On the Beach Reports Strong Growth but Suspends Guidance Amid Middle East Conflict

On the AI front, the Group says it has integrated its inventory with all major AI platforms and has submitted its app to ChatGPT, opening a new distribution channel. Translation: they are positioning to be discoverable – and bookable – wherever customers search in an AI-first world.

New verticals: city breaks and cruise broaden the engine

On the Beach is no longer just beaches. Since launching city packages in Q4 2024, it is now selling to 180+ city destinations and has more than doubled city booking volumes year on year. International expansion from the Republic of Ireland is “progressing to plan” with significant growth.

Cruise launched early in FY26. Cruise is a large, relatively resilient market with higher basket sizes; early entry gives OTB a chance to take share using its tech-led, asset-light model.

Later bookings intensify: flexibility is paying off

The industry-wide trend of later booking has become more pronounced in FY26. Bookings with less than 90 days to departure are up 28% year on year. That timing shift can be tricky for operators with committed inventory, but On the Beach’s asset-light model – no aircraft, no hotels to fill – is designed to flex to where demand appears.

In plain English: OTB can wait for demand to materialise and then match customers with flights and hotels dynamically, helping protect cash and margins in volatile conditions.

Middle East conflict dents demand; guidance suspended

From 1 March 2026, the Group has seen a significant slowdown in demand after the onset of conflict in the Middle East. While On the Beach says it has limited direct exposure to Middle Eastern destinations, the chill has spread to popular nearby markets including Turkey, Greece, Cyprus and Egypt.

With the timing of any resolution unknown and the recovery path unclear, the Group has suspended its full-year guidance of £39m-£43m adjusted profit before tax (Adj. PBT). That is the right move from a governance perspective – visibility is impaired, and summer trading is still ahead.

Why the guidance pause matters

• Uncertainty has increased: profitability now depends on when demand rebounds to the affected destinations and how quickly travellers regain confidence.
• Balance sheet and cash dynamics: the company reiterates it continues to trade profitably and generate cash, supported by a lower fixed-cost, asset-light model versus asset-heavy tour operators.
• Medium-term targets reaffirmed: management still aims for £2.5bn total transaction value (TTV), £100m EBITDA, £85m profit before tax (PBT) and 38.7p earnings per share (EPS) in the medium term. Those are ambitions, not guidance for this year.

My take: strengths versus risks

Positives:

• Operational momentum is real – 34% growth in Q2 travelled volumes and a record trading day on 1 February suggest OTB captured demand well before the recent shock.
• Channel shift to the app (38% of bookings) and AI-enabled distribution should lower customer acquisition costs and lift repeat rates over time.
• Diversification into city breaks, cruise and the Republic of Ireland expands the addressable market and reduces reliance on a single product or geography.
• Asset-light flexibility is a genuine competitive edge when booking patterns get later or destinations shift suddenly.

Risks:

• Conflict-related demand shock: if travellers continue to avoid affected regions, near-term volumes and mix could be pressured. The extent and duration are not disclosed and inherently uncertain.
• Pricing and margin dynamics: later bookings can compress or support margins depending on flight and hotel availability at short notice. Execution matters.
• New verticals are early: cruise and expanded city breaks look promising, but scale and profitability are yet to be proven in a tougher market backdrop.

What to watch into the 12 May 2026 interims

• Booking trajectory post-1 March: evidence that demand is stabilising or re-routing to alternative destinations.
• App mix and repeat rates: whether app share holds above one-third and repeat bookings remain elevated, supporting marketing efficiency.
• City and cruise contribution: early revenue mix and growth signals from these newer lines.
• Cash generation and costs: confirmation that the asset-light model continues to underpin profitability in a volatile period.
• Any reinstatement or framing of guidance: even qualitative guardrails would improve visibility.

Bottom line

This is a tale of two halves: standout growth up to late February, followed by a sudden, external shock that has clouded earnings visibility. On the Beach cannot control geopolitics, but it can control its channel mix, tech stack and flexibility – and those levers are clearly moving the right way.

If demand normalises, the app-led, diversified model should convert volume into profit efficiently. Until then, investors should expect caution on near-term earnings and focus on the underlying indicators of health: bookings momentum, app share, repeat customers and cash generation.