Holiday sector boom reaps rewards for On the Beach
Online travel business On The Beach is the latest holiday retailer to enjoy an uplift in fortunes.
Reporting increased sales, revenue and profits, the preliminary results for the full year to the end of September 2023 show revenue of £170.2m was £26.8m (18.7%) higher than the previous year showing a strong demand for holidays, with growth across both passenger numbers.
Pre-tax profits were £12.9million and the business holds combined cash balances of £184.4m (2022: £133.9m):
On The Beach recently won a legal claim which it brought in October 2021 against Ryanair in respect of refunds owed by Ryanair to the Group for flights that had been cancelled or had been subject to a major change where customers had chosen a refund.
The company intends to pursue Ryanair for further sums due in similar circumstances which accrued after issue of the Refunds Claim.
Shaun Morton, chief executive, said: “I am pleased with the Group’s incredibly strong performance this year, delivering record TTV and exceeding the £1bn revenue milestone for the first time – a huge achievement testament to the hard work across all our teams in the business. In line with our broader strategy, our firm focus and investments towards our marketing campaign has delivered our highest ever top three brand consideration score.
“Last year we differentiated ourselves from other mainstream holiday companies as the first to offer free lounge and fast track on bookings and this continues to grow customer satisfaction. The investment we have put into our proprietary technology has enhanced our flight, hotel and front-end platform capability and thanks to this upgraded front-end, we have improved the user experience leveraging technology, automation and AI via our new website and customer app. This has all helped drive growth in both the core business and expansion segments.
“This year we have seen the majority of consumers protect – not sacrifice – their holiday, a trend that our research shows will continue. We are already seeing this with strong momentum into the new financial year with TTV up 26% for the first nine weeks of FY24 and Winter FY23 bookings up 34%.
“We approach our key booking period in Q2 with significant momentum and this gives us confidence that Summer ’24 will be significantly ahead of Summer ’23.”
Russ Mould, investment director at Manchester investment platform, AJ Bell, said: “Holiday seller On The Beach is making a comeback after a difficult few years. A strategic push to become bigger in the premium and long-haul beach holiday markets initially spooked investors who feared it would have to stomach considerable marketing costs to get its brand front of mind for travellers. However, the move now appears to be paying off.
“Up until six months ago, chasing the premium end of the market seemed like a no-brainer on the assumption that wealthy people wouldn’t change their spending habits, despite higher inflation. But in recent months we’ve seen cracks in the luxury goods market which suggest wealthier clientele aren’t completely immune to cost-of-living pressures. Will this trickle down to the premium holiday segment? Judging by On The Beach’s outlook statement, it hasn’t happened.
“Holidays have proved resilient during the cost-of-living crisis as people are prepared to give up some of their normal day-to-day treats if it means still being able to go abroad for a week by the sea. Airlines have been talking about strong demand for some time and On The Beach’s latest results certainly suggest a favourable backdrop for the travel industry.”
The share price has soared on the news, having opened at 122p, the price has hit 140p and at midday was trading at 136p.