On the Beach sees bookings stabilise after initial impact of Iran war

On The Beach fell into a winter loss as consumer demand was hit with the start of the Iran war.

 

The OTA reported a pre-tax loss of £3.2 million against a profit of £4.5 million in the same period a year earlier.

 

However, bookings have since stabilised with volumes up by 9% in the past six weeks.

 

Total bookings in the six months to March 31 rose by 7% year on year to 324,000, with total transaction value (TTV) up by 2% to £626.2 million despite “significant industry headwinds”.

 

Adjusted revenue was limited to a decline of £6.4 million in the period to £52.9 million, “demonstrating the resilience of the model given widespread demand disruption from the conflict in the Middle East since 1 March, and outperformance of higher-growth city and shorter-duration winter travel, with record travelled volumes up 22%”.        

 

The company “continues to trade profitably and generate cash”, the On the Beach half-year financial statement said.

 

“Although demand remains more subdued as a result of the conflict in the Middle East, booking activity has stabilised to a more consistent trading pattern since the half year.    

 

“Despite the current geopolitical uncertainty and a challenging consumer environment, the board is reinstating full year guidance and is confident in delivering adjusted PBT [profit before tax] in the range of £18 million-25 million.”

 

The annual profit guidance was temporarily suspended in March, just weeks after the outbreak of hostilities in the Middle East.  

 

The company had recorded its highest ever volume trading day for the first time in its history in February, reflecting “a more pronounced later booking profile, with significant growth of 23% in bookings with less than 90 days lead time”.

 

On the Beach said: “The continued shortening of lead times this financial year meant that the growth in the first half was predominantly for lower ABV [average booking value], shorter duration and lower revenue margin winter ‘26 bookings, which were up 20%.

 

“As highlighted in the AGM trading update on 12 March, OTB experienced a significant slowdown in demand following the onset of the conflict in the Middle East on 1 March and as a result, closed H1 with bookings growth of 7%.

 

“As well as creating a volume headwind, the change in mix arising from the conflict has also impacted margin as higher value, higher margin, longer lead time summer bookings, particularly to eastbound destinations, have been deferred as customers adopt a ’wait and see’ approach, which further exacerbates this year’s later booking profile.

 

“In addition to the direct financial impact of the conflict in the Middle East, there has been ongoing operational disruption, including a rolling programme of cancellations to the UAE, a significant increase in contact from customers travelling to regions either involved, or with the potential to be involved in the conflict, and a higher than normal level of flight schedule changes.”

 

Customers are booking even closer to departure but volumes of travellers remain in double digit percentage growth. 

 

“The conflict in the Middle East is a challenge for the sector, however the travel industry has a track record of resilience evidenced by long term structural growth.

 

"Our enhanced strategy is succeeding in scaling the business, building loyalty and taking share,” On the Beach added.

 

“With H1 booked volumes up 7%, including the impact from the conflict in March, On the Beach continues to grow significantly ahead of the overall package holiday market.”

 

They company also indicated that it was poised to take share in the "large, high growth" cruise market.

 

Delivering the first half results, chief executive Shaun Morton said: "We entered the new financial year with strong momentum as our broadened offer continued to attract new and existing customers, delivering TTV growth of 2% and bookings volumes growth of 7%, significantly ahead of the market.

 

“However, whilst the group has limited exposure to destinations in the Middle East, the ongoing conflict has impacted consumer demand since 1 March and led the group to withdraw its guidance, as announced in the AGM trading 2pdate.

 

“H2 booking activity has stabilised to a more consistent trading pattern and bookings over the last six weeks are up 9% as we approach the key summer departure months.

 

As a result, we have today reinstated guidance and the board is confident in delivering FY26 Adjusted PBT in the range of £18 million to £25 million.”

 

He added: "The team remained focused on executing our strategic priorities in the first half. Our addressable market has rapidly expanded to over 50 million passengers, with significant headroom for further growth.

 

“We have continued to invest in scalable technology, build brand loyalty and increase our share of the market.

 

“We have delivered significant growth in bookings across our expansion areas, with city volumes, such as Krakow and Amsterdam, up 116% and the Republic of Ireland delivered volume growth of 74%."

 

"On the Beach’s commitment to helping people holiday better continues to resonate with customers and this is underpinned by the group’s asset light, cash generative model and proprietary technology platform, with no inventory to fill.

 

“Experience tells us that consumers value their summer holiday incredibly highly and I am confident that On the Beach is well placed to satisfy this demand and deliver a solid summer trading performance."