January peaks will be ‘significantly influenced’ by COVID-19, says On The Beach

January peaks will be ‘significantly influenced’ by COVID-19, says On The Beach

OTA reports £46.3 million loss in full year trading up date, but says model is resilient

OTA On The Beach expressed doubt that the January peaks will materialise in 2021 due to ongoing COVID restrictions and government policy.

In a full year trading update to October the firm said booking volumes and the timing of the 2021 peak “will be significantly influenced by the evolution of the  COVID-19 pandemic”.

However the firm added: “Whilst the wider environment therefore remains uncertain, the board remains confident in the resilience and flexibility of the Group’s business model and believes there is an unprecedented opportunity to significantly increase market share over the medium to long term as demand returns.”

On The Beach said it “will continue to evaluate internal and external opportunities that will both increase scale and deliver value for shareholders”.

The trading announcement saw the OTA  report a £46.3 million pre-tax loss for the year to September 30.

The results compared to a pre-tax profit of £19.3 million in 2019, with the direct impact of Covid-19 measured at £41.7 million due to cancellations, expected cancellations and administrative expenses.

Despite the results, On the Beach said its liquidity remains strong, with total cash at September 30 standing at £36.5 million, excluding £25.8 million of customer monies held in trust.

The overall cash position had since improved to £51 million at November 30, it added, with monthly cash burn of £2 million if no revenue is received.

The company also said its £75 million revolving credit facility had remained undrawn since an equity placing in May, and said it believed there was “an unprecedented opportunity to significantly increase market share as demand returns” as it continues to evaluate opportunities “to increase scale and deliver value for shareholders”.

It said it had issued total cash refunds of £165 million since March 15, and said it was still awaiting £4 million in refunds from airlines for cancelled flights where it had already paid out to customers.

Simon Cooper, chief executive, said: “There is no doubt that 2020 has significantly impacted the entire global travel industry and that the effects of the pandemic will have lasting impacts on the way the industry conducts business for many years to come.

“I am pleased to have witnessed and experienced the professionalism and resilience of our team members in coping and dealing with the many challenges that Covid-19 has presented and I would like to thank them, on behalf of the board, for all of their hard work for our customers.”

He added: “On the Beach continues to successfully build a leading position as more consumers discover the ease of use and vast choice of beach holidays across our platforms.

“The flexibility and asset light nature of our business model together with our recently strengthened balance sheet and the actions we have taken since the middle of March means we are well placed to capitalise on the inevitable structural changes in the market post Covid-19. As a result, the board continues to look to the future with confidence.”

Full-year guidance for 2021 has been suspended, with a further trading update due at the company’s AGM on February 5, 2021.