Skift Take
While plenty of European travel companies have struggled to cope in a difficult operating environment, On the Beach has prospered. In an uncertain world, its flexible approach to holidays means that it is able to take advantage without some of the risk that others face.
In travel it can pay to be flexible.
The industry is beholden to the type of external forces that are easily able to bring down companies.
The price of oil, terrorism, industrial action and an erupting volcano have in recent years caused havoc for plenty of businesses.
In most cases those that have felt the most pain are the traditional players. Owning assets such as hotels or airplanes makes it much harder to pivot away from trouble.
For Simon Cooper, the founder and CEO of On the Beach, an online travel agent based in Greater Manchester, England, the ability to move fast is key to survival and prosperity.
“We have a flexible business model. We have zero commitment to product. We're incredibly agile, which enables us to react to the challenges and the opportunities in the market,” he says.
The benefits of this ability were shown in the company’s most recent set of full-year results, issued in December. A pre-tax loss of $3.1 million (£2.5 million) in 2015 turned into a profit of $21 million (£17 million) in 2016.
Part of the turnaround can be pinned on the fact that last year’s figures don’t include shareholder interest payments following its listing on the London Stock Exchange in September 2015. Even so, the performance was still a vast improvement, an especially impressive feat given the current climate.
Wyn Ellis, a leisure analyst at stockbroker Numis, said the results showed that "the foundations are in place for continued strong profit growth", driven in part by the "ongoing structural shift to online."
Graham Neary, who writes at investment site Stockopedia, was similarly impressed with the results.
"I quite like the economics of the business: it has generated a very high return on equity this year, and the capital required to maintain the brand, the websites and its technology do not look particularly intensive...
"There are macro risks and the international expansion may take a long time to bear fruit but overall, I'd be more positive on this compared to the average stock."
For established tour operators like TUI Group and Thomas Cook, with their flight schedules and hotel commitments,
