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On The Beach predicts market gains after Cook failure

Posted by Lee Hayhurst on
On The Beach predicts market gains after Cook failure

On the Beach Group has more than doubled offline brand marketing spend to take advantage of the “unprecedented opportunity” last year’s failure of Thomas Cook presents.

The listed Manchester-based OTA has issued a trading update statement to the City for the four months to January 31 ahead of today’s Annual General Meeting.

It says it expects to see the increased investment in its marketing to pay back in the second half of its financial year.

On The Beach’s turn of year TV campaign, featuring a voice over from rock icon Iggy Pop has been widely acclaimed and achieved the highest awareness uplift of any brand in the UK.

The firm said: “Alongside this exceptional marketing spend, the group has also focused on price competitiveness to continue to drive long term market share gains.”

On The Beach revealed a reduction in capacity following the Cook failure has led to significant year on year seat price increases for all departures.

And it said the seat capacity shortfall is “further accentuated by continuing delays in Boeing’s 737 Max aircraft returning to active service”.

The OTA does not expect pricing to return to normal in the current financial year.

“Despite the significant increase in the prices of holidays across the market and the seat capacity constraints, the immediate actions taken by the group to capture market share are helping to drive strong sales growth for summer 2020 departures,” the statement added.

“The group’s international sites have continued to deliver an efficient performance year on year and the board continues to evaluate opportunities to enter new source markets.

“The rollout of Classic Package Holidays continues and as at 31 January 2020, more than 2,300 agents were signed up to the portal.

Simon Cooper, chief executive of On the Beach Group, said: “The actions we have taken in the first four months of the new financial year have accelerated our market share gain and mean we are well prepared to take advantage of capacity returning into the market.

“Our incremental investment into offline marketing activity is helping to drive significant growth in awareness of the brand nationally and we are delighted with the performance of the Classic Package brand in its first year post launch.

“We look forward to providing a more detailed update on progress at the group’s interim results.”

City analysts at Numis said: “With Hays’ retail shops now signed up for Classic Package, we consider OTB uniquely placed to benefit from Thomas Cook’s exit, both online and offline.”

Numis said due to price competitiveness and On The Beach’s marketing spend it has “trimmed” full year profit before tax forecast by 4% but left full year 2021 unchanged.

On The Beach will report Interim Results for the six months to March 31 on May 12.

 

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