TUI optimism rises as average holiday spend rockets

Average booking prices for summer 2021 are up 20% over summer 2019 despite major uncertainties around travel, says TUI.

The operator is still planning to operate 80% of its summer 2019 capacity, it said in a first quarter trading update today.

So far, it has sold 2.8 million summer holidays, which is only around 56% of its sales in the same period two years ago.

It took just €468.1m in bookings for the three months to the end of December compared to €3.85 bn the previous year.

But CEO Fritz Joussen said it was expected that customers will book summer holidays much later this year than in normal years.

"However, demand remains strong, people want to travel – this is shown by the already good number of bookings for the summer," he added.

TUI lost €698.6 million in the first quarter, €551.9m more than the first quarter of 2019/2020.

But it said it had managed to reduce its monthly cash outflow from an estimated €400 to €450 million a month to around €300 million a month.

And after completing a third coronavirus financing package for €1.8 billion in the last week of January, the company has €2.1 bn in cash and cash equivalents.

The refinancing package included a rights issue to provide the Group with around €500 million. Also, the Mordashov family, Russian billionaires who were already strategic shareholders in TUI, increased their shareholdng to 30.1%.

In its trading update, TUI said it is ‘prepared for a relaunch of its tourism business in the coming weeks’, adding: "With the approval of highly effective vaccines, more vaccinations and reliable and widely available rapid tests, the groundwork has been laid for a return to basic freedoms and also open borders."

English market ‘has a special significance’

Mr Joussen "We see an impressive pace and ambitious targets for vaccinations there. Vaccinations and rapid tests make an end to the standstill in tourism possible.

"I am hopeful that after a slow start, more energy is now being put on vaccination and the availability of rapid tests in other countries.

"We should do everything we can to quickly return to basic freedoms and make travel possible again."

"A look at the historically high savings rate in the EU also underlines that the scope for consumer spending is high. The significant increase in spending on booked travel reflects this very clearly. Holidaymakers are catching up and are willing to pay more for their holidays."

"Great Britain is economically a very important and large market for TUI. There, the vaccination campaign is progressing very rapidly; according to current plans, all Britons over 50 years of age are to receive a vaccination offer by the beginning of May.

"By mid-July, 75 per cent of the population there should have been vaccinated, so that herd immunity is achieved. This will have an immediate impact on the booking and travel behaviour of Britons for the summer of 2021.

"It also gives hope that the other European countries important to TUI will also be able to accelerate their vaccination strategies."

Rapid tests ‘should replace quarantine’

Mr Joussen said rapid tests would play an important role in the transition period.

"With uniform and reliable regulations on rapid tests, we can leave quarantine obligations and closed borders behind us," he said.

"Rapid testing instead of quarantine is a demand of the travel industry, to which TUI also adheres."

He said TUI packages offered one of the safest forms of travel, adding that since it resumed operations last summer it had registered a total of 364 Covid-19 cases among more than 2.5 million guests.