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HBX Group (HBX.BME) - the biggest hotel bedbank globally - released earnings today (fiscal 1H26 for the period ending March).  

A few key takeaways for me:

Regarding distribution into an AI world, it feels like it is more the PMSs and channel managers (eg recent SiteMinder announcement) angling to be source-of-truth inventory supply to LLMs.

To my distribution folk - do we see bedbanks in the mix?  DM, email or comment.  Would love to hear views.  

This follows what management felt was a strong Q1, but with full year TTV growth guidance assuming a -4ppt headwind from geopolitical issues in the Middle East (-1ppt in 1H), which assumes four months of conflict followed by a gradual recovery.

They imply similar to slightly slower top line sales growth trends as those expected in FY26 and some modest further take rate compression.

FX was a headwind in the period (~50% of group sales are in USD).

Take rate saw compression in the half although with cost reductions supporting EBITDA growth.  

Net profit benefited from cycling the IPO and debt refinancing.

Leverage reduced year on year and remains under 2x (>3x pre IPO).

Domestic demand remained healthy and each region grew TTV mid to high double digits in constant currency.

1. Middle East conflict negatively impacting trading. The Middle East conflict reduced 1H26 group TTV growth by approximately 1ppt, with the impact concentrated in March. In the two months of March and April, TTV from travel into the Middle East fell 75%, outbound fell 50%, and internal Middle East travel declined 64% versus the prior year. The Middle East represented approximately 8% of FY25 group TTV across inbound (4%), outbound (3%), and internal (1%) flows.

Beyond the direct impact, the Europe-to-Asia corridor — heavily dependent on transit through UAE and Qatar hubs — was materially disrupted, contributing to a moderation in Rest-of-World growth to +12% from the group's +17% 1H run rate.

Management's base case assumes a 4-month conflict duration (March–June) followed by gradual stabilisation, translating to an estimated -4ppt impact on full-year TTV growth. Partial demand reallocation is already visible: Southern European destinations (Spain, Italy, Portugal) are capturing rerouted flows, Istanbul has emerged as an alternative transit hub, and Americas growth has accelerated to partially offset the broader pressure.

Internal Middle East travel is expected to rebound first as perceived risk diminishes. The key unquantified risk is the impact on aviation fuel prices, which the CFO described as "the biggest unknown" in determining the pace of normalisation.

If the conflict extends to 6 months, the lower end of the guidance range accommodates it; escalation beyond that would represent additional downside risk not currently captured in guidance.

2. Take rate ‘evolution’ a headwind to revenue. The 1.3ppt take rate decline from 9.5% to 8.2% is framed as conscious execution: scaling into OTAs, TPS (third party supply), and shorter lead-time bookings where yields are lower but volume is higher. Only ~30bps is attributed to competitive pricing actions. However, the non-trading 50bps component (cancellations, VCC penetration, legacy revenue timing) is less controllable.

Management's assertion that the pace of decline is "flattening" in 2H rests partly on easier comps (2H25 was a softer period) and partly on the cancellation spike normalising. The medium term outlook implies a much more modest take rate reduction going forward.  

Recall WebBeds saw its take rate decline rapidly to 6.5% from over 8% two years ago.

3. MCP-enabled distribution positions HBX as an AI fulfilment layer. Management discussed Model Context Protocol (MCP) integration as enabling AI-driven travel platforms to access HBX inventory via natural language. This positions HBX as a fulfilment layer for emerging AI distribution channels and unlocks new growth through conversational interfaces and hyper-personalised discovery.

“We’re evolving into an operating and fulfilment layer for B2B travel. It’s way beyond just a distributor role.”

4. AI-Driven Productivity: Structural Cost Leverage. Two agentic AI agents are live, generating approximately €1m in annualised cost savings by automating internal workflows. AI-enabled room mapping reduces manual intervention and booking errors across suppliers. EBITDA per employee has nearly tripled since FY19 through "automation, simplification and scale, not by one-off cost actions." Management sees double-digit productivity gains over the next 15 to 18 months, noting structural operating leverage in a largely fixed-cost base where 80% of costs are not linked to trading volumes.

5. Operating costs. Underlying operating costs fell 5% against +1% revenue growth. Operations costs down 9%, driven by AI-enabled containment and footprint optimisation. Commercial costs down 8% from reorganisation. Technology costs down 3% primarily due to lower cloud costs. FTEs down 2%.

6. The ecosystem now contributes ~20% of gross profit. Fintech (VCC penetration), M&E, hotel tech, and marketing-as-a-service collectively generate approximately 20% of gross profit. Fintech is the standout, benefiting directly from TTV volume growth. The Mastercard/Outpayce partnerships scale virtual card issuance. Ecosystem revenue partially offsets accommodation take rate pressure. Bridgify (experiences content + AI tech) expands the ecosystem further.

7. Balance sheet is being deployed strategically. Trade prepayments YoY increase reflecting upfront investment in strategic distribution relationships (eg Despegar). The Despegar partnership quadrupled contribution in its first full year. Meaningful growth from upfront partnership investments typically comes "a year or 18 months into it”.

Q: Performance of smaller segments (M&E, Fintech) and Bridgify contribution?

A: Around 20% of gross profit now comes from non-accommodation activities. Fintech is "the star of the class" — ahead of expectations and correlated with TTV volumes through virtual credit card penetration. M&E is "still not quite performing where I'd like it to." Bridgify will contribute primarily from 2H with a small cost base, enabling faster AI-driven onboarding of activities content.

Q: Short lead-time TTV share only up 1ppt — shouldn't it be higher given OTA growth?

A: There is inherent overlap between OTA growth and shorter lead times. The company parsed them "as discretely as possible" but acknowledged "some element of compounding effect." The key takeaway: "if it weren't for the Middle East crisis, we would be beating our guidance for the full year on TTV."

Q: Current trading and summer bookings?

A: Volumes in recent weeks "very positive." Cancellation spike has decreased — "we're definitely through the worst of that."

Q: Take rate declines flattening in 2H — how to think about mix going forward?

A: 2H25 was softer trading, providing an easier comp. Q3 will be most ME-impacted, but by Q4 "I'd like to see us really getting back on the right side of growth from a revenue perspective."

Q: What does "gradual recovery" mean after the 4-month conflict assumption?

A: The biggest impacted corridor beyond ME was Europe-to-Asia, dependent on transit through UAE/Qatar. Istanbul has become a significant alternative hub. “What we’re saying is our expectation is that the general population or the general public are much more comfortable traveling back through those areas again.”  The other factor is more certainty around jet fuel prices.

Q: Is the 30bps pricing action structural or one-off?

A: "…predominantly the Middle East crisis has made the environment more

competitive, and so as a consequence, yes, I think that level is probably

elevated”, but “I wouldn’t say that that won’t be a part of the math as

we go forward”.

Q: Medium-term take rate trajectory into FY27?

A: Medium-term outlook maintained. Actions taken make the business "more flexible and a more fierce competitor." The thesis is "a more flattened decremental impact between TTV and revenue."

Q: 2H OpEx growth drivers?

A: Predominantly the full cost impact of PerfectStay and Bridgify acquisitions. Variable pay differential versus prior year may narrow depending on 2H results.

Q: Regional take rate evolution in 2H?

A: More interregional travel (Europe-to-Europe, Americas-to-Americas) and less transregional is negative for take rate since "take rate is optimized when we see well in advance, well-curated trips traveling from continent to continent." Summer Mediterranean volumes add further seasonal pressure. It’s a complex calculation.

Q: Europe-Asia corridor exposure — meaningful for European TTV?

A: APAC was the fastest-growing region pre-conflict and remains strategically important. DidaTravel's top 6 traveller cities are in Asia, 30% of clients travelling from China. "It's a very important region to us strategically."

Q: Working capital negative in 1H and reduced cash conversion guidance?

A: Balance sheet used "more in the first 6 months than maybe we have done traditionally" for SPAs and distribution partnerships. Reduced 90–100% cash conversion is "more predominantly as a result of trading" uncertainty — "we will work to be at the top end of that range."

Q: SPA pipeline and trade prepayments up 30%?

A: SPAs trending positively pre-conflict; luxury SPAs disproportionately impacted by ME. Approximately 4,000–6,000 SPAs maintained. Trade prepayments reflect both broad-based SPA support and concentrated distribution investments. Despegar cited as the model: upfront investment with "significant benefits come in the outer years."

Q: FX impact on FY26?

A: Approximately 2–3ppt headwind. Around half of TTV and revenue is USD-denominated.

Q: What if conflict prolongs beyond June?

A: A 6-month scenario is covered at the lower end of guidance. "However, if it escalates, that's when there's additional risk."

Q: FIFA World Cup impact?

A: Federations pre-book then release rooms near the event — "this is where the machine starts." US domestic strategy overall is "flying — the numbers are just amazing right now." World Cup adds incrementally.

Q: Fintech partnerships in APAC?

A: "We are definitely looking to expand Fintech." Partnership approach may eventually need reassessment: "will we need to start building up on some other kind of approach? We're not yet there, but it might be a question for the coming years."

Q: Balance sheet use for partnerships and sourcing?

A: M&A structured to "not pay a lot of money up front, but build based on success together." Distribution partnerships involve upfront investment with growth coming "usually a year or 18 months into it" — Despegar "a really good example."

Disclaimer: Informational content only — not investment research, advice, or a recommendation. Any estimates, expectations, forecasts, etc are either from management or consensus expectations as indicated.

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