Tui maintains forecast as booking levels surge to near pre-Covid levels
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Tui Group nears return to profitability as tour group customer bookings rise to approach pre-Covid level
- Tui expects ‘substantially positive’ underlying result before tax
- Average sales prices are about a quarter higher for the winter season
- The company revealed that its summer program had generated 12.9 million bookings
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Tui Group maintained its annual forecast after a strong rebound in summer holiday bookings, despite ongoing widespread unrest at European airports.
Europe’s largest travel company expects a ‘significant positive’ underlying pre-tax result for the fiscal year ending September 30, after a loss of more than £2 billion last year.
The company revealed that its summer schedule had attracted 12.9 million bookings, which was just 9 percent lower than pre-pandemic volume, even as the cost of flight disruption remained at “high levels.”
Popularity: The company revealed that its summer program had attracted 12.9 million bookings, which was just 9 percent lower than pre-pandemic volumes
Bookings were at 94 percent of 2019 levels during the peak holiday months of July and August, with about 5.3 million people traveling with Tui, roughly double the number of travelers in the same period last year.
Customers also paid an average of 18 percent more for their vacations, which the company attributed to the popularity of its summer vacations and the increased share of package products sold.
Meanwhile, average selling prices are currently about a quarter higher for the winter season, but the Anglo-German company expects the winter schedule to be “close to normalized pre-pandemic levels.”
It believes the Canary Islands and the Caribbean will be particularly popular destinations for its customers, and strong demand is also expected in Cape Verde, Mexico and Egypt.
Outgoing CEO Fritz Joussen and finance chief Sebastian Ebel said there is a growing trend among vacationers to seek longer vacations with a bigger budget.
“This is encouraging and shows the current importance of holidays and travel experiences in the post-Corona era,” the couple said.
Tui shares fell 0.5 percent on Tuesday to 136.3 pence, meaning their value is down more than 35 percent in the past 12 months.
The FTSE 250 operations have been affected by cross-border travel restrictions since March 2020.
Sales revived when these barriers were eased, but staff shortages at airports during Easter and early summer led to significant passenger numbers with flight delays and cancellations.
Tui has said it would seek compensation from airports for the disruption, which cost it £66 million in the last quarter.
The company noted that disruption has calmed down in recent months, but inflationary pressures in the UK and Europe are expected to erode holiday demand.
Skyrocketing energy prices following the easing of lockdown restrictions and Russia’s large-scale invasion of Ukraine have put enormous strain on household finances across Europe.
Russ Mold, investment director of AJ Bell, said: ‘TUI suggests Britons still desperately want to go on holiday and are willing to pay higher prices to fly abroad.
“That resilient market is likely to be tested like never before in the coming months, and while a week in the sun may be the priority for now, there comes a point where it’s just not affordable, even for middle-to-higher income families.”