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Travel industry news

19 Mar 2015

BY Edward Robertson


Interview: As its second decade begins, On The Beach is hitting a new gear

The online travel agent has taken control of its tech and is starting to explore foreign markets with a new Swedish site. Edward Robertson speaks to chief executive Simon Cooper

On the Beach Simon Cooper

It’s been five years of hard labour but On The Beach finally has full control of its own website.

And if it is a surprise that a company so reliant on its site is only now fully in control of it, founder and chief executive Simon Cooper is keen to explain why.

When On The Beach was originally set up in 2004, it was simply easier to outsource the technology as a bespoke platform, which supported it from the company’s birth until it was achieving a turnover of £150 million.

In 2010 and 2011 the company then started insourcing the site and rewrote the core platform in a new language. Only now, after a further three years of optimising the site, is it functioning to Cooper’s satisfaction.

If five years seems like a long time to take, he says much of it was down to the fact that building the new site involved an inevitable on-the-job learning process.

He adds: “When one maps out a plan you probably only map out the first steps in detail, you launch and learn and the rest of it comes from that learning.”

Taking control
Cooper also believes the advantages of having complete control of the site far outweigh the amount of time it took to achieve.

He says: “The ability to grow a brand by spending money online [on elements such as pay-per-click advertising] existed and that doesn’t exist now, so you need to be clever at delivering with online differentiated product.

“How the hell can you do that without having the ownership of all your own platforms?

“We’re now also able to go from the inception of an idea to launch within weeks, not months.

“[We can focus on] new product and new delivery of product. Most of it we can relate to customer experience improvement, whether it is a hotel we didn’t sell before or the presentation of the hotel.”

This has led to a business where the proportion of bookings now taken online is between 92% and 93%, although January saw the figure hit 95%. The business still stays true to the name. All holidays sold are beach holidays, with short and mid-haul - including Egypt, the Canaries and all key Mediterranean destinations - on offer.

Room for growth
“It’s always been our longer-term plan to deliver long-haul beach, but there’s so much room to grow still on short to mid-haul that it is easier for us to stick with what we have,” says Cooper.

He adds this is particularly the case given how much space for growth he still sees in the UK market, especially with 17 million passengers booking short-haul holidays, only 45% of whom are booking online.

Cooper says: “How much share we can grab depends on our ability to grow our proposition and we’re doing a pretty good job of that.”

Nor does he feel any temptation to take more control of the product sold by the On The Beach and start competing with tour operators.

“Not being committed to stock means we don’t have to factor in 15% to 20% [extra to the price] for unsold seats. There’s no chance of unsold seats or beds for an OTA,” Cooper says.

“As long as room exists for growth with our model at the rates we’re experiencing then… we don’t need to make that jump. I believe we can keep on growing at 30% per annum for the foreseeable future.”

Instead, he has set his eyes on the continent with the first international website hard-launched in Sweden at the start of 2015. The main attraction is that Scandinavia boasts the highest penetration of holidays sold online, up to about 60%.

And while Cooper enjoys preaching to the converted, he still believes that markets such as Germany and Italy, which have particularly low penetration points, will come round to booking online. “It seems inevitable to me, not just because it is easier and the quality of the experience is better,” Cooper argues. “The value proposition that an OTA can provide for a beach holiday is higher, making it better value.

“The Germans will probably find their reticence will be broken down as the young become older. Do I see a point where Germans are 50% booking online? Yes. How long will it take? It is difficult to say.”

Big adjustments
Cooper is also deeply aware of the effort required to launch successfully an OTA overseas, compared with the many bed banks that have launched in the UK and then trodden foreign paths.

He says: “It is different for every market; it is not about taking 200,000 hotels and selling them there. It is about offering completely different product [relevant to the market].”

And while Cooper has one eye firmly set overseas for future expansion, he has no intention of moving operations there, even with the much-anticipated changes coming to the Package Travel Directive.

He adds: “We haven’t yet got full clarity as to what the regulations will look like or how onerous they will be.

“I certainly think any benefits one can get by moving offshore would be negated by the cost of the value proposition of being UK-based and Atol-protected.”

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