On The Beach Group PLC (LON:OTB) has upped its ad spending and is offering more discounts to grab market share.
The online holiday retailer said these measures are “helping” to drive “strong” sales growth for summer departures.
READ: On The Beach starts to gain market share after Thomas Cook’s burnout
House broker Peel Hunt said the marketing investment implies an extra cost of £4mln and cut its pre-tax profit forecast by 5% to £38.5mln.
The company has been tackling the “unprecedented opportunity” left by the collapse of Thomas Cook and expects the extra spending to bear fruit when summer comes.
The gap in flight capacity has led to “significant” increases in prices, accentuated by the Boeing 737 MAX grounding.
The beach holiday-focused travel agency said airline seat prices are not expected to normalise in the financial year to September.
“On the Beach has a highly resilient business model in a turbulent market and we believe that each bout of volatility leaves it better-placed to add value in the future,” analysts at Peel Hunt said in a note.
Shares dipped 2% to 397.8p on Thursday at the opening bell.