Holidays group basks in strong results, with better performance on the horizon

On the Beach (OTB), the Manchester-based online travel agent, is raising a Piña colada to full year figures that saw revenues, TTV and pre-tax profits all rise.

Group revenues, on a GAAP (generally accepted accounting principles) measure, came in at £128.2m in the year to September 30, 2024, up from £112.1m the previous year.

TTV (total transaction value), a non-GAAP measure representing the cumulative total transaction value of sales booked each month before cancellations and amendments, was £1.2bn, up from £1bn a year ago, and a record figure for the third consecutive year, after travel shackles were removed following the 2020 pandemic.

Pre-tax profits came in at £26.5m, up from £14.4m the previous year.

The group said it remains in a strong financial position with cash, excluding amounts held in trust, of £96.2m, compared with £75.78m in 2023.

It has declared a final dividend of 2.1p per share, and a full year figure of 3p per share, in line with the capital allocation policy.

OTB has also announced the start of a share buyback programme, worth up to £25m, which it said reflects the board’s confidence in the strategy and business model.

The group said it has delivered significant volume growth, with summer ‘24 passenger levels up 13%, compared with summer ‘23.

During the year it ended its legal battle with carrier Ryanair and signed a transformational partnership agreement, improving OTB’s customer experience and simplifying operations while enhancing scalability.

From Q4, 2024, OTB also expanded into cities, fuelling the next stage of revenue growth while increasing the efficiency of marketing spend.

The group also confirmed that its 2024 growth has continued into the new financial year with year to date TTV up by 14% and bookings growth of 15%, compared with last year.

The forward order book is at record levels, with group winter ‘24 bookings currently ahead by 25%, ensuring OTB approaches its key second quarter bookings period with significant momentum.

OTB said current trends and strategy gives it confidence that summer ‘25 will be significantly ahead of summer ‘24.

And it outlined its medium term ambition to deliver TTV of £2.5bn, an EBITDA of £100m, representing 40% of revenue, and an adjusted pre-tax profit of £85m.

Chief executive, Shaun Morton, said: “This performance was driven by a combination of initiatives, including the successful integration with Ryanair, ongoing investment in our proprietary technology platform and further enhancements to our differentiated customer proposition.

“The partnership has facilitated an improved customer journey for those booking Ryanair flights as part of an OTB package, whilst enabling increased operational efficiency and a greater focus on areas of strategic value.

“What’s more, the agreement and significant upgrades to our technology have supported a doubling of our addressable market, following the addition of city breaks to our offering alongside planned investment in Ireland.”

He added: “The positive momentum in FY24 has continued into the new financial year, with TTV 14% ahead of last year, indicating that customers continue to prioritise their spending on holidays.

“Winter ’24 volumes are currently at record levels, up 25% year on year, as customers seek winter sun or a European city break, and we anticipate summer ’25 to be significantly ahead of last year, with bookings to date supporting this.

“Our strategy and positive booking trends, underpinned by our track record of delivery, gives us every confidence in delivering on our medium-term ambition to double TTV to £2.5bn, achieve EBITDA of £100m and adjusted PBT of £85m.”

Dan Coatsworth, investment analyst at Manchester investment platform, AJ Bell, said: “Shareholders will be popping out the cocktail umbrellas as specialist holiday provider On The Beach demonstrated the benefits of a Ryanair partnership as it enjoyed a record summer and reinstated dividends alongside a share buyback.

“On The Beach sells beach holidays online and earns a commission on these sales. It has no physical sites and doesn’t own planes, which means it does not need to employ lots of capital to grow. Its main costs lie in marketing. The company also sells holidays offline through third party travel agents.

“What’s put the market in a sunny mood are the company’s ambitious medium term targets for sales, earnings and margins. The company has experienced slowing demand at the more budget end of the market, showing that pressures on household spending are having a negative impact, although this represents a decreasing share of the company’s overall business.

“On The Beach is looking to boost its exposure to long haul beach holidays and has begun serving customers in the Republic of Ireland. Targeting city breaks is also seen as an opportunity.”