Shares in online package holiday provider On The Beach (OTB:AIM) dipped 0.7% to 365.5p as it reported predictably weak interim results but said bookings for next summer, while low, are ‘significantly ahead of normal trading patterns.’
In the six months to 31 March 2021, revenues on a GAAP (generally accepted accounting principles) basis were down 79% to £4.4 million and gross profits down 51% to £3.7 million.
Cash burn has remained steady at around £2 million a month, while the firm said it had £29.9 million in cash at the end of May, with ringfenced customer prepayments held in trust of £24.1 million, and access to an undrawn £75 million revolving credit facility.
It comes as the firm decided in early May not to take holiday bookings for departure before 1 September, a move which is looking increasingly prescient given the Government’s tinkering with the ‘traffic light’ system for overseas countries.
FOCUSED ON 2022
On The Beach said it is focused on ‘supporting customers with bookings due to travel this summer’ and taking bookings for winter 2021 and summer 2022, adding that it ‘remains focused on growing its market share in the long term rather than being concerned about summer 2021 volumes’.
The firm believes any potential upside from bookings this summer ‘would be marginal and would be offset by disruption and loss of goodwill for holidays that would need to be cancelled or re-arranged.’
It added that booking volumes for summer 2022 remain low, but are ‘significantly ahead of normal trading patterns’, partially due to the early release of flights for next year by most major airlines.
TRAVEL SECTOR ‘BLINDLY OPTMISTIC’
Speaking to Shares, On The Beach’s chief executive Simon Cooper defended the firm’s decision to not take bookings for holidays this summer, citing low consumer confidence for summer 2021 amid the changing traffic light system, and hit out at the rest of the travel sector for being ‘blindly optimistic’ despite the consistently changing Government advice regarding travel.
Cooper said, ‘We’re far better capitalized than our peers so we can be more pragmatic. The rest of the industry is blindly optimistic and it’s almost a case of close your eyes, cross your fingers and hope. They’re [taking bookings for this summer] because they need the cash.
‘But it would be foolhardy of customers to spend £1,500 of their hard-earned cash on a holiday this summer when the chances are their holiday could be cancelled and they might not be able to get their money back.’