Package holiday specialist On the Beach has issued a stark warning to investors, revealing a sharp decline in bookings to popular Mediterranean destinations following the escalation of conflict in the Middle East. The travel group anticipates a direct hit to its profitability, prompting a suspension of annual profit forecasts and sending its share price tumbling by more than 10%.
Significant Slowdown in Demand
The company confirmed that while it has limited direct exposure to Middle Eastern countries, it has experienced what it describes as a "significant slowdown in demand" since the onset of regional hostilities. This downturn is particularly affecting bookings to key holiday destinations including Turkey, Greece, Cyprus and Egypt.
"The timing of when the conflict will end and the shape of recovery in demand to these destinations are unknown," the company stated in its investor update, highlighting the uncertainty facing the travel sector.
Profit Forecasts Suspended
As a direct consequence of the booking decline, On the Beach has temporarily suspended its annual profit guidance. Analysts had previously projected adjusted pre-tax profits between £39 million and £43 million for the full financial year, but these expectations have now been withdrawn pending further clarity on the conflict's resolution.
The warning signals broader trouble for the travel and holidays industry, which is grappling with sudden consumer reluctance to book trips to destinations perceived as potentially affected by the US-Israel conflict with Iran.
Operational Response to Crisis
Beyond the financial implications, On the Beach reported that its operational teams have been "working round the clock" to assist customers directly impacted by the conflict. Chief executive Shaun Morton emphasized the company's commitment to supporting affected holidaymakers.
"Following the onset of the conflict in the Middle East, our operational teams have been working round the clock to support directly impacted customers in resort and to enable a return home as soon as possible," Morton stated.
Popular Destinations Affected
The company sells holidays to numerous resorts across the affected regions, including Dalaman and Antalya in Turkey, Sharm El Sheikh in Egypt, and Greek islands such as Crete and Corfu. It also operates multiple resorts in Dubai, though these were not specifically mentioned as being affected in the latest update.
Contrast with Previous Growth
In a notable contrast to the current downturn, On the Beach revealed that its bookings had actually surged by 10% between October and February compared to the same period the previous year. Bookings from repeat customers showed even stronger growth, increasing by nearly a fifth during that period.
This previous growth trajectory underscores how dramatically the Middle East conflict has altered the travel landscape, transforming what had been a period of robust expansion into one of uncertainty and declining demand for key Mediterranean destinations.
