Full impact of escalating cost of living on holiday bookings ‘still unclear’ – On the Beach
The full impact of escalating costs of living on holiday bookings has yet to be seen, according to On the Beach.
The OTA admitted it remained “cautious regarding the consumer environment”, adding: “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.”
However, the relaxation of restrictions for UK travel to the Spanish mainland and islands “should support a stronger lates market”.
Sales have remained resilient into the current half of the financial year and are 33% ahead of 2019 levels in the eight weeks to May 22, the company reported.
Traditional winter pre-tax losses reduced by £14.6 million to £7 million year-on-year.
Issuing financial results for the half year to March 31, On the Beach reported £5.3 million lower revenue as an agent at £39.7 million as consumer demand remained subdued until Covid travel restrictions were eased.
Overall group revenue totalled £52.9 million against £12 million in the same period in 2020-21 and £63.5 million in pre-Covid 2019-20.
The OTA had cash of £16.8 million, an undrawn credit facility of £75 million and customer prepayments held in a ring-fenced trust account of £99 million at the end of March.
Growth over the period was exclusively based on new cash bookings rather than redemption of vouchers or refund credit notes, according to On the Beach.
Sales in September and October 2021 exceeded equivalent 2019 levels.
But the Omicron variant “heavily impacted” sales in November and December 2021 and early January 2022.
Group sales returned to 2019 levels in mid-January following the gradual easing of travel curbs in the UK and in key destinations throughout January.
B2B businesses, Classic Collection and Classic Package Holidays, traded well prior to Omicron.
Total B2B sales in the year to date are up 43% on 2019 levels, despite the lack of high street footfall throughout December and January.
However, the company said: “Bookings from high street travel agents have recovered more slowly than online, due to both a sluggish return to pre-Covid footfall and staff shortages across the industry.”
On the Beach chief executive Simon Cooper said: “During the first half of our financial year we have seen a set of unique trading dynamics which were impacted, in part, by the Omicron variant in December and January.
“Prior to Omicron, group booked sales in September and October 2021 exceeded H1 ‘19 levels, being the last full financial year not impacted by Covid, and while group sales were heavily impacted in November and December it was pleasing to see a significant uplift in traffic and booking volumes following the easing of restrictions in the UK and key international destinations during January.
“Throughout the pandemic, we continued with our strategy of investing in our brand, technology and customer proposition. Our deliberate focus on capturing share in the premium, long-haul and B2B segments, including accessing previously unavailable premium hotel stock, has resulted in us taking market share in this area.”
But he added: “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 costs 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.
“Our investments in brand and proposition will ensure profitable trading into the second half and has left us in a strong position to continue growing market share.”
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