On the Beach ‘expects’ financial shake-up of industry as Covid obliterates profit
On the Beach suffered a pre-tax loss of more than £46 million in 2020 as the company said it expects changes to the financial structure of the travel industry.
Chief Executive Simon Cooper said a regulatory shake-up was needed to prevent travel companies from using customer money as working capital.
A move to ring fence money would ‘protect both customers and the taxpayer’, he said.
The comments came as On the Beach reported a pre-tax loss in the 12 months to 30 September of £46,3m, against a profit the previous year of £19.3m.
Despite encouraging vaccine developments, the company said trading remains challenging with regular changes in foreign office advice, onerous entry requirements and quarantine restrictions continuing to impact demand.
On the Beach also warned of further uncertainty during the traditionally peak January booking period.
"In a normal year, holiday bookings would peak in January for travel from March – September," it said. "Booking volumes and the timing of the peak in FY21 will be significantly influenced by the evolution of the Covid-19 pandemic and UK and European Government policy in response to it."
The company added that it remained confident of longer term success.
"Whilst the wider environment therefore remains uncertain, the board remains confident in the resilience and flexibility of the Group’s business model and believes there is an unprecedented opportunity to significantly increase market share over the medium to long term as demand returns," it said.
The company said it has processed £151m in refunds "and unlike many peers in the industry has not issued any vouchers or refund credit notes in lieu of cash refunds".
Cooper, who said its ring-fenced Trust account has protected customer money, said he expected changes to the financial structure of the industry.
"The Group does not rely on cash received for forward bookings to trade. Monies that have been received for holidays that are cancelled by a closure of airspace can be repaid to customers in cash with limited impact on the Group’s working capital," he said.
"Companies operating in the travel industry have historically traded using advance holiday receipts as working capital. We expect and would welcome regulatory changes to the system of financial protection and protection of customer prepayments in the travel industry to protect both customers and the taxpayer."
Cooper added: "There is no doubt that 2020 has significantly impacted the entire global travel industry and that the effects of the pandemic will have lasting impacts on the way the industry conducts business for many years to come.
"I am pleased to have witnessed and experienced the professionalism and resilience of our team members in coping and dealing with the many challenges that Covid-19 has presented and I would like to thank them, on behalf of the Board, for all of their hard work for our customers."
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