Hostelworld has warned that it expects the Middle East conflict and “softer” demand for long-haul travel to weigh on demand through the rest of this year and into 2027.

The hostel-booking company reduced its profits guidance for 2026 as a result.

Shares in the company dropped by around 7.3% on Wednesday morning as a result, striking their lowest level for almost four years.

The firm, which was founded in 1999, said the ongoing Iran war has “dampened” travel volumes from long-haul customers, with net transaction dipping by around 2% in third quarter of this year.

Around 30% of the firm’s hostel bookings are typically between Europe, and Asia or Oceania.

Hostelworld said journeys to these locations have been particularly impacted by tensions around the Middle East, estimating that the conflict knocked volumes by around four percentage points.

It added that the “softness in long-haul demand has since extended beyond those routes”, with higher travel costs and less favourable currency exchange rates hitting demand between Europe and the Americas.

The company said net revenues were nevertheless up 7% year-on-year to 27.9 million euro (£23.6 million) for the three months to the end of September, compared with a year earlier.

It said it expects revenue growth of around 10% for the year but expects net revenue growth in the mid-single digits for 2027 due to the “current long-haul environment”.

Adjusted earnings before interest, tax, depreciation and amortisation (ebitda) rose to around 8.3 million euro (£7 million) from 7.9 million euro (£6.7 million) a year earlier.

Hostelworld told shareholders it is now on track for ebitda of between 20 million euro (£16.9 million) and 21 million euro (£17.8 million) this year.

Gary Morrison, group chief executive, said: “The conflict reduced our volume growth by approximately four percentage points, up from about three in the first half, concentrated on routes between Europe and Asia or Oceania.

“The balance arose in roughly equal measure from softer long-haul demand on routes between Europe and the Americas and from lower organic web traffic, across the industry, as AI answers more searches.

“Demand within Europe and from North America was broadly flat.”