On the Beach shares tumble as it tears up guidance amid bookings slowdown
On the Beach has torn up its guidance for the forthcoming year after warning that tensions in the Middle East have sparked a sharp slowdown in bookings.
The online travel agent previously forecast pre-tax profit of between £39m and £43m.
“Whilst the group has limited exposure to destinations in the Middle East, it has experienced a significant slowdown in demand following the onset of conflict in the region, particularly to destinations such as Turkey, Greece, Cyprus and Egypt,” the London-listed company said.
“The timing of when the conflict will end and the shape of recovery in demand to these destinations are unknown.”
On the Beach has been “working round the clock to support directly impacted customers in resort and to enable a return home as soon as possible,” chief executive Shaun Morton said.
On the Beach shares fell 14.5 per cent to 165p on Thursday morning. The stock is down by more than a quarter since the start of the year.
Travel sell-off
The move adds On the Beach to a growing list of London-listed travel companies that have suffered sharp share sell-offs following the outbreak of war in Iran.
Low-cost airline Easyjet has seen its shares slide by a fifth over the past month, while package holiday business Jet2 has fallen by 11 per cent.
The price of oil shot back above triple digits on Thursday morning, rising as much as nine per cent in Asian trading following the news two tankers were struck in the Gulf.
An Iraqi news agency broke the news that 38 crew members have been rescued from the vessels while one person has died.
It comes after Iran vowed to prevent “one litre of oil” leaving the region until the strikes from the US and Israel stop. The Israeli military said it had launched an “extensive” wave of air strikes targeting Tehran overnight.
The International Energy Agency (IEA) made an intervention on Wednesday to cap oil prices with the release of a record 400 million barrels from emergency oil reserves in a bid to contain spiking prices on Wednesday – but market reaction remained muted.
The IEA’s executive director Faith Birol said on Wednesday the market “challenges we are facing are unprecedented in scale”.
And yet Brent crude – the international bench mark for oil – barely reacted to the move, holding firm above the $90 mark. Meanwhile, the FTSE 100 swung back to a loss, shedding 0.5 per cent in the day’s session.
Analysts at investment bank Macquarie have said the ongoing tensions around the Strait of Hormuz could push the price of Brent crude to “$150 or higher”.
“The timeline for an extremely large oil price move is very short,” they said, adding that a few weeks of closure for the strait – which around a fifth of the world’s oil supply flows through – would trigger a “domino effect”.
Bookings on the up
Before the more recent turbulence, On the Beach reported a 10 per cent increase in bookings in the six months to the end of February, with bookings from repeat customers rising 19 per cent.
The company said more and more users are booking holidays with their phones, with a 58 per cent jump in bookings made directly via the app.
On the Beach is also hoping to get business from AI chat tools, having recently submitted its app to ChatGPT.