On the Beach's B2B growth 'slower than expected' despite long-haul and premium surge
Ilaria Grasso MacolaOn the Beach’s B2B business has experienced "slower than expected" growth due to increased competition for high street agents’ and homeworkers’ attention.
The OTA on Tuesday (5 December) confirmed its full-service tour operator Classic Collection Holidays’ operating loss more than tripled to £1.3 million in the year to 30 September, up from £400,000 last year.
Meanwhile, its lighter-weight, online-only Classic Package Holidays proposition made an operating profit of £100,000, up from a £300,000 loss during the same period last year.
According to On the Beach, this was due to the B2B market becoming more crowded with tour operators and low-cost carriers competing for high street agents’ and homeworkers’ attention.
The high street market’s post-Covid recovery, the company said, has also been sluggish compared with other segments, such as long-haul and premium, which it said have continued to drive business.
Nevertheless, On the Beach expects its Classic Collection Holidays and Classic Package Holidays brands to return to profitability next year after “deepening its partnerships” with independent agents.
“We expect a return to B2B profitability in FY24, underpinned by the synergies already realised across the group, a focus on product and destinations where we can win with a digital-first approach,” the company said.
It comes as the premium and long-haul segments have continued to drive business, with five-star holidays growing 32% year-on-year as people continue to prioritise their getaways despite the cost of living pressures.
“The group estimates premium to be of a similar size to the value market in terms of passengers, but approximately two and a half times larger in absolute value, and the revenue margin opportunity on each individual booking is also significantly greater,” it added.
Long-haul has also reported a 74% year-on-year growth, with both best-selling destinations such as Mexico and Dubai as well as newer ones – including the US and Mauritius – performing well.
Overall, the company delivered a record transaction value of more than £1 billion for the first time in its history, while group revenue went up by 18.7% to £170.2 million. Adjusted profit before tax came in at £23.6 million.
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Ilaria Grasso Macola
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