Online travel retailer On the Beach Group plc (LON:OTB) issued an update on Thursday ahead of its AGM, in which it outlined its intention to go after Thomas Cook’s (NSE:THOMASCOOK) share in the beach holiday market.
“As outlined in the Group’s Preliminary Results on 27 November 2019, there exists an unprecedented opportunity to take market share in the beach travel market following the failure of Thomas Cook Group (“TCG”). On the Beach has responded to this opportunity, more than doubling offline marketing spend to drive awareness of the On the Beach brand. Management expects that a proportion of this investment will payback in the second half of the financial year. Alongside this exceptional marketing spend, the Group has also focused on price competitiveness to continue to drive long term market share gains.” the company’s statement read.
On the Beach continued, stating that the failure of Thomas Cook has led to an overall reduction in capacity and as a result, a ‘significant’ year-on-year seat price increase. The situation has been exacerbated by issues with the Boeing 737 Max and in turn, seat prices aren’t expected to normalise within the current financial year.
The Group said its action to secure market share was helping to drive strong sales growth for summer 2020. Its international sites continued to deliver efficient performance and the Group’s Board is continuing to evaluate opportunities to enter new markets.
On the Beach Group comments
Simon Cooper, Chief Executive of the company, commented:
“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.”
Following the update, the company’s shares rallied 4.64% or 18.80p to 423.80p per share 06/02/20 13:57 GMT. Peel Hunt analysts reiterated their ‘Buy’ stance on On the Beach Group stock. The Group’s p/e ratio is 18.93, their dividend yield is 0.78%.