Tui Group on course for strong summer as demand soars

Tui predicted strong demand for summer 2022 as winter seasonal losses were cut as the group continues to recover from the pandemic.

The group reported a “very strong” booking dynamic for summer 2022 with average prices up 22%.

“Only at the end of November and in December was there a short-term dampener due to the Omicron variant, which had not yet been conclusively researched at the time,” Tui said.

“Currently, a trend towards short-term bookings is still noticeable, but confidence in progress in ending the pandemic is increasing and holiday bookings are picking up significantly.”

A total of 3.5 million customers had booked a trip for summer 2022 at the end of January – around 72% of the level of pre-pandemic summer 2019 at the same time.

However, new bookings are now over 100% of the level of summer 2019, so Tui expects summer 2022 to be close to pre-crisis levels.

People are booking higher quality and planning a higher budget for their summer holidays, with  average prices up on the previous year by 22%.

“The market is intact, the demand is there. The Tui brand and Tui hotels enjoy a high level of trust even in a difficult pandemic environment,” the company said.

“The framework conditions for tourism have now improved significantly, government measures are becoming more predictable and reliable and the lifting of comprehensive restrictions has begun or is foreseeable in some markets.

“The UK and Denmark are leading the way. This shows that travel has a high value for people.”

Chief executive Fritz Joussen said: “We expect a strong summer 2022. There is pent-up demand among customers. We see this in all European source markets.

“The last two financial quarters have shown that the group continues to stabilise. Every step towards normality gives people confidence, and the demand for holidays increases immediately.

“Despite the still ongoing trend towards very short-term bookings, we see the strong demand for the upcoming summer 2022.”

Tui pointed to increased demand for package holidays as well as higher-value offers and more additional services, such as upgrades in hotels or room categories

The forecast came as losses for the three months to December 31 were trimmed to €274 million from €676 million in the same period a year earlier as more than four times as many holidaymakers travelled with the company to give a total of 2.3 million.

This came on the back of revenue reaching €2.37 billion, five times higher than the €468 million achieved in the first quarter of 2021.

Tui’s northern region, led by the UK, saw a steady increase in customer volumes particularly in October and December with 665,000 travellers departing overall in the quarter, against 114,000 in the same period in 2021.

Underlying earnings improved by €25.6 million to give a loss for the region of €171.7 million as a result of the operational development.

“Comparatively to our other regions, the overall loss of €172 million reflects the higher operational leverage for the UK, with departure volumes, although improving, still limited and overall sentiment around testing requirements and changing restrictions holding back a wider recovery,” Tui said.

“The first quarter of financial year 2022 also shows the next step out of the pandemic for the Tui Group,” the company added.

The company plans to hand back around €0.7 billion in state aid in April “as a first step”.

The group added: “The time of the pandemic was used to transform Tui.

“All measures of the efficiency programme launched in 2020 have already been implemented.

“In the 2022 financial year, around 90% of the cost reduction target will already be reflected in earnings. The programme envisages annual savings of €400 million from 2023 onwards.”

  • Commenting on the results, Julie Palmer, partner at business recovery firm Begbies Traynor, said: “Released from Covid controls, people are desperate to get away so it’s no surprise Tui is enjoying skyrocketing demand. UK bookings for summer holidays are currently a fifth higher than pre-pandemic levels of 2019.

    “It could just be a temporary respite, though. Soaring inflation across travel companies’ costs such as fuel and wages, whilst trying to recoup losses racked up over two hellish years, combined with consumers being forced to rein in spending, could mean this sunny period soon ends.”

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