On the Beach Group LON: OTB reported record first-half booking volumes for fiscal 2026 and reinstated full-year guidance, even as Chief Executive Shaun Morton said the travel market continues to face pressure from weaker consumer confidence, shorter booking lead times and the impact of conflict in the Middle East.
Morton told analysts that bookings rose 7% year over year in the first half, while departed volumes increased 22% across the period and 35% in the second quarter. He said the company’s performance was “significantly ahead of the market,” supported by growth in winter beach holidays, city breaks and bookings from Ireland.
City breaks more than doubled year over year, while bookings from Ireland increased 74%, Morton said. The company also reported that bookings over the most recent six-week period were up 9%, with month-to-date bookings for summer up 17%.
Company Reinstates Guidance Amid Later Booking Trends
On the Beach said it is now confident in delivering adjusted profit for the year of between GBP 18 million and GBP 25 million. Morton said demand had “improved and settled” since the company’s March update, although customers are continuing to book closer to departure than in prior periods.
Morton said the later booking pattern was a market-wide trend rather than one specific to On the Beach. He said bookings from October to February were up 10% year over year, but demand shifted from March 1 as customers planning holidays to the Middle East and Eastern Mediterranean destinations slowed significantly. That reduced first-half booking growth to 7% and further shortened lead times.
“Customers are still planning to travel. They’re just making that decision closer to departure,” Morton said.
Morton emphasized that On the Beach reports on a booked basis, while some tour operators and airlines report on a traveled basis. As a result, he said the pressure from shorter lead times is more visible in On the Beach’s first-half financial results but should normalize over the full year.
Revenue Declines Despite Higher Booking Volumes
For the first half, On the Beach reported traveled bookings of 201,600, up 22% year over year, and total booking volumes of 324,200, up 7%. Total sales rose 2% to GBP 626 million.
Adjusted revenue fell by GBP 6.4 million to GBP 52.9 million. Morton attributed the decline to several factors, including reduced demand for higher-margin summer bookings tied to Middle East uncertainty, mix dilution from growth in lower-value and shorter-duration holidays such as city breaks and winter beach trips, and competitive pricing across the market.
In response to analyst questions, Morton said the gap between total transaction value growth and revenue growth was driven in roughly equal parts by shorter-duration holiday mix, price competition and the impact of the Middle East conflict, including a shift from Eastern Mediterranean to Western Mediterranean destinations.
Marketing costs fell by GBP 4.5 million year over year, which Morton attributed to improved efficiency, including a larger share of bookings coming through the company’s app, brand channels and repeat customers. Marketing as a proportion of revenue declined to 41% from 44%.
Overheads rose by GBP 3.1 million to GBP 21.6 million, primarily due to technology investment. Morton said EBITDA and profit before tax were each around GBP 6 million lower than the prior year, reflecting the revenue shortfall.
Technology, App Usage and Repeat Bookings Improve
Morton said the company’s technology investments are delivering measurable benefits. Search conversion increased 24%, and nearly 40% of all bookings are now made through the company’s mobile app. Monthly active users on the app rose 29% year over year, and more than 90% of customers access the app at some point between booking and travel.
The company also reported gains in retention, with in-year repeat bookings up 24% and two-year repeat rates up 17%. Morton said city breaks are contributing to repeat activity, but not entirely driving it. Winter beach travel also grew, with nearly 15% growth in people traveling to winter beach destinations.
On the Beach has expanded its addressable market through city breaks, cruise and the Republic of Ireland as a source market. Morton said the company’s addressable market has increased to 50 million passengers from 16 million passengers two years ago.
The company now offers more than 80 billion holiday combinations, compared with around 1 billion a few years ago. Morton said 98% of bookings are now automatically fulfilled, up from 60% four years ago. He said the business has increased annual passengers traveled from 1.4 million to 2 million while reducing headcount by 40% over the same period.
AI and Cruise Remain Growth Areas
Morton said On the Beach was the first U.K. package online travel agent in ChatGPT, launched earlier this year, and said further integrations are underway. Traffic coming directly from large language models is now 10 times higher than a year ago, though it remains less than 0.5% of total traffic.
He said customers appear to be arriving on the site better informed, with higher intent, which is improving conversion and marketing efficiency. “Whichever route they come through, they’re coming with higher intent, so the return on spend is better,” Morton said.
On cruise, Morton said the company remains in a “test and learn” phase. The product is available on web and app, and the site is seeing thousands of cruise searches per day. He said On the Beach is not spending money to attract cruise traffic and is instead leveraging existing visitors. Morton said he expects the proposition to be in the desired position by the end of the financial year, and certainly by the end of the calendar year.
Balance Sheet Remains a Strength
Net debt declined by GBP 2 million year over year to GBP 27 million, and the company reported GBP 88 million of headroom on its facility. Morton said this followed GBP 33 million of capital committed to share purchases and dividends during the period.
The trust account balance stood at GBP 210 million, down about GBP 14 million year over year. Morton said the reduction reflected shorter booking lead times, with customers paying later and therefore less cash held in trust at any given time.
The company declared an interim dividend of GBP 0.01 per share, consistent with the prior year. Morton said the dividend reflected confidence in profit and cash generation.
Looking ahead to fiscal 2027, Morton said the company will continue investing in its proposition and scalability. Asked about the consumer outlook, he said the impact of the Middle East conflict could continue to affect consumers for “at least the next 8-12 months,” but added that On the Beach’s flexibility and market position should support continued growth in share.
About On the Beach Group LON: OTB
On the Beach is one of the UK's largest online package holiday specialists with significant opportunities for growth. Founded in 2004 and listed on the London Stock Exchange in 2015, today over 1.7 million customers find, book and enjoy their perfect package holiday with us every single year.
Our innovative technology, low-cost base and strong customer-value proposition provides a structural challenge to legacy tour operators and online travel agents, as we continue disrupting the market. Our model is customer-centric, asset light, profitable and cash generative.
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