On the Beach projects return to profitability for trade brands

The OTA shared its preliminary end of year results

On the Beach is forecasting a rebound to profitability for its trade-facing Classic Collection Holidays and Classic Package Holidays brands in 2024.

The projection came as the OTA revealed an almost £10 million improvement in overall annual pre-tax profits to £23.6 million as group total transaction value surpassed £1 billion for the first time in the year to September 30.

Classic Collection Holidays’ losses deepened to £1.3 million from £400,000 the pervious year, while Classic Package Holidays achieved an operating profit of £100,000 against a loss of £300,000.

The group recently won a £2 million legal claim which it brought in October 2021 against Ryanair in respect of refunds owed for flights that had been cancelled or had been subject to a major change.

On the Beach revealed that it “intends to pursue Ryanair for further sums due in similar circumstances which accrued after issue of the refunds claim”.  

The group is also awaiting the announcement of Atol reforms. 

“We understand that there has been further delay to the announcement of proposed reforms which is now not expected until 2024, however the group remains well placed regardless of the outcome,” chief executive Shaun Morton said.

The owner of the Classic tour operating brands described the 12 months to September as being a “challenging year” for high street retail, which has seen a sluggish recovery from the pandemic.

Morton said: “The competitive landscape for our B2B businesses has also become more crowded, as tour operators and low‑cost airlines compete for share of high street agent and homeworker business. 

“As a result of this market backdrop, B2B growth has been slower than expected. 

“In both businesses, however, we have been able to define and drive certain destinations and product lines where growth has been strong.”

B2B back-office functions have been integrated into the group, reducing overheads to improve overall profitability. 

“Notwithstanding recent market headwinds, the B2B channel and share opportunity remains significant, with online penetration lagging other consumer verticals,” Morton said. 

“The strategy for Classic continues to be to build on its foundations, deepening partnerships with independent high street agents. Agents are increasingly risk averse post-Covid, with a trend away from tour operating and back to retailing.

“We expect a return to B2B profitability in FY24, underpinned by the synergies already realised across the group, a focus on product and destinations where we can win with a digital first approach.”

He said that the group had seen the majority of consumers protect, not sacrifice, their holiday in the past year – a trend its research shows will continue.

“We are already seeing this with strong momentum into the new financial year with TTV up 26% for the first nine weeks of FY24 and winter FY23 bookings up 34%.

“We approach our key booking period in Q2 with significant momentum and this gives us confidence that summer ’24 will be significantly ahead of summer ’23.”

Reviewing the past year, Morton said: “I am pleased with the group’s incredibly strong performance this year, delivering record TTV and exceeding the £1 billion revenue milestone for the first time – a huge achievement testament to the hard work across all our teams in the business. 

“In line with our broader strategy, our firm focus and investments towards our marketing campaign has delivered our highest ever top three brand consideration score.

”Last year we differentiated ourselves from other mainstream holiday companies as the first to offer free lounge and fast track on bookings and this continues to grow customer satisfaction. 

“The investment we have put into our proprietary technology has enhanced our flight, hotel and front-end platform capability and thanks to this upgraded front-end, we have improved the user experience leveraging technology, automation and AI via our new website and customer app. This has all helped drive growth in both the core business and expansion segments.”