Ocean Holidays ‘on track for profit’ Andrew McQuarrie
Ocean Holidays believes it is on track to move out of a loss-making period and into profitability as it plans further inroads with the trade and looks to maximise its new Atol provision. Co-chief executive Harry
Hastings said the US specialist had “returned to being profitable on a current trading basis” as he reported agents accounted for 40% of Ocean Florida bookings during peaks – up from 20% last year. Parent company Ocean Holidays
posted a £2.5 million net loss in the 16 months to April 30, 2024, following a period of losses throughout the pandemic and during the delayed reopening of the US market.
However, Hastings noted the
extended reporting period took in two January-April low seasons in addition to significant “exceptional items” and said £7.5 million in convertible loan notes and a £1 million injection from a private group of investors reflected the company’s underlying stability. “The normal operations of the
business are profitable,” he said. “We achieved around £1 million in Ebitda [earnings before interest, taxes, depreciation and amortisation].” Plans for the trade include
the launch of a cruise-and-stay programme later this year, which will build on existing relationships with Carnival, Royal Caribbean and Disney Cruise Line, while an online booking portal is planned for early next year.
Supplier demands for extra financial cover ‘hitting firms’
Ian Taylor Abta Travel Finance Conference
A strong appetite for travel is adding to the financial pressure on some businesses as suppliers demand additional financial security to cover increased bookings. That is according to Richard
Buxton, Inspire Europe chief financial officer, who told Abta’s Travel Finance Conference in London on Tuesday: “Suppliers are starting to ask for more security and that has an impact on working capital.” Buxton said: “Demand for
travel is excellent. Suppliers are also 6 6 MARCH 2025
experiencing that and feeling more at risk from a failure. They feel more exposed by the level of demand.” He insisted: “I understand it from
a suppliers’ point of view. Everyone wants to protect their financial position. [But] it creates a challenge [when] we’re being asked for security at the levels we are now, when we already have failure insurance.” Buxton suggested: “Exposure levels
are ballooning and suppliers are not happy with their risk position. All are having to provide this level of security now irrespective of their payment records. It’s hard to manage and makes it harder to expand your business.”
We’re putting more
investment into the other consortia than we have in any prior year – we’re in growth mode
The company is also looking
to widen distribution after moving from The Travel Network Group to become a member of the Hays Travel Independence Group (IG). Having previously held its
own Atol, Ocean now operates under Hays’ tour operating licence, which Hastings said had reduced “administrative pressure” and cost. “When we looked at the Hays proposition, the time we won back
was the winning factor,” he added. Becoming a Hays Travel IG
member has enabled Ocean Florida to boost distribution organically, Hastings confirmed, but the business is also ramping up efforts with other agency groups and consortia. “We’re putting more investment
into the other consortia than we have in any prior year,” he said. “We’re doubling down and we’re in active growth mode with all of them.” Ocean Holidays remains
96% owned by its founders – Hastings and his brother George alongside Daniel and David Ox. “If you think of owner-operated
tour operators founded since 2000, you would be hard-pressed to find many of our size and scale that have stayed owner-managed,” Hastings said.
Richard Buxton
Adam Murray
Ingrid Cawood, chief financial
officer at inbound operator Mika Travel, agreed increased demands for security are affecting cashflow, saying: “Borrowing [to provide security] when interest rates are high is eating into margins.” Flight Centre chief financial
officer Adam Murray told the conference: “The pandemic opened a lot of lenders’ eyes to the risks in this industry. That has not disappeared, and it flows the whole way through the credit cycle.” He also identified “a trend coming out of Covid where most customers
[of Flight Centre] were incredibly late in paying”. Murray said: “We’ve invested in credit control and been zealous on that, charging for late payments, taking a much harder line.” Buxton warned the increase
in employers’ national insurance contributions and national living wage rates from next month would be “significant for every business” and “reflected in pricing across all businesses”. He said: “I see suppliers’ notifications of price increases regularly. The outlook for travel is optimistic, but managing costs is going to be key.”
travelweekly.co.uk
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