The UK travel sector is poised to return to a shutdown as deep as at the height of the COVID-19 pandemic, according to the founder of On The Beach.
Speaking at last week’s Travolution Summit, Simon Cooper, chief executive of the leading OTA, warned firms’ hopes to repair their finances could be hit by suppressed consumer confidence.
He said winter usually offers just three short opportunities to make profit at half terms and at Christmas, but that with most destinations off sale load factors will have been “murdered”.
Cooper said the sector is fully expecting a “far deeper, darker winter” than would have been the case in March or May.
“You can assume that the low levels of bookings we’re coming into this period with, combined with a low appetite to book will mean it will be hugely loss making for anyone to operate the winter.
“So, as we go further into the winter there will be less and less operations and we’ll end up with almost the same level of shutdown that we had back in March, April, May,” he said.
Cooper added that figures for bookings for next year are being flattered by deferred travel from this summer and the traditional January peaks could be hit by low consumer confidence.
“Imagine we hit January and there’s very little operating because…it would be loss making, what does that do to consumer appetite to place bookings to travel in June, July, August time?
“We are expecting a different profile to booking patterns than we would normally see and that will be unhelpful for everyone in travel because there is the need for companies to repair balance sheets.”
Cooper said On The Beach has taken the opportunity of the COVID-19 crisis to look at its technology requirements for the long term.
And he said the OTA will be looking for opportunities to grow into new markets and possibly through acquisitions by developing a modular tech stack into which new brands can be easily plugged.
“From the off we would always approach any challenge with positivity,” he said.
“In the middle of February we were saying look there is a hurricane going to blow through the travel industry and it’s going to obliterate a whole host of companies.
“We don’t know how long it’s going to last, we don’t know whether this is going to be a three month or six month or 12 month event, or even beyond.
“So, what can we use that as an opportunity to do that we wouldn’t be able to do in a normal trading environment? If revenues are going be next to zero for a period it takes away certain pressures, and maybe allows you to focus on other things.”
As well as dealing with immediate operational and support challenges, On The Beach has begun to focus on its “longest term strategic objectives” with a full workforce in place, Cooper added.
“We’re not looking at what do we need to do to trade better next quarter, we’re looking at what is our five to 10 year opportunity, and how can reposition the platform, the brand, the talent and the organisation to prepare for that,” he said.
“We’re fortunate that we have a relatively modern tech stack, but of course this is a tech stack that has its roots in 2009 through 2012/13. In tech that’s quite old.
“The foundations of the platform were designed to do what we wanted to do as a company then. What we want to achieve as a company today is different.
“Over the last three, four or five years some of our expansions have come, rather than platform re-engineering, through bolt on modules to the existing core.
“This gives us an opportunity to build some of those modules within the core so the platform is fit for the next five to 10 years.
“That means you’re not having to make decisions about do I do it properly and it takes longer or do I hack it because hack on top of hack on top of hack will lead to a very painful place in due course.”
On The Beach had made two significant acquisitions in the years leading up to 2020 with rival OTA sunshine.co.uk and trade supplier Classic Collection joining the group.
It has also expanded into overseas markets in northern Europe. Future growth will be assisted by having a platform that seamlessly integrates market nuances like supplier feeds and payments.
“Some of the core work to the platform is essentially to allow you to more seamlessly, more efficiently re-platform any brands that may look attractive so we could use that as a stepping stone to more quickly enter and penetrate a new market,” Cooper said.