David, we do have a video to play, which I thought might be useful to do just before we go into the Q&A session. If I may, I'll just load that up now and bring that up for investors to watch. Thank you.
Thank you very much indeed. I will now bring out, your cameras, and if I may, David, I'll hand back to you, if I may, to moderate the Q&A, and, I'll collect it from you at the end. Thank you.
Yeah. Hi, good morning, everybody, and thanks, Mark. Excuse me. Thank you, everybody, for your questions. We'll try and, and get through as many as we can now, and any questions that we don't get through, we'll, we'll post a response on the platform after this. Let's get through as many as we can now. We've had a lot of comments and feedback regarding the contribution of our social strategy towards the results that we're presenting today, so that's probably the best place to start. Gary, you might share some thoughts around, you know, how much of this you think is revenge travel, and how much of it is actually the strategy in action, which is delivering the growth that we're seeing year-on-year here.
Maybe looking specifically at our revenue cohort side, it looks like the 2022 cohort that returns this year is returning at a rate which is significantly above the historic average. What do you think is driving this, and what do you think it means for future years? Finally, how is all of this affecting our CAC and LTV equation and impacting our customer acquisition bidding strategies?
Okay. We'll do the first one first, the revenge travel. From my perspective, the easiest way to think about that is the revenge travel would show up in category growth. You know, there's no particular reason to presume that it would be materially greater than that. You know, we, you know, we have a certain market share of the category, so the category growth incorporates, you know, all parts of revenge travel, if, if I may. The fact that we've increased our share within it so significantly is due to having a better product in the marketplace, because that growth has come with marketing as a percent of net revenue at the low end of the guidance range. You know, I don't think that our results are exceptional because of revenge travel.
I think 14% is category, and the other 30-34% above us is really us. In terms of the retention ratio, revenue retention, there's really two things that you generally see there. One is the number of customers that come back, you know, year-over-year, and then when you look at those customers, their purchase frequency over a defined period of time. What we are seeing is that more customers are coming back, number one, compared to prior years, and we're also seeing more of those bookings. The simplest way of looking at that is, obviously, as we are growing in the category, we are growing by acquiring customers that have a certain propensity to travel, multi-destination travelers, who are looking for people to hang out with.
We are naturally more attractive to customers who are looking for that, who generally travel more frequently and also make multiple trips over multiple years. That's the driver for the increased retention rate. As a consequence, I feel very comfortable with the expectation that that would continue. Those increased revenue retention rates we are seeing, not just across 2023 versus 2022, but all of the prior years before that. If you look at each of those lines, which are the cohorts from prior years, they are also slightly proportionately larger. We would expect, you know, a higher retention rate from the customers that we acquire this year to come back next year, and for the other customers that we've acquired in prior years, again, to show up more frequently.
It is a consequence of the business model and, obviously, operating the business around, you know, the 50s, marketing as a percent of net revenue, does create that enormous revenue growth. In terms of CAC to LTV, in interims, I think last year we started to give people a bit of a, a sense of what that looks like. What I would say is that across a very wide customer base, in other words, thinking about some of the customers we see once and we never see again, other customers are with us for years and years and years and book multiple times on every single trip. There is a very, very wide dispersion.
If you collapse that all and you take it to an average, in general, we recover the cost of every customer that we acquire if we take all of our marketing costs and divide by the number of customers, somewhere between 28 days and 91 days of their life. In general, across that huge wide dispersion, we, we see that 50% of the value is normally in 28-day time frame. I think I covered your 3 questions there, David.
Yeah. Thanks, Gary. We might stay on social with the next question because.
Yeah.
There's quite a few questions around, the messaging and Linkups platform.
Mm.
You might, Gary, help people understand how you measure user engagement and longevity on those platforms. In your view, the main KPIs that you follow for measuring the performance of a social strategy that other stakeholders can keep an eye on then as well.
There's two sets of KPIs. If you looked at the second platform, the social network, you know, we look at a whole range of things like: How many people opened the app? You know, did they send a message? Did they look at a profile? Did they... You know, all of those subcomponents, we would track every day, every 7 days, you know, and we use that to inform how we improve the product. The data point that I gave you today was just an indicative data point to say: Look, the volume of messages, if you just look at the social platform, which is just one feature, you know, is growing very substantially as a way of communicating that people are using these features more and more.
I think when you look at the social strategy holistically, though, I would say that's too, that's a too detailed way to look at it. I think the best way of looking at it is, what does the retention rate look like in terms of those revenue cohorts for a certain level of marketing spend? Then the two other data points are, if you look at the first 91 days, how many bookings do they make relative to non-members? What proportion are on the app? What proportion of the total bookings are being made by social members? We will continue to report that, but basically, the power of the social strategy ultimately gives you really strong revenue growth at 50%, marketing as a percent of net revenue.
As that revenue growth continues to accelerate, that is coming on a business model, which is very scalable, so more of that drops down to EBITDA. That's probably the best way of thinking about it, and those would be the KPIs that we would continue to report on.
Thanks, Gary. Caroline, I might turn to you for the, the next set of questions.
Mm-hmm. Yeah.
We've had quite a few comments that have picked up on the combination of trading performance, the operating leverage that's come through, the cash conversion that's come through, and how the refinancing with that has meant that the business has been able to deleverage significantly.
Mm-hmm.
There's a pathway emerging to zero net debt position.
Mm-hmm.
You might talk down a little bit about the balance sheet priorities for you over the next, 6-12 months, and your, your thoughts then on capital allocation optionality, be that M&A, reinvestment in the business-
Mm.
dividends, and buybacks.
Great. Okay, thanks, David. Yeah, you know, a very popular question that has come up whilst on our roadshow. We're delighted. We, we were able to complete the debt in a timeframe that was much earlier than we had expected. We, we put out a Capital Markets Day. This is a strategic priority. We initially thought it would be something we would complete late summer, early, early Q3. There was a lot of interest from Irish player banks. We ran a competitive process, our performance was such over Q4, end of last year, start of Q1 and into Q1 of this year, that we were able to complete the transaction earlier than we had expected. We ...
One thing that was very important to us, actually, with whoever was going to be the bank that we refinanced with, we wanted flexibility. We, we knew that we were signing up to a term loan that was going to be, you know, two to three years, typically, standard commercial debt terms, very much reflective of the strong performance of the business, where it was strong recovery, strong cash generation, generation, characteristics of the business. One thing we really wanted to make sure was with the flexibility, that if we wanted to repay early, that there was not going to be an early repayment penalty, which can be quite punitive, and adds up. Very pleased that what we agreed with AIB allow-- is allowing us that flexibility.
Whilst the current EUR 10 million term loan is over a 3-year period, we would see that we would get to a net debt 0 position quicker than that. The other piece that's out there as well is obviously the Revenue liabilities. Again, they've been very. They're, they're very, I would say, slow and flexible on the repayment of the debt. Again, that's, that's not reflective of our, our position and where we're at. It's very much we're trying to accommodate the wide cohort of companies that owe liabilities to Revenue as standing since the COVID period. I think if I are to kind of, you know, stack rank in order of importance, first of all, it will be the continuing to deleverage the debt that we've raised with AIB.
The interest rate there is very competitive. It is more expensive than the interest rate that is accruing with the government liability. We will prioritize that first. We'll deal with the government liability then second. Ideally, we agree a bespoke plan with them. We can expedite, expedite that and get that off the balance sheet. After that then, as I say, David, there are options open to us, and it could be reinvesting in the business. There are so many things we would like to do. We know that there's a massive upside potential to Linkups monetization opportunities. Building out beyond that. So important to invest in the business as well. When we say invest in the business, it's having people on the ground to build the features and expand the product portfolio. That is our CapEx.
It's the development labor associated with these projects. I think there's an element of that right fine balance between making sure we're investing in the business for growth, but also shareholder returns. What is going to represent the best shareholder value? Is it a share buyback, as we say? Is it, is it the resumption of a dividend? Those are things we're going to have to assess when the time is appropriate. I think back to the original question of kind of the nearer term, 6-12 months, it's continuing to deleverage.
Thanks, Caroline. I might stick with you for the next question. This relates to our financial performance and...
Mm-hmm.
EBITDA result for, H1 2023.
Yeah.
You, you might help walk people through the performance drivers, not just in that result versus H1 2022, but maybe bridge people from where we were in H1 2019 as well, and then your pathway in your review back to EBITDA levels on a full year basis, in line with with pre-COVID timeframe, 2019.
Okay. Well, margin, or sorry, EBITDA walk versus H1 last year, we covered off in the presentation. The key headline items are huge resurgence in volume. Net price inflation also helping drive revenue growth, but materially volume recovery result over 60% growth versus H1 last year. Marketing efficiency being at 51%. Costs, broadly flat. An element of drag from deferred revenue, which will unwind in the second half of the year, is the walk from a loss of EUR 5.2 million in H1 to a profit of EUR 5.1 million in H1 of this year. If we look at that versus 2019, in H1 2019, we made a profit of just under EUR 9 million, versus the profit in H1 of this year of EUR 5.1 million.
What are the constituent parts of that? We, as we mentioned, have a flat commission rate of 15%. That's actually down 1.6% versus 2019. The London average commission rate in 2019 was EUR 16.6 million. That's a tailwind, or sorry, a headwind, I should say, for us in this half of the year. It was a lower commission rate. We also changed the cancellation window. While we had the free cancellation product in 2019, the cancellation window was much longer. You could only see, It was 7 days, so you could only see the free cancellation option and could cancel 7 days out. Whereas now, with the free cancellation product, you can cancel with whatever is the cancellation window of the hostel. It could be 24 hours, it could be 48 hours.
I.e., I'm traveling in two days' time, and I can cancel up until 24 hours before my stay date. Back in 2019, you could cancel seven days before your stay date. That meant that there was less optionality, so the cancellation rate was lower in 2019. That the benefit of having a closer window of cancellation rate is that there's a far greater free cancellation volume in 2023 than there would have been in 2019. That is a drag, the cancellation rate. We've seen huge volume in ABV uplift again when versus 2019, that's then driving the performance back to H1 of this year. Marketing costs are up versus H1, 2019. Again, I think there's some important points to make on that. She talked about the commission rate.
We had a higher commission rate, so we're making more revenue, I suppose, on, on, on that booking from a commission rate perspective than we are this year, with it being a 15%. We also had brand marketing spend in 2019. When, when we look at it on a marketing as a percentage of revenue, we're talking purely paid marketing. That marketing percentage looks higher, H1, 2023 versus H1, 2019, but that excludes the brand marketing spend that we were incurring in 2019. I suppose operating costs then are the other tailwinds. If we think headwinds are commission rates, changing the cancellation window, defer, deferred revenue, because we're seeing more free cancellation product and the marketing costs.
They're all adverse versus 2019, but then the headwinds are volume ABV, and then operating leverage, so operating costs being down materially versus where they were in 2019. Sorry, I think the last part of the question was: where do we see the full year results, David, or?
Yeah.
Yeah.
The pathway back to a, on a full year, full year basis, 2019 levels.
Sure. I suppose from an EBITDA perspective, we've our guidance for the full year is EUR 16.5 million-EUR 17 million. We will have a margin %, an EBITDA margin percentage that is in the high teens, close to 20%. I think we what we can see from the business is we've improved our operating leverage. Getting back to that EBITDA margin of 20%+ is something we're very, very close to.
Thanks, Carolyn. Gary, I might turn to you with our, our next question. We've had quite a few comments around market share. So actually maybe just as a, as a bit of a refresh for, for people, and you might have some new, new people to the story. You might just remind people how we, how we define, and measure our market share, and just simply comment on the competitive landscape within it. And then, and then just to maybe underscore, how much of our top line performance has been the market, how much has been Hostelworld, and the impact of bed price inflation on that.
Okay, just thinking about market share. we look at the entire hosteling category, all of the hostels. You know, we have most of them, and we make a core assumption. If you are a hostel, you are distributing either through Hostelworld, through Booking.com, or both. We form a picture by scraping Booking.com every single week of all of the hostels that they have. We have all of the hostels that we have and the hostels that we have together. When you look at the total category sales, because we know how much demand that is going into each hostel that we have, we can also make a very good assumption about how much demand is going into hostels that we don't have, because they are in locations where we have other hostels.
We're able to build up a picture of the total category bed nights. That was the underpin or the data set that we used that said that the category has grown by 14%. We can also see that our market share has grown because we have grown another 34% on top of that. Now, if I look at the total number of beds that we sold, compared to the total number of beds that we estimate that were sold in the category, that would be about 10% in the first half. Normally, about 50% of the hosteling category sales come through OTAs, online travel agents like us. So if you just take that 50% portion, our market share of that portion is 20%, and clearly it's grown materially, half year, over half year.
We haven't actually reflected that as a, a GMV share or a revenue share, because it's a little bit more difficult to be specific on what bed prices or, or what the prices are of hostels that we're not selling. We can be very certain around the volume estimates, slightly less precise on the revenue. I can't give you how much of our revenue growth was driven by market share on an accurate basis, but at least from a volume perspective, you know, I'm pretty comfortable. Category grew 14%, we grew 40%, 34% on top of that. I also might return a little bit to the question that was asked around 2019 and, you know, the P&L shape was different to what it is now.
We have made an enormous amount of change to this business, improving the core OTA, launching our social network and now launching Linkups. Essentially, the proposition for our hostel partners is a lot better. We're giving them even more customers that they want, that do excursions, they, you know, increase bar sales, and we're doing that at a lower distribution cost of 15%. It's a much better proposition for our hostel partners. It's also a much better proposition for our customers. We have built features that help them find people to hang out with, an incredibly powerful and prevalent need. By running the business at this marketing as a percent of net revenue, we can get much higher revenue growth rates going forward than the business ever enjoyed in the past. It's important to place all of these things in context.
Frankly, in 2019, you know, and earlier years, the business wasn't spending enough in the right way to be able to keep topping up the funnel. If you look at the revenue retention chart, you can see that. You know, we have a much better proposition for our hostel partners, much better proposition for our customers. We're operating the business now at a very tight OpEx base, and we're investing in marketing to get that huge revenue growth with a much better product. I just think it's important to frame all of those decisions. The shape of the P&L is different, but it's gonna grow a lot faster.
Thanks, Gary. I think we've reached our final question now. Thanks, everybody, for your contributions. Unless any other question comes in in the next moment or so, I'll probably, after this question, hand back, Gary, to you to close things out as well. Gary, the last question is around supply and maybe your comments on how the overall category has been performing from a supply perspective and how-
Mm.
-our coverage has moved with that. Specifically at Capital Markets Day, you talked about Brazil and Poland as opportunity areas for us that you were going to, to target over the coming period. You might talk a little bit about how that's been progressing?
Yeah, so start off by talking about what our market coverage is. If you look at the total category, and you say that, let's say, this half year, it was 100 bed nights. You know, obviously, it's a lot more than that, runs into the millions, but just say 100. If you look at all of the hostels on our platform, what they sold, not just by us, but every channel that they have, what they sold was about 75%, 75 bed nights. We estimate that the hostels that are on Booking.com platform is very slightly greater than that, maybe, you know, 78, you know, 77, 78, something like that. What that means is we have a lot of hostels that they don't have, they have a lot of hostels that we don't have, and we have a huge overlap between the two.
If I look at how much our coverage, that 75% has changed relative to first half, it's actually flat. It's 75%, even though we added another 1,000 hostels to our platform throughout the first half. The way to think about that is, as the category has grown and more hostels have come on board, we've added hostels at the same rate that the total category has grown. In relation to the Capital Markets Day comment, you're absolutely right. The three kind of regions of the world where I felt that we, you know, the data says that we have opportunities to grow our hostel portfolio were Central America, Eastern Europe, and North Asia. If you wanted examples underneath, you're absolutely right, Brazil, Poland, Japan. Throughout the year, we have done a couple of things.
First, we've hired some contractors, some local agents in Japan to be able to start building the inventory there. I'm also delighted that we're having our first post-COVID hostel conference in Bogota next month. You know, gives us a great opportunity to spend a lot of quality time with all of the hostels in that region. You know, in part, these are the kinds of things that we do to stimulate more demand and sign on more hostels in that region. Also, we're having another hostel conference in Copenhagen in the latter part of September, and that gives us an opportunity, again, to reach some more of the hostels, you know, who come in and visit us from Eastern Europe.
There's a whole variety of techniques, whether it's hostel conferences, in-market visits, because hostel associations call us, or whether it's webinars or outreach, you know, a whole sort of strategy around building that market coverage. We'll be able to give you some more precise data about how each subregion is performing at year-end. David, I think I'll conclude.
Yeah.
I hope, I hope you've enjoyed spending this time with us today. It's always a privilege for Caroline and I to present what is actually the incredibly hard work of the rest of the team that we have, those 240 people that make up Hostelworld. I'm hoping that the first half growth rates, you know, the increase in market share, the incredible cost discipline, you know, marketing as a percent of net revenue at the low end of guidance range, the exciting things that we're doing, all the social strategy, gives you the comfort that we have a tremendous opportunity ahead of us. We're certainly, you know, well ahead of where we wanted to be from Capital Markets Day projections.
I think on that note, very much look forward to seeing you all again at our full year presentation, which should be sometime in February, March.
That's great, Gary. Thank you very much, Gary, Caroline, David, for updating investors this morning. Thank you once again for your time. Ladies and gentlemen, please don't close this session, as we'll now automatically redirect you for the opportunity to provide your feedback in order the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of Hostelworld PLC, I'd like to thank you for attending today's presentation. We wish you all a very pleasant afternoon.
Thank you.
Thank you.