On the Beach’s surprise £20m deal for travel agent platform

ONLINE travel company On the Beach has delivered a surprise by dipping its toe in the offline booking market.

It has announced the £20m acquisition of Classic Collection, a booking platform that sells holidays through high street travel agents.

Investors reacted positively to the move, and were also buoyed by an announcement that its profits will be in line with expectations.

On the Beach chief executive Simon Cooper said: “We operate in a market where circa 60pc of bookings are made online and we have never addressed a market that books its holiday offline.

“We believe … we can launch a hybrid of the two [businesses] with a portal to a network of high street agents.”

Founded by Mr Cooper in 2004, On the Beach was subsequently backed by private equity firm Livingbridge. It was sold to Inflexion Equity Partners in 2013 in a deal worth £73m before a 2015 float that valued the company at £240m. It is a member of the FTSE 250 index, with a stock market valuation topping £600m.

Shares, which rose 15.7pc to 476p following yesterday’s announcement, had fallen by more than a third since May.

“It won’t have escaped most people’s attention it has been pretty hot here for about three months,” said Mr Cooper. “Against that backdrop, those who are trying to sell sunshine holidays probably haven’t had a fantastic time.”

Larger travel firms such as Tui and Thomas Cook have warned over the hot weather.

Panmure Gordon analyst Mark Irvine-fortescue called On the Beach’s reiteration of its profit expectations “reassuring”. The acquisition of Classic Collection “surprised us somewhat”, Mr Irvine-fortescue said.