The UK online travel platform OnTheBeach appeared poised to capitalise on the AI revolution transforming the travel industry, until geopolitical turmoil in the Middle East disrupted its momentum.
The company, a leading specialist in package beach holidays, city breaks, and now cruises, has aggressively invested in proprietary technology to stay ahead in a competitive market dominated by legacy tour operators.
In recent years, OnTheBeach positioned itself as “AI-ready,” integrating artificial intelligence to enhance customer experiences, streamline operations, and open new distribution channels.
In a trading update on Thursday (12 March), the company reported strong carryover momentum from a record FY25 into the current year, with FY26 bookings up 10% overall and a notable 19% surge from repeat customers.
Travelled volumes in Q1 rose 14%, while Q2 departures jumped 34%. App bookings soared 58%, now accounting for 38% of total sales, fuelled by enhanced functionality and user-friendly features.
On the AI front, OnTheBeach said it has connected its inventory to major AI platforms and submitted its app to ChatGPT as a new discovery and booking channel.
Investment in technology has also enabled rapid expansion into City packages since launch in Q4 2024. On the Beach said it is currently taking bookings to 180+ City destinations and has more than doubled booking volumes year on year (“YoY”).
The Group launched its Cruise offer early in FY26 and is well-positioned to take share in this large, resilient, high-growth market.
“Momentum has been building since we entered 2026, recording our highest ever volume trading day on 1st February and a 34% increase in Q2 travelled/departed volumes. Our customer loyalty continues to grow with repeat customers up 19% in the period,” said CEO Shaun Morton.
“The advancements in both our proposition and app functionality are enabling customers to search for great value holidays. I am confident that On the Beach’s enhanced strategy to scale into new markets, underpinned by its asset-light operating model remains a key competitive advantage.”
The impact of the war
Following the outbreak of conflict in the Middle East. involving escalated tensions and military actions impacting the region, demand for popular sun destinations such as Turkey, Greece, Cyprus, and Egypt slowed significantly.
Despite the company’s relatively limited direct exposure to the most affected areas, the ripple effects were pronounced enough to create uncertainty around the timing and shape of any recovery.
As a direct result, OnTheBeach suspended its previous FY26 guidance for adjusted profit before tax of £39 million to £43 million.
The company said that it continues to trade profitably and generate cash, thanks to its low fixed-cost structure, but the geopolitical shock introduced too much variability for reliable forecasting.
Morton also addressed the human element amid the disruption. “Following the onset of the conflict in the Middle East, our operational teams have been working (a)round the clock to support directly impacted customers in resort and to enable a return home as soon as possible.”
The market reacted swiftly to the news, with shares dropping more than 13% in trading following the announcement.
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