On the Beach claims Lowcost’s 'aggressive bidding and discounting' 'disrupted' trading

The group released a trading update for the four months to January 31 in advance of its Annual General Meeting to be held today (Thursday), and reported a 20% increase in revenue year-on-year.

Along with “hotel partners in the Western Mediterranean holding back capacity”, On the Beach highlighted the impact on its trading of the Low Cost Travel Group before it failed in July.

The group said in a statement: “Trading in the period February to mid-July 2016 was [also] disrupted by the aggressive bidding and discounting of the Low Cost Travel Group, prior to their failure, and as such, the group’s year-on-year comparators will be significantly softer in the next six months.”

The company said the first quarter of its financial year (calendar Q4) was historically the quietest trading period for the group and booking volumes were impacted by “the timing of the low cost carriers’ seat release for spring/summer capacity which resulted in a noticeable shortening of lead times”.

The group said the 20% growth in revenue year-on-year for the first four months to the end of January was partly down to booking volumes and revenue growth strengthening since the new year and a “continuation of lower cost paid search marketing”.

“Our growth in the period is also particularly pleasing given that many of the group’s key hotel partners in the Western Mediterranean are holding back capacity to sell in the late market,” said the statement, adding that this had led to a slowing of peak season sales to destinations such as Majorca, mainland Spain and the Algarve.

“This trend should however lead to greater availability in these destinations in the late market with an offsetting increase in sales volumes,” continued the statement.

The On the Beach board believes the oversupply of seats into the Western Mediterranean would present the group with “multiple opportunities to leverage its scale and technological capability to consolidate its position”.

The group said it had continued to optimise its platform and search technology and grow brand awareness through a nationwide offline campaign, the full benefits of which it expected to “flow through” in the remainder of this financial year.

Following a successful trial and testing period, On the Beach has also now fully launched its international proposition, www.ebeach, into its second market, Norway.

Simon Cooper, chief executive of On the Beach Group, said: "Our strategy of investing in our brand, hotel supply and technology to drive growth has delivered performance in line with the board’s expectations; with consumers attracted to our wide range of value for money beach holidays.

"Our second nationwide television advertising campaign started on Christmas Day and has helped drive this strong performance as our brand awareness continues to grow.

"The board remains confident in the group’s outlook and will continue to evaluate opportunities to enhance its market share position."