Shares in On the Beach (OTB) slumped 10% to 173.3p after the online package holiday specialist warned the war in the Middle East is already impacting demand and profitability.
The firm has temporarily suspended FY26 earnings guidance after experiencing a significant slowdown in bookings since the start of March, triggered by the escalation of the conflict.
In an AGM update, On the Beach said it is temporarily suspending current year guidance for adjusted pre-tax profits of £39 million to £43 million.
The holiday and city break operator has limited exposure to Middle East destinations. However, it has experienced a ‘significant slowdown in demand’ following the onset of conflict in the region, particularly to destinations such as Turkey, Greece, Cyprus and Egypt.
On the Beach warned investors ‘the timing of when the conflict will end and the shape of recovery in demand to these destinations are unknown’.
Positive progress
Outlook uncertainty overshadowed the progress On the Beach has made in recent periods. The positive momentum seen in a record FY25 had carried over into FY26, before the conflict broke out.
In the five months to 28 February 2026, bookings grew 10% year-on-year, with repeat customer bookings increasing by 19%. Travelled volumes grew 14% in the first quarter and accelerated to 34% in the second quarter.
Investments in app functionality have ‘resonated strongly with customers, resulting in a 58% increase in bookings made directly through the app across the period’, said the company. Management also highlighted positive progress with the group’s AI strategy.
‘On the Beach recently submitted its app to ChatGPT, opening a new distribution channel and demonstrating the group’s technology readiness for an AI-first world,’ enthused the firm.
Furthermore, On the Beach remains confident in delivering its medium-term targets of £2.5 billion of total transaction value (TTV) and taxable profits of £85 million.
Working round the clock
CEO Shaun Morton said: ‘Following the onset of the conflict in the Middle East, our operational teams have been working round the clock to support directly impacted customers in resort and to enable a return home as soon as possible.’
Morton remains confident that the group’s strategy to scale into new markets, ‘underpinned by its asset light operating model with no committed inventory to fill, remains a key competitive advantage.’
Despite the volatile environment, this package holiday market disruptor continues to trade profitably and generate cash.
On the Beach has significantly lower fixed costs and exposure to variable costs than the asset heavy tour operators. Overseas leisure travel spend continues to grow year-on-year, and within that, package holidays continue to grow in popularity.
And yet shares in On The Beach are flashing red over one and five years due to the turbulence that often bedevils the holiday industry. Given the risk of further conflict escalation in the Middle East, the shares are best avoided for now.
Disclaimer: This content is for information only and is not investment advice. Always do your own research before investing.
Read the press release here: https://www.onthebeachgroupplc.com/investor-centre
You might also like these stories:
