Tui Group predicts summer 2022 recovery despite Omicron ‘weakening momentum’

Tui expects summer 2022 bookings will recover close to pre-pandemic levels.

Europe’s largest travel group’s projection was supported by a “stronger starting position and a travel environment underpinned by the continued success of vaccinations”.

However, Tui cautioned: “The increased media coverage of rising incident rates and the emergence of new Omicron variant has weakened this positive momentum, particularly for winter.”

The programme from UK, which typically books further ahead, is already 52% sold for May with total bookings for the key August holiday period up 17%.

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“At this early stage, we believe summer ‘22 volumes will recover close to normalised summer ‘19 levels,” the company said.

The forecast came as Tui Group reported its first quarterly positive earnings [ebitda] since the start of the pandemic of €160 million for the three months to September 30.

Quarterly pre-tax losses were trimmed to €71 million from €836 million the previous year.

This came as quarterly revenue rose by €2.1 billion to €3.4 billion year-on-year, “reflecting the success of vaccination programmes and the rebound of leisure travel, particularly across continental Europe during the summer”.

The group handled 3.8 million holidaymakers across the summer peak, up from 1.8 million a year earlier. It carried a total of 5.4 million holidaymakers in the 2021 financial year.

The annual pre-tax loss of €2.4 billion was down from €3.1 billion in the 2020 financial year.

Tui reported a “very encouraging” pipeline of 2.2 million total bookings for next summer, up 535,000 since October 3 “driven by a mix of re-bookings and new bookings, reaffirming the intention to travel and continued appetite for a Tui summer holiday”.

A total of 1.4 million bookings have been added across winter 2021 and summer 2022 since October to give a pipeline of 4.1 million.

The group added: “It remains difficult to forecast the further course of the pandemic and its impact on customer behaviour.

“In view of the uncertain environment, the executive board believes it would not be appropriate to issue a specific forecast for the new financial year 2022 at this time.”

The Caribbean and Canary islands are expected to remain key winter destinations.

A recent capital increase to give total liquidity of €3.5 billion will help offset the lower winter working capital swing, the company said.

Chief executive Fritz Joussen said: “Looking ahead to the 2022 summer season, we are positive.

“The indicators and trends are intact, summer 2022 is well booked and currently in line with capacity expectations.

“Presently, at the end of 2021, we are seeing the fourth wave, among others in our home market Germany. At the same time, many countries in southern Europe are very stable, with low incidences and high vaccination rates. These are destinations that were also well booked and very safe last winter.

“However, it is crucial to look ahead to spring and summer 2022. It is still too early to make a real forecast for the 2022 summer season. But we are optimistic that tourism will be able to recover to 2019 levels next summer.

“At the same time, we also know from 2021 that bookings will be made much later and at shorter notice. Bookings for summer 2022 from all Tui markets are already very encouraging.”

He noted a “major, lasting trend” of customer demand for higher-value travel and more add-on services.

“Holidaymakers are willing to spend more money on, for example, room upgrades, a higher quality hotel or individual, authentic experiences.” Joussen said.

“There has also been a slight increase in the average length of stay.

“At the moment we are seeing a strong shift towards the Mediterranean countries.

“We expect recovery in the long-haul business to follow a little later. But the long-haul destinations are on the way back, including North Africa and the Cape Verde islands.”

Looking forward, he said the new post-pandemic Tui will be “leaner, more digital and more efficient”.

“But it will continue to set standards in tourism in terms of quality, innovation, and sustainability,” Joussen said.

“What makes us unique is our enthusiasm for what we do: creating holiday experiences for our customers.

“The desire for this will be greater than ever after two years of pandemic. This also makes all of us at Tui optimistic for 2022.”

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