On The Beach would consider acquisitions for long-haul and overseas growth

Firm weighing up further targets following successful integration of sunshine.co.uk Continue reading →

UK OTA On the Beach says it would consider acquisitions to help it grow in long-haul business or break into other overseas destinations.

The firm said it was continuing to weight up further targets after the successful integration of sunshine.co.uk this year which is bought for £12 million.

Simon Cooper, chief executive of the Manchester-based firm said it gets offered many opportunities to acquire firms, only one in ten of which are worth considering.

“As a reasonably high profile business within travel, not just in the northwest of England but nationally and across Europe, we are likely to be presented with every single opportunity even if they have the most remote connection to travel,” he said.

Sunshine.co.uk’s trading since being taken over in May was described as being in line with expectations.

Cooper said there was a high degree of overlap with Sunshine.co.uk having a well-established brand that was able benefit from coming under On The Beach ownership.

He said there are likely to be opportunities to acquire other complimentary businesses with a beach focus.

“We sell a lot of short-haul beach but never made great inroads into long-haul. We could focus organically on growing but could go out and acquire a specialist long-haul retailer of ‘fly-and-flop’ holidays.

“Internationally we have clearly taken the decision with Scandinavia to enter organically and benefit from the infrastructure we have in the UK and the capabilities we have in retailing in the UK.

“We know we have to pay to establish a brand in an overseas market so where we able to find a brand that has already got branded traffic in a market we could enter another international territory.”

Cooper said On The Beach’s experience in Scandinavia is that it takes around three years on investment to establish a brand a new overseas market organically.

The calculation On The Beach will make if any prospects arise is to what extent it can curtail that process and therefore how more cost effective an acquisition would be.

“Regardless of how strong and efficient your technology and marketing functions are in driving non-branded traffic you have to establish a brand in order to break even online.

“We are selling a product that costs £1,500 and it’s very difficult to persuade someone to part with that sort of cash with a brand they have never heard of.”

On The Beach revealed its overseas operations in Sweden and Norway have seen revenue growth of 48% in the year to the end of September taking it to £1.7 million.

It recorded an EBITDA loss of £2 million which the firm said reflected “continued investment to drive market share growth”.

Online cost per unique visitor increased 15% to £1.12. The firm announced as a result of improved trading in Sweden it will launch a third international site in Denmark early next year.