On the Beach revenue falls 37% amid ‘complex rules’

Shares of Manchester-based online holiday retailer On the Beach Group plc (OTB) fell about 6% on Thursday after it published results for the year to September 30, 2021, showing revenue down 37% to £21.2 million amid “dampened consumer confidence … due to complex and inconsistent rules coupled with prohibitively expensive testing costs.”

The firm reported a narrowed pre-tax loss of £36.7 million, a 21% reduction from £46.3 million the previous year.

On The Beach CEO Simon Cooper said: “The disruption caused by COVID-19 has lasted longer than anyone would have anticipated and the travel industry has been, and continues to be, one of the hardest hit.

“Whilst our trading performance has clearly suffered, our successful placing this year is testament to the support from our shareholders who see the long term value of On the Beach and it ensures we are well positioned as the market starts to normalise.

“Looking after our customers remains central to our thinking where we have invested across our digital platforms, brand and supply.

“We are also proud of our industry leading initiatives of free Covid tests and our New Normal Booking Pledge which has enabled us to sustain high levels of brand awareness and customer trust through times of weak consumer demand.

“The shape of recovery for the sector remains uncertain due to the continued COVID-19 evolution and subsequent governmental responses.

“The flexible, asset light nature of our business model and use of our ring-fenced trust account, alongside the work the team has done over the last year, means we are ready for 2022.

“I would once again like to thank everyone at On the Beach who has risen to the challenge, acting with speed, professionalism and resilience.”

AJ Bell Investment Director Russ Mould said: “We have got used to certain patterns during the pandemic and where working from home guidance and increased mask wearing lead, yet tighter travel restrictions often follow.

“This is the unhelpful backdrop to an iffy set of full year results from online beach holiday specialist On The Beach.

“The company made what seemed like a prudent decision at the time to suspend new bookings for holidays departing before 1 September back in May.

“On The Beach continues to do the right things to protect its standing with holidaymakers, offering all refunds in cash, unlike some of its rivals, investing in TV ads, offering free Covid tests and working on all the background stuff around its technology routes, back-office and payments when bookings were depressed.

“The company also benefits from its asset-light nature, meaning during fallow periods it does not face onerous ownership costs on high street outlets, planes or hotels.

“In theory this should put On The Beach in a strong position in a more normalised environment, the problem for the business is it has no control over when that truly normalised environment returns.”