On the Beach confirms commitment to B2B Classic Collection despite ‘intensified’ competition

Company reports swing from half-year loss to profit

On the Beach has reiterated its commitment to its B2B channel under a single Classic Collection brand despite job cuts as part of a review to return the operation into profit.

The OTA “identified several structural changes” to improve the performance of Classic Collection Holidays and Classic Package Holidays during the winter.

On the Beach confirmed in March the departure of former Classic Collection chief executive Andy Freeth as well as product and commercial director Alex Gavalda.

Releasing improved results for the winter half year to March 31 – with a move from a £5.9 million pre-tax loss to a profit of £600,000 – On the Beach said today: “Both businesses represent a meaningful part of our group, and we remain committed to continuing the growth and supporting the trade with quality service and products.”

However, reporting a first half operating loss for Classic Collection Holidays of £2.7 million and a profit of £500,000 for Classic Package Holidays, the group added: “B2B operates in an increasingly competitive market, particularly post-pandemic, where competition has intensified. 

“To win share in this market, we need to operate with a simple operating model for the benefit of suppliers, agents, and customers. 

“We will be supporting the B2B channel with a single brand trading as Classic Collection, and a single platform solution leveraging group technology and operations.” 

B2B will be a more “closely integrated channel” within the OTA, represent a single segment, and adopt an “agency revenue recognition policy” which will simplify group reporting following a short transitional period, according to the company.

Former agency sales and marketing director Si Morris-Green has taken up the role of director of B2B and will lead the business through its next chapter of growth, the interim financial results statement confirmed. 

“The high street remains an extremely competitive market for B2B sales, which has contributed to a reduction in bookings of 6% on a travelled basis since the prior year,” On the Beach said.

“Despite the changes made in Q4 FY23 to centralise a number of group functions, costs to serve remain high. This has driven the need for a strategic review and conclusion that a simpler operating model is required to serve the B2B market.

“Having recently completed a period of collective consultation, we are providing dedicated support to our teams, including those affected.

“We expect these actions will deliver a significant improvement in operating efficiency and return this channel to profitability.”

On the Beach Group reported an 11% rise in group revenue in the first half of its financial year to £80.8 million with an adjusted pre-tax profit of £4.3 million against a break even for the same period last year.

Meanwhile, On the Beach said it believed its “milestone” sales agreement with Ryanair will help deliver another record summer for the business.

The total transaction value [TTV] of forward bookings for the summer were reported to be 22% ahead of the same time last year.  

On the Beach described the overall market as remaining strong, underpinned by an additional 7% airline capacity to beach leisure destinations for the summer. 

“OTB continues to grow at ahead of this rate, supported in part by our new partnership agreement with Ryanair which ensures we have secure access to this increase in capacity,” the group said.

While the premium market continues to perform strongly, the value segment “remains more challenging, reflecting ongoing cost of living pressures”.

Chief executive Shaun Morton said: “I am pleased to report another strong set of results, marking our ninth consecutive quarter of record performance. TTV was up 22% as we saw strong growth across both volume of bookings and the average value of holidays sold. 

“Our customers are favouring our premium and long-haul beach holidays, whilst making the most of our enhanced customer perks.”

He added: “The signing of our long-term distribution agreement with Ryanair was a milestone achievement in the period. 

“Through this partnership, our customers can now secure free and fair access to Ryanair’s seat supply, and we hope this industry-leading collaboration can be used as a blueprint for how the industry can better work together. 

“In the two weeks since the partnership went live, demand for Ryanair seats has been encouraging and supports the growth of our value proposition that is enjoyed by families across the UK.

“Looking ahead, the summer ’24 forward order TTV is currently 22% ahead of last year which, coupled with our continued trading momentum since the half year, means we are confident of delivering our biggest summer ever.”