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On The Beach starts to gain market share after Thomas Cook’s burnout

The failed travel company booked a fifth of UK beach holiday passengers, causing what OTB called a “material shift in market dynamics” once it went bust

On the Beach Group - On The Beach gains market share over Thomas Cook’s burn

On The Beach Group PLC (LON:OTB) is gaining some market share following the collapse of Thomas Cook but said it will only be when next summer's bookings start to build that it will really start to pack up stronger sales.

The failure of the world's oldest travel agent, which had a 20% share of beach holiday capacity, has caused what OTB called a “material shift in market dynamics” as the lack of seat capacity has pushed flight prices up, especially for trips over this winter and for travel to Eastern Mediterranean destinations.

READ: On The Beach grabbing "unprecedented" opportunity from Thomas Cook downfall

OTB said in its full-year results statement that it had created “an unprecedented opportunity” to gain market share in the medium term, despite the consumer environment continuing to be challenging.

Expecting that seat supply will normalise during the coming months, management's strategy will be to "focus on price competitiveness and to increase the visibility of all of the group's brands".

Thomas Cook’s liquidation hit OTB’s full-year profit before tax and revenue by £7.7mln and £7.1mln respectively, due to one-off exceptional expenses related to alternative travel arrangements for stranded customers and lost margin on cancelled bookings.

Adjusted profit before tax for the year to 30 September was still up 3% year-on-year to £34.6mln on revenues up 41% to £147.5mln, with a flat 3.3p dividend.

House broker Peel Hunt said OTB is increasing visibility and is growing market share, with the results consistent with a pre-close statement in October.

“Revenue growth may be weak in this quiet quarter because of discounting and the shortage of flight capacity, but when capacity normalises for summer 2020 we expect OTB to grab market share and grow profits,” the analysts said in a note.

The shares were searching for direction in early trading, up a couple of pennies to 436p.

Quick facts: On the Beach Group

Price: 283.5 GBX

LSE:OTB
Market: LSE
Market Cap: £446.12 m
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