On the Beach has warned its full-year profits will likely come in below previous forecasts owing to the spread of the Covid-19 coronavirus in Europe.
The OTA said the the increase in Covid-19 cases in Europe, “particularly the spread of the virus to Tenerife”, had hit summer 2020 travel demand.
In a trading update, issued on Friday (28 February), On the Beach said it had already experienced a “small but noticeable” reduction in demand.
“The reduction in demand has accelerated significantly following the increase in Covid-19 cases in Europe, particularly the spread of the virus to Tenerife,” said the OTA.
“While this reduction in demand has led to a natural reduction in marketing spend, the board does not now expect the group to achieve payback in the current financial year on its previously outlined strategic marketing investment.
“With the expectation that the spread of the Covid-19 is going to cause significant disruption for a period of time, the board believes that the group’s full-year results for the year to 30 September 2020 will be below current market expectations.”
The OTA though said its business model would allow it to bounce back quickly once the crisis abates.
“On the Beach’s asset-light business model, low inventory risk and tight cost and cash controls ensure that the group is resilient in a volatile market environment, enabling it to return to profitable growth when the demand for short-haul beach holidays normalises.”