On the Beach has seen a “significant downturn” on demand following the outbreak of the war in Iran.
The OTA temporarily suspended its future annual profit guidance as a result.
In a trading update, the company said: ”Whilst the group has limited exposure to destinations in the Middle East, it has experienced a significant slowdown in demand following the onset of conflict in the region, particularly to destinations such as Turkey, Greece, Cyprus and Egypt.
“The timing of when the conflict will end and the shape of recovery in demand to these destinations are unknown.
“Both will impact group profitability and as a result the group is temporarily suspending its guidance of £39 million to £43 million adjusted profit before tax for the full year.
“Despite the volatile environment, the company continues to trade profitably and generate cash because of its asset light model with significantly lower fixed costs, commitments and exposure to increases in variable costs versus the asset heavy tour operators.”
Bosses “remain confident” in delivering a medium term ambition of £85 million in pre-tax profit and £2.5 billion total transaction value (TTV).
“As the group has demonstrated in prior years, OTB’s low cost and flexible operating model is able to react to changes in the nature and timing of holiday booking demand,” the company said ahead of its annual meeting today (Thursday).
On the Beach reported a 10% year on year rise in bookings for the eriod between October 1, 2025 and February 28 this year, with a 19% increase in repeat customers following a record financial year.
The group said: “The later booking pattern experienced across the industry in FY25 has been more pronounced in FY26 and, as a result, bookings with less than 90-day lead times have been particularly strong, with year on year volume growth up 28%.”
Direct app bookings have gone up by 58% in the period following investment in functionality.
On the Beach added: “The group’s AI strategy continues to progress well, through integrations that connect its inventory to all major AI platforms.
“OTB recently submitted its app to ChatGPT, opening a new distribution channel and demonstrating the group’s technology readiness for an AI-first world.
“Investment in technology has also enabled rapid expansion into city packages since launch in Q4 2024.
“On the Beach is currently taking bookings to 180-plus city destinations and has more than doubled booking volumes year on year.
“International expansion through the sale of package holidays from the Republic of Ireland is progressing to plan and is also experiencing significant growth.
“The group launched its cruise offer early in FY26 and is well positioned to take share in this large, resilient, high growth market.”
Chief executive Shaun Morton said: “Momentum has been building since we entered 2026, recording our highest ever volume trading day on 1 February and a 34% increase in Q2 travelled/departed volumes.
“Our customer loyalty continues to grow with repeat customers up 19% in the period.
“The advancements in both our proposition and app functionality are enabling customers to search great value holidays, be that in a city, on a beach or on a cruise ship, and app bookings have increased 58% as a result.
“Following the onset of the conflict in the Middle East, our operational teams have been working round the clock to support directly impacted customers in resort and to enable a return home as soon as possible.
“I am confident that On the Beach’s enhanced strategy to scale into new markets, underpinned by its asset light operating model with no committed inventory to fill, remains a key competitive advantage.”
Results for the six months to March 31 are due to be released on May 12.