UK ‘top booked market’ for Tui as group performance surpasses pre-Covid levels

The UK market remains the most advanced booked for Tui, with bookings up 11% versus pre-pandemic summer 2019.

Overall summer 2022 booking are 85% of pre-pandemic 2019 levels as the company forecast a return to profit in the current financial year after two years of turbulence caused by Covid-19.

Bookings from the key markets of the UK, Germany and Benelux have been “largely unaffected” by the war in Ukraine.

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“Total bookings have been trending strongly with the last six weeks’ bookings firmly surpassing summer 2019 levels, boosted by the return to a more pre-pandemic environment of restriction-free travel,” the company said.

Tui added: “The latest positive booking trends, combined with clear pent-up demand as Omicron-related travel restrictions eased, increasing intention to holiday abroad for a beach holiday and a later booking profile, we are confident in our summer 2022 capacity assumption of close to normalised 2019 summer levels.”

Key trends

Tui identified two key trends – holidaymakers continuing to book more at short notice and at the same time spending more money on their trips.

Europe’s largest travel group saw 11 million bookings made for winter 2021-22 and summer 2022, with five million added since its last update as demand for holidays and confidence in international travel returns.

Only bookings from the Nordics region and Poland remain subdued.

Chief executive Fritz Joussen said: “The strong Easter business was already the first important indicator. The high demand for travel and the good business performance now confirm our forecasts. 2022 will be a good financial year with a strong travel summer.

“In terms of capacity utilisation, we are almost reaching the pre-Corona level of 2019. After two years of crisis, things are clearly progressing and we expect to become profitable again in the current financial year with a significantly positive underlying EBIT [earnings]. This is the basis for new growth.”

The group almost halved year-on-year losses to €329.9 million in the three months to March 31, “driven by a strong operational recovery in the second half of the quarter on easing of Omicron restrictions”.

This came as quarterly revenue rose by €1.9 billion to €2.1 billion, “reflecting the more normalised pre-pandemic travel environment versus the prior year”.

Tui’s northern region, including the UK, cut its seasonal loss to €181 million from €221 million in the second quarter of 2021.

March saw the highest monthly revenue within the quarter as operations ramped up after a more subdued January and February post Omicron restrictions, according to Tui.

A total of 1.9 million holidaymakers were carried in the quarter, an increase of 1.7 million over the prior year, with the highest departure volume achieved again in March.

The average load factor continued to be strong at 84% against 85% in the same three months in 2019.

Tui said it generated “a significantly positive” operating cash flow, “driven by substantial working capital inflow as the business returned to a more normalised pre-pandemic environment for travel and bookings and operations recovered, helped by the easing of Omicron-related restrictions in the second half of the quarter”.

Ukraine impact

However, the group added: “The impact of the pandemic and the war in Ukraine on customer behaviour remains difficult to predict.

“The greatest area of uncertainty will be the impact on consumer confidence, should travel restrictions be reintroduced, should there be further cost inflation volatility and/or an escalation of the war in Ukraine.

“In view of these considerable uncertainties, the executive board continues to believe that it is not in a position to issue a specific, quantified forecast for the financial year 2022.”

The hotels and resorts segment delivered a third consecutive quarter of positive underlying earnings since the start of the pandemic.

“We expect occupancies and average rates to develop strongly through the second half and the short-term booking environment to contribute significantly to a strong summer,” Tui said.

Cruise recovery

All 16 ships across the group’s three cruise brands returned to operation since the start of April.

“Compared to our other segments, cruises recovery is expected to be slower with short-term bookings continue to represent a large share of overall bookings,” the company added.

“We see H2 2022 calendar year building steadily. Bookings are currently trending at higher rates for all three cruise brands, in comparison to prior years.”

A total of 681,00 excursions, activities and tours were sold in the second quarter.

Looking forward, Tui said: “Our growth opportunities will be driven by the expansion of our Tui Musement tours and activities segment, which will benefit from both our integration as well as growth through third party sales, accelerated digitalisation, our increased offer of dynamic packaging, growth through asset-right financing structures and execution of our global realignment programme.

“The combination of these drivers will enable us to emerge stronger, leaner, more digitalised and more agile, and ready to exploit market recovery and growth opportunities.”

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