On The Beach has recorded a 12% drop in its share price after reporting a "significant slowdown" in demand following the conflict in the Middle East.

The travel retailer said in its latest trading update that despite its limited exposure to destinations in the region, since 1 March, it has seen reductions in demand to destinations such as Turkey, Greece, Cyprus and Egypt.

Due to the uncertainty of the conflict, On The Beach has temporarily suspended its adjusted profit before tax guidance at between £39m and £43m.

The update comes after momentum from its record year in 2025 has continued into the current year, with FY26 bookings from 1 October to 28 February increasing by 10% year-on-year, while bookings from repeat customers jumped by 19%.

Furthermore, bookings made directly through its app increased by 58% in this period, representing 38% of total bookings.

It added that investment in technology has enabled rapid expansion into city packages since Q4 2024, with On The Beach currently taking bookings to over 180 city destinations.

Chief executive at On The Beach, Shaun Morton, stated: "Momentum has been building since we entered 2026, recording our highest ever volume trading day on 1 February and a 34% increase in Q2 travelled / departed volumes. Our customer loyalty continues to grow with repeat customers up 19% in the period.

"Following the onset of the conflict in the Middle East, our operational teams have been working round the clock to support directly impacted customers in resort and to enable a return home as soon as possible.

"I am confident that On the Beach's enhanced strategy to scale into new markets, underpinned by its asset light operating model with no committed inventory to fill, remains a key competitive advantage."

Head of markets at AJ Bell, Dan Coatsworth, said that the crisis in the Middle East has caused "massive turbulence" in the travel industry.

He concluded: "It’s impossible to say with confidence how much business will come its way over the coming months. If the Middle East crisis is prolonged, there is a big chance that UK holidaymakers might opt for a staycation this year and not risk the hassle and stress of wondering if their foreign travels will be upended.

"Plenty of airlines have already suspended flights to Middle East destinations for the foreseeable future, but it looks like this trend might spread further afield if demand weakens more broadly and oil prices stay at elevated levels. Airlines will need to have their planes at full capacity to warrant taking off in a high oil price environment, otherwise it’s not worth their while taxiing to the runway."

---