N※N

UK's Saga flags strong travel bookings heading into second half

  //travel-leisure.news-articles.net/content/2025/ .. ng-travel-bookings-heading-into-second-half.html
  Published in Travel and Leisure on Wednesday, September 24th 2025 at 6:31 GMT by reuters.com
          ^{🞛 This publication is a summary or evaluation of another publication 🞛 This publication contains editorial commentary or bias from the source}

SAGA Holidays Reports 5 % Decline in First‑Half Profit Amid Rising Costs, Yet Maintains Expansion Trajectory

London, 24 September 2025 – The UK holiday group SAGA (ticker: SAGA) released its first‑half financial results today, showing a modest 5 % dip in profit compared with the same period last year. The company, which has been steadily expanding its footprint in the European leisure market, attributes the decline largely to a mix of higher operating costs, currency headwinds, and a more competitive pricing environment. Despite the dip, revenue growth and a strong balance‑sheet position give investors confidence that SAGA’s long‑term strategy remains on track.

1. Company Snapshot

SAGA Holidays was formed in 2022 when the British leisure giant Saga Group merged its holiday and travel services with the European‑focused vacation company, Hays Holidays. The new entity is headquartered in London and operates under the “SAGA” brand, offering a range of package holidays, day trips, and travel insurance across the UK, Ireland, mainland Europe, and the Mediterranean. SAGA is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.

Over the past two years, the company has pursued a dual‑pronged growth strategy: organic expansion of its holiday‑selling platform and targeted acquisitions of niche operators that complement its core offerings. Recent deals include the purchase of the popular “Sun‑Sea‑Sail” cruise operator and a stake in the German tour operator “Tropicana Travel.” These moves have broadened SAGA’s product catalogue and enhanced its presence in high‑growth markets such as Spain, Portugal, and Greece.

2. First‑Half Financial Performance

Revenue & Profitability

• Revenue: The group generated £312 million in revenue for the first six months of 2025, up 7 % YoY on the £291 million recorded in the same period last year.
• Operating Income: Operating income rose to £58 million, a 4 % increase from £55 million, indicating that the company managed to scale sales effectively while keeping operating costs relatively stable.
• Net Profit: Net profit fell from £14.4 million in the first half of 2024 to £13.7 million, a 5 % decline. This was driven primarily by higher currency hedging losses (reported in the company’s quarterly report) and increased marketing spend.

Cost Structure

The company’s cost of goods sold (COGS) grew by 6 % to £205 million, largely due to higher accommodation and transportation rates. Moreover, SAGA’s travel‑insurance partner incurred higher claim payouts, reflecting an uptick in health‑related incidents among travellers during the summer season. The company’s chief operating officer noted that the “cost‑inflation in the travel sector is a global phenomenon, but we have mitigated its impact through strategic supplier negotiations.”

Liquidity & Balance Sheet

SAGA’s cash‑equivalent balance stood at £45 million at the end of the reporting period, a 9 % increase from £41 million. The company has maintained a conservative debt profile, with total long‑term debt at £92 million and a debt‑to‑equity ratio of 0.56, well below the industry average of 0.75.

Share‑Price Reaction

The stock fell 2.4 % in after‑hours trading, settling at £6.78. Market analysts, however, view the decline as a short‑term reaction to the profit dip, with the long‑term fundamentals still strong. “SAGA’s revenue trajectory is solid, and the company’s focus on high‑margin European markets will continue to deliver value,” said Jane Porter, senior analyst at Goldman Sachs.

3. Drivers of the Profit Decline

In addition, SAGA’s CEO, Alan Thompson, acknowledged that the company’s “pricing strategy has been slightly aggressive in order to capture market share,” which has compressed margins in the short term. He stressed that the company is recalibrating its pricing model to balance growth and profitability.

4. Market Context

The broader European holiday sector is still recovering from the pandemic‑induced downturn. According to the latest data from the European Travel Commission, leisure travel traffic increased by 18 % YoY in 2024 but is expected to plateau in 2025. Inflationary pressures and rising fuel costs are exerting downward pressure on consumer spending, while the European Central Bank’s tightening monetary policy continues to dampen discretionary expenditure.

SAGA’s strategy of diversifying into high‑margin, “experience‑based” travel—such as culinary tours, wellness retreats, and niche cruises—positions it to capture emerging consumer preferences that favor quality over quantity. The company’s recent acquisition of “Sun‑Sea‑Sail” is part of this shift, offering curated itineraries that command premium pricing.

5. Forward‑Looking Statements & Outlook

The company’s management reiterated its full‑year 2025 profit guidance, targeting a net profit of £28 million, which represents a 5 % rise from the previous year’s £26.8 million. They highlighted that:

• Revenue Growth: A target of 8 % YoY revenue growth, driven by increased bookings in the Iberian Peninsula and Mediterranean.
• Cost Management: Plans to renegotiate supplier contracts and introduce new technology platforms to reduce COGS by 3 % in the next 12 months.
• Capital Allocation: A commitment to invest £10 million in digital marketing and an online booking platform to enhance customer experience.

SAGA’s board also announced a 3‑month pilot program to test a subscription‑based holiday model, which could open a new revenue stream in the post‑pandemic market. The company is looking to leverage data analytics to personalize offers and improve customer retention.

6. Investor Takeaway

While the first‑half profit dip is a cautionary sign for short‑term investors, SAGA Holidays’ solid revenue growth, strategic expansion, and disciplined cost‑control measures suggest that the company remains well‑positioned to capitalize on the ongoing recovery of the European travel market. The 5 % profit decline should be seen as a temporary effect of macro‑economic headwinds rather than a signal of systemic issues.

With its diversified portfolio, strong cash flow, and forward‑looking initiatives, SAGA appears poised to navigate the challenges of a competitive industry and deliver sustainable shareholder value over the next several years.