| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 123.43 | -44 |
| Intrinsic value (DCF) | 96.96 | -56 |
| Graham-Dodd Method | 1.14 | -99 |
| Graham Formula | 1.71 | -99 |
On the Beach Group plc (OTB.L) is a leading UK-based online retailer specializing in short-haul beach holidays, operating under the On the Beach brand. Founded in 2003 and headquartered in Manchester, the company serves customers through multiple digital platforms, including onthebeach.co.uk, sunshine.co.uk, and onthebeachtransfers.co.uk. It operates across four segments: OTB (core brand), International (Sweden, Denmark, Norway), Classic (luxury packages), and CPH (business-to-business portals). The company leverages a tech-driven, asset-light model to offer competitively priced holiday packages, focusing on flexibility and customer experience. As a pure-play online travel agent (OTA), On the Beach capitalizes on the growing demand for digital-first holiday bookings, particularly in the short-haul leisure market. With a strong presence in the UK and expanding Scandinavian operations, the company is well-positioned in the consumer cyclical sector, benefiting from post-pandemic travel recovery trends while navigating industry challenges like fluctuating demand and competitive pricing pressures.
On the Beach Group presents a high-risk, high-reward investment case, reflected in its beta of 2.11. The company operates in the volatile travel services sector, with revenue of £128.2 million and net income of £13 million in the last fiscal year. Its asset-light model and strong cash position (£96.2 million) provide resilience, while a modest debt load (£2.8 million) offers financial flexibility. The dividend yield (3p per share) may appeal to income investors, though payout sustainability depends on maintaining profitability in a cyclical industry. Key risks include sensitivity to economic downturns, intense OTA competition, and reliance on airline/hotel partnerships. The stock may suit growth-oriented investors bullish on digital travel adoption and European short-haul demand recovery.
On the Beach competes in the crowded online travel agency space with a differentiated focus on short-haul beach holidays, primarily targeting UK consumers. Its competitive advantage stems from: 1) Specialization in beach packages, allowing curated offerings versus generalist OTAs; 2) An asset-light model with lower fixed costs than traditional tour operators; 3) Strong digital capabilities and customer acquisition through performance marketing; 4) Strategic airline partnerships providing dynamic packaging flexibility. However, it faces pressure from larger global OTAs with superior scale and brand recognition. The company's UK focus provides local market expertise but limits geographic diversification compared to multinational peers. Its B2B Classic Collection segment diversifies revenue but remains small relative to core B2C operations. Pricing power is constrained by intense competition, requiring continuous marketing investment (evidenced by thin 10% net margins). The Scandinavian expansion offers growth potential but increases exposure to niche markets with lower barriers to entry. Relative to hybrid operators, On the Beach lacks owned inventory, making it more vulnerable to supplier disputes but also more adaptable to demand shifts.