Sales soar for Tui but the cost of living crisis could soon bite | Tui Travels


HHundreds of delayed or canceled flights, an engine fire on a Tui plane at Manchester Airport and a dismal apology from the managing director… it hasn’t been an easy summer for the world’s biggest tour operator.

On Wednesday, a Tui report on bookings and revenue from April to June will shed light on the entire holiday industry during its peak period.

A surge in travel demand has caused chaos at airports across the UK and elsewhere in Europe as they struggle to recruit baggage handlers and security staff after mass layoffs during the Covid pandemic.

Tui insists it has canceled fewer flights than some of its rivals, including easyJet and British Airways, which have canceled thousands in recent months. But British boss Andrew Flintham issued an apology to customers in June and promised to learn the lessons. In July and August (so far) it has flown all scheduled flights and claims it takes nine days, on average, to issue refunds.

After May’s mid-term cancellations, Tui said bookings had slowed in the industry – not surprising given the chaotic scenes at airports – but he still expects sales this summer are close to pre-pandemic levels. The British are particularly keen to travel: in mid-May, more of us had bought Tui holidays than at the same time in 2019.

This summer, many families are making their first trip abroad since the start of the pandemic. They spend a lot of money on longer trips and upgrade to four or five star hotels and better rooms.

Spain, Greece, Turkey and Mexico are popular destinations, with all-inclusive Mexico vacations not costing much more than a vacation in Greece, says Tui.

Germans are also desperate to travel abroad, and summer travel bookings in Europe’s biggest economy are back at or even above 2019 levels, according to a recent survey by data group GfK.

At Tui, second-quarter revenue soared to 2.1 billion euros from 250 million euros a year earlier, as demand increased. The group operated at 71% of its pre-pandemic capacity during the period. Its hotels and resorts business posted a third straight quarter of positive underlying operating profit since the start of the pandemic.

For cruises, the company hopes for a recovery in the second half; many ports were still closed earlier this year and its ships could only navigate limited routes.

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, says: “Tui doesn’t just run flights – they have a much wider package holiday business. In some ways, that’s what makes Tui more defensive – he has more to offer and plenty of cross-sell opportunities. But restoring full capacity is also a much higher priority for her: the cash losses when you have planes and huge hotels to fill are huge.

Like others in the vacation industry, Tui is facing challenges as the cost of living crisis takes hold and people limit their spending. The company has the potential to do well in the future thanks to its more diverse offering, but analysts warn that further turbulence is likely at the moment.

After nine years at the helm, general manager Fritz Joussen is due to bow out at the end of September and hand over to Sebastian Ebel, Tui’s financial director. He will have to steer the company through more turbulence as the UK and Germany risk sliding into long or deep recessions, mainly because of Russia’s war in Ukraine.

Britain is on course for a recession lasting more than a year and double-digit inflation, the Bank of England warned last week as it hiked interest rates for the sixth consecutive time . “The world could soon tip over to the brink of a global recession, just two years after the last one,” said the International Monetary Fund’s chief economist, Pierre-Olivier Gourinchas. warned last month.

This summer vacation could be the last hurray for many.




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