Holidays will be “scarce” and prices “strong” this summer, with demand surging despite the rising cost of living, according to Tui chief executive Fritz Joussen.
Europe’s biggest holiday group revealed an average sales price for summer 2022 bookings 20% up on 2019 and UK sales 11% ahead of 2019.
Joussen argued: “Customers are spending 20% more [and] this almost all relates to longer holidays.
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“Instead of an average holiday of 8.5 days before the crisis, the average is 9.5 days.”
The Bank of England has warned inflation will hit 10% this year and Joussen acknowledged: “Historically, inflation influences demand.” But he insisted: “Capacity will be scarce and prices strong this summer.
“Will inflation have an influence later in the season? The scarcity of supply will be enormous. We’re consuming 10%-13% more hotel capacity per customer because of longer stays. Holidays will be scarce, particularly for July, August and September. You won’t see discounts. You will see limited availability.”
He forecast: “The strong demand will last. Everything will fill up. We expect a significant operating profit already this year.”
The UK is leading Tui’s recovery in Europe, with 41% of all group bookings, while Germany still lags pre-crisis level sales, and Joussen noted: “The UK is where we have half our [airline] fleet.”
He said Tui had no need to raise prices to cover high fuel costs, adding: “The 20% higher prices cover the fuel price. The margin on the additional bednights is enough.”
He did note: “We can’t decouple the industry from inflation. If inflation stays it could affect demand, but not this year and not, so far, for next year. The only indications we have for winter and next summer are in the UK, and for winter we’re 20% booked. We don’t see a slowdown.
“But if inflation is sustained, products will become more expensive. Prices will go up.”
Ryanair, Europe’s biggest carrier, confirmed plans to operate 15% more capacity this summer than in 2019, noting: “We expect to fill these flights with lower fares than pre-Covid.” However, it forecast peak summer fares “would be somewhat ahead” of 2019.
Ryanair reported a loss of €355 million for the 12 months to March, with its average fare falling to €27 against costs per passenger, excluding fuel, of €35.
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