Shares in On the Beach Group (LSE:OTB) fell 12.5% after the online travel company suspended its full-year profit guidance as the outbreak of conflict in the Middle East triggered a sharp slowdown in bookings to some of its most popular destinations, including Turkey, Greece, Cyprus and Egypt.
The Manchester-based firm, which had been targeting adjusted pre-tax profit of between £39-43 million, said the timing of any recovery in demand remained too uncertain to maintain that guidance.
It comes despite what had been a strong start to the year, with a record trading day on 1 February and second-quarter departure volumes up 34% year on year. Bookings in the first half of the financial year were up 10%.
The Iran conflict, which erupted at the end of February, has sent shockwaves through the global travel industry. More than 23,000 flights have been cancelled since hostilities began, with major hubs in Dubai and Doha temporarily closed or restricted.
The conflict has dented demand not just for Middle Eastern destinations but also for popular Mediterranean holiday spots, which have seen a knock-on slowdown in bookings.
With interim results due on 12 May, On the Beach said it continued to trade profitably, pointing to its asset-light model and low fixed costs as a buffer against the disruption.
The board said it remained confident in its medium-term targets of £2.5 billion in total transaction value and £100 million EBITDA.
Analyst Anna Barnfather at Panmure Liberum noted that the shares had been down 1.6% over the last month and 15.7% in the year to date as worries about a slowdown in international travel intensified as the conflict in the Middle East stepped up.
"We believe the company is well placed to remain profitable this year but will likely experience subdued demand and higher cancellations while the conflict continues."
** UPDATE: Adds share price and broker reaction **