28th Feb 2020 14:38
(Alliance News) - Holiday firm On the Beach Group PLC on Friday became the latest travel company to warn on its earnings, with the spread of the coronavirus leading to a "small but noticeable" slide in Summer 2020 demand.
On The Beach cautioned that its numbers for the year ending September 30 will now be "below current market expectations".
The company explained: "The group experienced a small but noticeable reduction in demand for Summer 2020 travel following the early reports of COVID-19 cases in early February. The reduction in demand has accelerated significantly following the increase in COVID-19 cases in Europe, particularly the spread of the virus to Tenerife."
Tenerife, one of Spain's Canary Islands, is famed for its warm summer weather and is a popular tourist destination among Brits.
On The Beach added: "Whilst this reduction in demand has led to a natural reduction in marketing spend, the Board does not now expect the group to achieve payback in the current financial year on its previously outlined strategic marketing investment.
"On the Beach's asset light business model, low inventory risk and tight cost and cash controls ensure that the group is resilient in a volatile market environment, enabling it to return to profitable growth when the demand for short haul beach holidays normalises."
Earlier in February, the company reported an "unprecedented opportunity to take market share", following the Thomas Cook liquidation, and in turn doubled its online marketing spend.
"Management expects that a proportion of this investment will payback in the second half of the financial year. Alongside this exceptional marketing spend, the group has also focused on price competitiveness to continue to drive long-term market share gains," On the Beach added at the time.
Shares in the company were down 5.6% 313.00 pence each in London on Friday afternoon.
Warnings about the coronavirus continued to pile up earlier on Friday. Blue-chip airlines International Consolidated Airlines Group SA, which operates British Airways, and budget carrier easyJet PLC, warned on softening demand due to the spread of the virus in Europe.
In the US, the operator of the booking.com holiday comparison site lowered its first quarter guidance due to the contagion.
Booking Holdings Inc said the coronavirus had a " a significant and negative impact across our business during the first quarter".
By Eric Cunha; [email protected]
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