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On the Beach takes advantage of Thomas Cook's death

Lianna Brinded
Head of Yahoo Finance UK
Photo: Getty

Britain's largest online beach holiday travel agent, On the Beach, is taking advantage of the death of major tour operator Thomas Cook (TCG.L) by ramping up its marketing spend.

The group confirmed in its full year trading update that while the collapse of Thomas Cook, 23 September 2019, had a “significant impact on the package travel industry,” it actually posed a key opportunity for On the Beach.

“This has created an unprecedented opportunity to take additional market share at an increased rate,” it said.

“As a result, the Group has started to strategically increase its marketing investment both online and offline to attract new customers to onthebeach.co.uk, sunshine.co.uk, Classic Collection and Classic Package Holidays, and is well positioned across all channels. The Group will update shareholders further on release of the Preliminary Results.”

In September, Thomas Cook finally collapsed after months of trying to seal bailout cash from Chinese conglomerate Fosun and a number of other firms.

It led to an immediate cessation of trading — stranding 150,000 passengers across the globe — leading to the biggest ever peacetime repatriation of British people. All passengers have now been returned home.

Thomas Cook has been under pressure to keep up with the evolving travel industry for some time. It was a pioneer of the package holiday — combining flights, accommodation, and sometimes other perks such as food into one bundle.

But, while more and more travel companies became online-only operators, Thomas Cook’s business model still had costly overheads, such as 500 physical travel agencies.

Finance firm Shore Capital pointed out in its note to clients on Tuesday that “given the collapse of Thomas Cook, which has taken a significant impact of the package travel industry, the question remains whether the group can take advantage of the additional market share at an increased rate that is up for grabs.

“On the Beach remains confident it can, however, in order to stay at the front of this opportunity it has decided, despite the time of the year, to make a material step-up in marketing investment. This will target both online and offline campaigns, including more non-traditional advertisement for the Group, in the hopes to attract new customers. We expect this increase in marketing to result in a shortterm cost for a modest long-term gain. The key factors for seeing a return from this marketing strategy include how fast seats can return to the market and the normalisation of seat prices post Thomas Cook.”

Simon Cooper, CEO of On the Beach said:

"I would like to thank all teams across the business for their exceptional response following the compulsory liquidation of TCG in ensuring that customers were either re-booked or refunded in the shortest possible time whilst maintaining our high quality customer experience standards. On the Beach has an exciting opportunity to significantly increase its market share over the short to medium term by leveraging its strong brand and core capabilities."

READ MORE: Auditors had concerns about Thomas Cook going bust for years