On the Beach shares slide as Iran war hits British holiday demand

LONDON: British package holiday group On the Beach reinstated its annual profit forecast on Tuesday but at a level below its previous estimate, sending its shares 18 percent lower as the company grapples with a slowdown in bookings due to the Iran war.
Customers have pulled back on holidays to destinations such as Turkiye, Cyprus and Egypt near the conflict zone, forcing the group to withdraw forecasts in March as US-Israeli strikes against Iran ‌upended global ‌travel and hurt consumer sentiment.
While bookings have stabilized ‌since ⁠the end of ⁠March, many travelers are taking a “wait and see” approach leading to subdued demandas the conflict continues for the third month, On the Beach said on Tuesday.
The company forecast adjusted profit before tax of 18 million pounds to 25 million pounds ($24.4 million to $33.9 million) for the year ending September 30, compared with 39 million pounds to 43 million pounds expected earlier.
Adjusted pretax ⁠profit for the six months ended March 31 fell ‌72.6 percent to 2.3 million pounds after ‌On the Beach recorded a roughly 700,000-pound hit from cancelations related to the Middle ‌East.
However, the company reported a 9 percent growth in bookings in ‌the most recent six weeks as it heads into the key summer period, which it hopes will help offset pressures from cancelations and a shorter gap between bookings and departures.
“Experience tells us that consumers value their summer holiday incredibly highly ‌and I am confident that On the Beach is well placed to satisfy this demand and deliver ⁠a solid summer trading ⁠performance,” CEO Shaun Morton said.
RBC Capital Markets analysts said that while there is likely to be a “lagging impact” on travel from the conflict, On the Beach focuses on direct bookings with customers, leaving it “well placed to recover strongly against an improving backdrop.”
Tourists across Europe and beyond are rethinking travel plans in a world of expensive oil, tight jet fuel supply, higher costs and Middle East conflict disrupting popular routes. Many are booking later and building in flexibility.
On the Beach shares were down 14 percent to 145 pence per share at 0745 GMT. Including Tuesday’s losses, the stock has fallen almost 28 percent since pulling forecasts on March 12.