Manchester’s On the Beach reports suppressed trading

Manchester-based online holiday retailer On the Beach Group plc (OTB) on Wednesday published an update on trading for the 12 months to September 30, 2021, saying it experienced “suppressed trading” in its second half of the year.

On The Beach shares fell about 4%.

“Following the Government’s announcement in May 2021 on the traffic light system for leisure travel, where most destinations were classified ‘amber’, On the Beach made the decision to extend the group’s off-sale period for holidays from 30 June to 31 August 2021,” said the Manchester firm..

“In addition to the group’s focus on growing its market share in the long term, the board’s decision was based on consumer feedback from both research and search / sales data, showing a market-wide lack of appetite for booking amber destinations, as well as the likely loss of customer goodwill for holidays that might be booked only to be cancelled or re-arranged.

“As a result of the above, the group along with the whole travel industry experienced suppressed trading in H2.

“The group has maintained investment in all strategic areas over this period, including technology, brand and supply, to ensure it remains well-placed to take advantage of the market share opportunity when demand for booking holidays returns.

“OTB restarted selling holidays to travel from early September 2021, when it became clearer that overall confidence to book a holiday had increased, with OTB research finding 53% of Brits feeling confident about booking a holiday for the remainder of calendar year 2021 (up from 34% in July 2021).

“While demand for international leisure travel currently remains below pre-pandemic levels, our specific initiatives, including the ‘Free Covid Tests’ promotion, combined with a further softening of government restrictions, have stimulated bookings in the final weeks of the financial year.

“The increased awareness of brand and strengthening of trading over this period provides confidence that there is pent up demand for travel, and positions the business well as we enter 2022.

“On 30 September 2021, the group had cash in excess of £55m, excluding customer prepayments of c.£40m which are held in a ring-fenced trust account.

“The group has access to a £75m credit facility which is undrawn. The group continues to refund all customers in cash and in full where their holidays are cancelled.

“Given the continued level of short term uncertainty, it would not be appropriate to provide any financial guidance for the 2022 financial year.

“The board remains committed to investing for long term market share gains in FY22, ahead of full market recovery.

The board continues to believe that the strength of OTB’s balance sheet and flexible business model means the business is well-positioned to both sustain further significant disruption and to grow market share.

“OTB continues to appraise UK and international commercial opportunities.”

On the Beach Group CEO Simon Cooper said: “The strategic initiatives we have taken throughout the year to best navigate the crisis and manage risk while investing in our brand, people and technology, ensure On the Beach is in a strong position as we head into our typically busiest booking period.

“Thanks to the continued support from our shareholders and lender, we remain well-funded to successfully and sustainably grow market share.”