Wealthy travelers escaping to the sun boost On The Beach as sales of premium holidays DOUBLE from pre-Covid – but firm warns of uncertainty
- On The Beach has posted smaller losses and rising sales in its first half
- Sales for premium holidays with five star hotels up 95% compared to H1 in 2019
- Sales of holidays with three star hotels were 30% lower than pre-pandemic
Online travel agent On The Beach has posted smaller losses and rising sales in its first half as it cashed in on wealthier holidaymakers returning to travel.
However, the company sounded a cautious note about the future, telling investors that it was still unclear to what extent the cost of living crisis will impact bookings.
The comments sent On The Beach shares falling nearly 14 per cent to 207p in afternoon trading.
Beach holidays: On The Beach said its strategy of targeting wealthier customers is paying off
‘The group continues to remain cautious regarding the consumer environment,’ it said.
‘Visibility of the near term outlook for the UK outbound travel industry is limited and it is currently unclear to what extent the cost of living crisis will impact bookings.’
The company, which specializes in beach holidays, said that its strategy of targeting wealthier customers is paying off, as this market has recovered more quickly than budget holidays.
Early bookings for the coming summer have been stronger into ‘higher value, more premium hotels’, particularly for destinations in the Eastern Mediterranean, it said.
Sales for premium holidays with five star hotels nearly doubled in the half year, and were 150 per cent higher in the 10 weeks to 31 March compared to the same period in 2019.
By contrast, sales for three star hotels were 10 per cent lower over the same three month period, and 30 per cent lower in the half year, with customers booking more last minute than they did before the pandemic.
On The Beach said it was optimistic about the recent relaxation of travel restrictions from the UK to Spain and its islands, which it said ‘should support a stronger late market’.
Sales since the start of April has been ‘resilient’, rising 33 per cent compared to pre-Covid levels. The firm expects to ‘trade profitably’ in the second half.
Its booked sales for the half-year to March grew 6 per cent against pre-pandemic levels from 2019.
The Manchester-based holiday firm posted revenue of £ 53million in the six months, up significantly from £ 4.4million the year before.
However, this is still below the £ 63.5million it made in the first half of financial 2019, before the pandemic struck.
Pre-tax loss narrowed to £ 7million from £ 21.6million.
One of the effects of the pandemic on travel is that people leave it more to the last minute to decide if and where to go.
Simon Cooper, chief executive, said: ‘Whilst we have entered the second half with resilient sales, visibility of the near-term outlook for the UK outbound travel industry remains limited.
‘Customers are typically booking holidays with shorter lead times and we believe we are yet to see the full impact of the escalating cost of living on bookings.
‘Despite this, we remain confident that we have taken the right actions throughout the pandemic and we will continue to support our customers and staff as a priority.’