On the Beach is “well placed” to capitalise on the industry fallout from the Covid-19 crisis despite a 90% slump in bookings during April.
The forecast came as the OTA reported a 66% slump in first half revenue to £21.4 million due to coronavirus-related cancellations and a “significant reduction in demand” from mid-February when the virus began to spread to Europe.
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The company suffered £34.7 million in exceptional costs due to the impact of Covid-19 in the winter six months to March 31.
Adjusted pre-tax profit fell by £13.4 million to £2.3 million from the same period a year earlier.
The company accessed in £75 million in loans and via the government’s Coronavirus Large Business Interruption Loan Scheme following the six month trading period.
The OTA pointed out that it remains the only listed UK travel business that operates a fully ring-fenced customer trust account in which customer funds are held until the point of travel.
“Therefore, the group does not rely on cash received for forward bookings to trade.
“Monies that have been received for holidays that are cancelled by a closure of airspace can be repaid to customers in cash with limited impact on the group’s working capital,” On the Beach said.
Group bookings were at around 10% of normal volumes in April as consumer appetite for booking holidays “remained subdued”.
However, the company has seen a “significant increase in demand” from mid-June for summer 2020 departures, albeit from a very low base.
Booking volumes for summer 2021 remain low, but are “significantly ahead” of the prior year, partially due to the early release of flights for next year by most major airlines.
On the Beach added: “Whilst a significant number of bookings have been or will be cancelled, we do expect that some holidays booked to travel from 1 July to 31 October will go ahead as planned.
“The board believes the business is well-positioned to grow market share as demand for holidays recovers.
“Whilst this recovery is likely to take some time and the consumer environment will continue to be challenging, the group remains confident in the resilience and flexibility of our business model and believe there is an exciting opportunity to increase our market share over the short to medium term.”
The group “will continue to evaluate internal and external opportunities that will both increase scale and deliver value for shareholders”.
But in light of continued market uncertainties, the group is maintaining its suspension of full year guidance “until such time that the overall impact of Covid-19 becomes clearer”.
Chief executive Simon Cooper said: “In the aftermath of the Thomas Cook collapse, the group made excellent progress in the first four months of the financial year, driving record levels of brand awareness and achieving sales growth of almost 30% for holidays departing in summer 2020.
“We also made significant progress against our strategic objectives in the year with Classic Package Holidays going live in over 2,600 agencies alongside the continued expansion of our long haul offering.
“The onset of the Covid-19 pandemic led to a rapid slowdown in demand for foreign travel followed by the total closure of airspace across Europe by mid-March.
“Our staff responded brilliantly to ensure that the group delivered the highest possible customer service standards in the most difficult of circumstances.
“On the Beach continues to successfully build a leading position as more consumers discover the ease of use and wide choice of beach holidays across our platforms.
“The flexibility and asset light nature of our business model together with our recently strengthened balance sheet and the actions we have taken since the middle of March means we are well placed to capitalise on the inevitable structural changes in the market post Covid-19.
“As a result, the board continues to look to the future with confidence.”
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