On The Beach, the package holiday firm, has reported an improvement in bookings since the onset of the Iran war, but caution among holidaymakers persists, leading to later booking patterns. The company has reinstated its annual profit outlook, albeit at a lower level than analysts had previously anticipated, due to the disruption caused by the conflict.
Profit Forecast Reduced
Last month, On The Beach suspended its forecasts amid concerns that the conflict would negatively impact holiday bookings and warned that profits would suffer. The new forecasts indicate an adjusted pre-tax profit in the range of £18 million to £25 million, significantly lower than the previously expected £39 million to £43 million range. This revision sent shares tumbling by approximately 16% on Tuesday morning.
Impact of the Iran War
Although On The Beach has limited exposure to Middle Eastern countries, it experienced a sharp slowdown in demand following the US-Israel war with Iran that began in early March. The company cited a "rolling programme of cancellations" to the United Arab Emirates, a surge in customer inquiries about trips to regions near the conflict, and a "higher than normal level of flight schedule changes" as exacerbating factors.
Demand for holidays remained subdued due to the conflict's knock-on effects on consumer confidence and concerns about potential travel disruption over the summer, including reports of jet fuel shortages threatening flights.
Recovery in Bookings
Despite these challenges, On The Beach noted that booking activity has returned to more normal levels since the end of March. Over the last six weeks, the volume of bookings has increased by 9% ahead of the peak summer months. However, industry-wide, consumers are increasingly booking summer holidays closer to the departure date, indicating hesitation or a preference for greater flexibility.
Victoria Scholar, head of investment for Interactive Investor, commented: "Shares have plunged by around 15% today reflecting the profit slowdown amid weak demand for holiday destinations like Dubai and Egypt because of tensions in the Middle East. Consumers are also booking later, creating uncertainty for the online travel agent. The company will be hoping for a flurry of late bookings and a strong summer trading performance to offset a challenging start to 2026."
