On the Beach’s Classic Collection deal divides industry opinion
James ChappleOn the Beach’s £20 million acquisition of Classic Collection is a “smart idea” at a “good price” – if agents are willing to “cosy up with the enemy”.
The OTA snapped up the tour operator last week with a view to capturing a share of the offline B2B beach holiday market through an exclusive new trade portal called Classic Online.
While the new platform will offer agents a broader portfolio spanning Classic’s B2B and On the Beach’s B2C product, it remains to be seen whether the trade will support it.
“It [the deal] is definitely eye- catching,” said Martin Alcock, director of the Travel Trade Consultancy.
MORE: What does On The Beach’s Classic deal tell us about the travel M&A climate?
“On the Beach has been behaving more and more like a traditional tour operator. They direct contract hotel product, employ ground-handling teams, run offline advertising – things not usually associated with OTAs.
“Classic Online is another step on that journey. It’s a smart idea, capitalising on challenges posed by increased regulation.
"However, On the Beach has been a major competitor for independent agents over the past decade; they may be reluctant to cosy up with the enemy.”
Mark Farlow, partner at corporate finance analyst Alantra, added he felt On the Beach had “got a good price” but struggled to see – beyond taking what On the Beach has said at “face value” – what it can gain from Classic.
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Deal to broaden 'loyal' agents' beach holiday portfolio
The total cost to the On the Beach group will run to £14.6 million, with £2.7 million deferred for 12 months and another £2.7 million allocated in shares.
Classic’s existing management team, led by managing director Nick Munday, will continue to run the business while collaborating with the OTA to deliver Classic Online.
On the Beach chief executive Simon Cooper hailed Classic’s “excellent reputation” throughout the trade, adding the collaboration would allow the OTA to secure a share of the five million short-haul beach holidays sold offline each year.
Munday added the partnership would give Classic’s “loyal network” of agent partners access to a wider portfolio of mainstream beach holiday product and luxury options.
James Chapple
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