Winter TUI holidays plummet 89 per cent as travel curbs tightened

The world’s biggest travel agency TUI has revealed that winter bookings were at only 11 per cent of last year’s levels as travel restrictions continued to hammer its business.

Revenues at the Anglo-German firm plummeted by over 85 per cent year-on-year to €468.1million in the first quarter, with its cruises, and tours and activities divisions witnessing exceptionally sharp declines.

About half as many of the group’s 229 hotels were open at the end of December due to European governments, including the UK and Germany, imposing harsher lockdown rules following major rises in coronavirus infections.

This badly hit orders for breaks in the Canary Islands and Maldives, but the group said its Greek and Caribbean operations did well, and that it was the only European cruise operator to ‘continuously sail throughout the winter.’

However, its UK cruise brand Marella was suspended entirely during the period, through which it operated only five ships at less than 40 per cent capacity, resulting in a €100million loss in underlying earnings for the cruises division.

Overall group losses soared by over sevenfold to €813.1million, with the majority deriving from the markets and airlines business, and about half of those losses related to tumbling demand from Northern Europe.

TUI also revealed that it completed a third fundraising round to the tune of £1.58billion. Shareholders were tapped up for €500million in a rights issue and the German government and banks providing over €1billion more in support. 

‘As the world’s largest tourism and travel operator, TUI’s fragile financial position shows Covid-19 is still a treacherous tide threatening to drag the global travel industry’s recovery off course,’ stated Hargreaves Lansdown’s Susannah Streeter.

She added: ‘It’s far from being able to recline on a lounger just yet, but bailouts from the German government and investors mean it has a sizeable spade to dig itself out of another hole if the tide of infections doesn’t recede as quickly as expected.’ 

The Hanover-based company is confident that the summer season will see a significant revival in travellers, 2.8 million of whom have already booked with TUI for the period, which it is planning to operate at 80 per cent capacity.

Its holiday prices for the summer months are up by a fifth, purchases of packaged holidays is especially strong, and it expects a peak booking spell is still on its way.

‘TUI shares the industry expectation of delayed bookings whilst vaccine programmes are underway, the rollout of which will support the lifting of extensive travel restrictions,’ it remarked.

It added: ‘Our strong customer base and scale gives us an advantage in terms of brand awareness and distribution, securing attractive terms from suppliers, and in gaining greater insight into customer behaviour.

‘In addition, selling into a range of source markets helps to diversify our customer base, meaning we are not reliant on a single market.’

Like TUI, online travel agency On the Beach also said last week that it was expecting reservations to recover once restrictions are lifted, and vaccine use becomes more widespread.

However, it observed its summer holiday bookings were ‘very weak,’ and that UK website traffic declined by 73 per cent in the four months to January 31.  

Shares in TUI were down 0.5 per cent to 329.6p during the late morning.