Capacity switch helps boost summer bookings for Tui

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Tui Group has switched capacity to the Canary Islands and other popular destinations to offset the ban on flights to Sharm el-Sheikh while demand for Turkey remains “subdued”.

The Thomson and First Choice parent today reported an improved occupancy and performance outside Turkey and North Africa driven by the popularity of alternative destinations and new hotel openings.      

Summer bookings from the UK are up by 9% year-on-year.

The remix of capacity to alternative popular destinations has driven growth in Spanish bookings with medium-haul and long-haul destinations also seeing good demand.

Tui’s overall summer programme is 47% sold, described as being broadly in line with the same time last year, with revenue up 3% and 1% higher average selling prices.

This highlighted the continued strength in demand for package holidays, the company said in a trading update this morning.

The proportion of online bookings is up three percentage points over last year to 38%.

Reviewing summer trading, Tui said: “The UK is delivering a strong performance, with revenue up 8% and bookings up 9%.

“As expected, demand for Turkish destinations remains subdued. Capacity has been remixed away to profitable alternative destinations, with mainland Spain, the Balearics and the Canaries seeing the most significant growth, where we are well placed to benefit through our own hotel content.

“We continue to grow our long-haul programme, with Mexico, Dominican Republic and Jamaica remaining our most popular destinations and Costa Rica being added to the summer programme this year.

“Bookings through our controlled channels account for 70% of summer 2016 bookings, up two percentage points, with the online channel accounting for 38% of bookings, up three percentage points.”

The group said it we remained confident of delivering underlying earnings [EBITA] growth of at least 10% in the 2015/16 financial year.

Chief executive, Friedrich Joussen, said: “We remain pleased with our summer 2016 trading performance, with both revenue and bookings ahead of last year.

“The UK continues to demonstrate a strong bookings performance, up 9% on prior year.

“Hotels and resorts are performing well overall, benefitting from increased demand in Spain, the Canaries, and long-haul.

“The group has again demonstrated the flexibility of its business model and the ability to remix destination capacities to match demand and as a result demand and pricing has remained resilient overall despite the impact of geopolitical events.

“Our integrated model with our differentiated range of own accommodation content, combined with strong supplier relationships continue to give us a strong competitive position and sustainable earnings growth.”

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