On The Beach Regulatory News (OTB)

This announcement contains inside information as stipulated under the market abuse regulation (EU no. 596/2014) as it forms part of UK law by virtue of the market abuse (amendment) (EU exit) regulations 2019 (SI 2019/310).

25 February 2022

On the Beach Group plc

("On the Beach" or the "Group")

AGM Trading Update

On the Beach Group plc (LSE: OTB.L), a leading UK online retailer for beach holidays, issues the following trading update for its financial year to date, in advance of its Annual General Meeting to be held today.

Summary

- Prior to the emergence of the Omicron variant in November, Group sales* in September and October exceeded FY19 levels (the last full financial year not impacted by COVID)

- The Omicron variant heavily impacted Group sales in November, December and early January. However, Group sales returned to FY19 levels on 13 January 2022

- In the 4 weeks to 23 February 2022, Group sales were up 50% on FY19, as travel restrictions were eased

- In line with its stated strategy, the Group is continuing to invest in its customer proposition, brand, technology and customer service capabilities to ensure that it is well positioned to continue to take market share as the travel market recovers

Update on trading and liquidity

After 18 months of COVID affected trading, On the Beach experienced green shoots of recovery at the start of the current financial year. Group sales for October 2021 exceeded the comparative month in FY19, carrying forward the positive momentum from September 2021, driven by the easing of international travel restrictions and the success of the Group's free COVID test promotion.

The emergence of the Omicron variant triggered the reintroduction of widespread travel restrictions at the end of November 2021, leading to a substantial reduction in consumer confidence, search traffic and booking volumes, throughout December and into early January 2022. Pleasingly, the Group has experienced a significant strengthening of traffic and booking volumes since the reduction and subsequent removal of travel restrictions by the UK government in early and late January respectively.

Daily booked Group sales exceeded FY19 levels on 13 January 2022 and the delta between the current period and FY19 has been increasing steadily since this date.

Group sales since the start of the financial year, including the period affected by Omicron, are down 2% vs FY19 (up 389% vs FY21), however over the last four weeks Group sales are up 50% vs FY19.

In line with its strategy, the Group has materially invested in the proposition to capture share as it emerges from the pandemic. This includes offering a differentiated customer experience with lounges and fast track, increasing headcount in technology and customer service areas, and investing in above the line media to drive awareness of the brand.

The Group's cash position as at 23 February 2022 was £19m, which reflects significant investment in funding low deposit schemes and offline marketing. This figure excludes £61m of customer prepayments held in Trust. The Group also has an undrawn £75m credit facility.

Short Haul progress

Given the experience of the past 24 months and short term concerns about cost of living increases, customers looking for holidays to 2, 3 and value 4 star hotels in the Spanish mainland, Canaries, Balearics and the Algarve have been booking with shorter lead times vs FY19. Group sales into this product have been strengthening over the last 4 weeks as consumer confidence in overseas travel grows and restrictions continue to ease.

Planned short haul airline capacity to On the Beach destinations for summer 2022 has recently surpassed capacity for summer 2019. As a result, the Group also expects to see a substantial lates market, with competitive prices for both flight and hotel inventory supporting the ongoing recovery.

Early bookings for summer 2022 have been stronger into higher value, more premium hotels, particularly for destinations in the Eastern Mediterranean and the actions taken during the pandemic, as set out below, have positioned On the Beach well to take share of these early bookings.

By continuing to pay hotelier partners promptly throughout the pandemic, the Group has successfully increased both its direct contracting share (now 90%) and access to new premium hotels that were previously exclusive to other operators.

On 26 December 2021, On the Beach launched its enhanced customer proposition, including investing in airport fast track for all customers and a free lounge for customers booking premium holidays in summer 2022.

Whilst the Group is also focused on capturing share of 2, 3 and value 4 star holidays as that segment of the market strengthens, investments in the customer proposition have enabled the Group to:

- target the premium segment of its addressable market (since the start of the financial year 30% of hotel sales are in hotels that are new to the Group or on improved terms);

- increase the overall mix of sales into premium hotels (71% vs 59% in FY19); and

- capitalise on a shift in booking mix into higher value destinations.

Long Haul and B2B developments

Despite ongoing restrictions for some destinations, the Group's Long Haul offering, which has also benefitted from the improvements to the proposition, continues to make good progress. Long haul sales in the year to date are up 349% vs FY19 and now account for 9% of Group sales (FY19: 2%).

The Group's B2B businesses, Classic Collection and Classic Package Holidays, traded well prior to Omicron and, despite the lack of B2B footfall throughout December 2021 and January 2022, total B2B sales in the YTD are up 35% on FY19.

*Group sales: the total transaction value of holidays sold during the period, before cancellations.

Simon Cooper, Chief Executive of On the Beach Group plc, commented:

"After what has been a very difficult time for the travel industry, it has been incredibly pleasing to see consumer confidence and demand return in line with the loosening of travel restrictions in the UK and our destinations. The Group's proactive actions taken throughout the pandemic have led to increased Group sales in the higher value 4 and 5 star hotels, particularly for holidays to the Eastern Mediterranean. Our sales patterns continue to evolve to our core destinations and while we are seeing shorter lead times for these holidays, we are hopeful that the increasing consumer confidence will result in a strong lates market in those regions.

"Our customer first attitude and proposition has also been reflected in our record Trust Pilot score of 4.5, further supporting our decision to refund our customers throughout the pandemic promptly and in advance of receiving funds from airlines. This would not have been possible without the continued hard work of all colleagues across the business. While we are mindful of the ongoing inflationary pressures impacting our core consumer base, we look to the future with renewed confidence and believe On the Beach is favourably positioned to continue to gain market share as demand for beach holidays further normalises."

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About On the Beach

On the Beach is a consumer-centric disruptor on a mission to continually democratise easy access, hassle free, great value holidays. Having invested in proposition, technology, brand and service, our asset light model is well positioned to continue to attract and retain the widest possible audience of beach holidaymakers. We are a leading online retailer in the UK short haul beach holiday market. By expanding into B2B and Long Haul channels, we have doubled our UK addressable market, and have a long‐term vision to become Europe's leading online retailer of beach holidays.