On the Beach Shares Plunge as Middle East Conflict Dents Holiday Demand

Shares in On the Beach Group (LON: OTB) are currently down over 12% following the release of a trading update that highlighted a significant slowdown in demand due to the ongoing conflict in the Middle East.

The travel company, known for its online platform for package holidays, has temporarily suspended its full-year guidance as a result of the uncertain geopolitical situation.

Prior to the conflict, OTB had experienced strong momentum, building on a record FY25. Bookings for FY26 were up 10%, with repeat customers driving growth at 19%. Travelled volumes increased by 14% in Q1 FY26 and surged by 34% in Q2 FY26.

The company’s investments in its app functionality have paid off, with app bookings increasing by 58% and representing 38% of total bookings. OTB’s foray into city packages and international expansion in the Republic of Ireland have also contributed to growth.

The company has also been making in-roads into the AI travel planning space. The group recently submitted its app to ChatGPT, opening a new distribution channel and demonstrating the Group’s technology readiness for an AI-first world.

However, the conflict in the Middle East has significantly impacted demand, particularly for destinations such as Turkey, Greece, Cyprus, and Egypt, despite OTB’s limited exposure to the region. The timing and shape of the recovery in demand to these destinations remain uncertain, leading the company to withdraw its previous guidance of £39m to £43m Adjusted PBT for the full year.

Despite the challenging environment, OTB emphasizes that it continues to trade profitably and generate cash, due to its asset-light model. This model allows the company to react to changes in demand without being burdened by high fixed costs or committed inventory.

The Board remains confident in achieving its medium-term ambition of £2.5bn TTV, £100m EBITDA, £85m PBT, and 38.7p EPS.

Shaun Morton, Chief Executive of On the Beach Group plc, commented, “I am confident that On the Beach’s enhanced strategy to scale into new markets, underpinned by its asset light operating model with no committed inventory to fill, remains a key competitive advantage.”