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On The Beach acquires Classic Collection Holidays

The online travel agent has branched out into in-person bookings with its acquisition
August 16, 2018

On The Beach (OTB) has traditionally been an online-only travel agent. But with its £20m acquisition of Classic Collection Holidays, it’s made the jump into in-person bookings. Classic Collection sells luxury beach holidays through a network of third-party branch-based travel agents. Analysts at Numis reckon that around 40 per cent of the market for short-haul beach holidays are booked offline. But the plan is to launch a Classic Online product, a business-to-business version of OTB’s direct to customer offering, to get Classic’s existing 1,800 independent travel agents to add a digital element to their business.

IC TIP: Buy at 473p

Analysts at Numis expect Classic Online to reach around £3m in cash profits by 2021. During the year to October, the overall Classic Collection business reported £2.6m in adjusted cash profits and had £18m in gross assets. Management expects the overall deal to be earnings enhancing within the first year of ownership. 

The announcement also included a reassuring update for the 19 weeks to 15 August, which quelled concerns of a profit warning before the full year, after OTB had missed expectations at the half-year results. Warm weather in the UK and the FIFA World Cup discouraged some travellers from booking a holiday, but cuts to marketing spend mean that full-year profits should be in line with expectations.