Customers book holidays again despite price rises

Mar 26 2009 by Peter McCusker, The Journal

THOMSON Holidays firm TUI Travel said its trading prospects had brightened after a late surge in summer bookings.

TUI reported stronger demand across all its key markets in the past month, with UK bookings down 7% against 18% for the season as a whole. It has reduced capacity by 17% and said scope existed to cut this further if necessary.

With the pound weaker against the euro, TUI reported increased demand for medium-haul destinations such as Egypt – up 18% in the past four weeks – and Turkey, ahead 8% on the same period a year ago.

It added that average UK selling prices were up 10%, which was ahead of cost inflation for the season.

The company said: “Customers who delayed purchasing holidays in the early booking season have started to return to the market.” The improved demand, coupled with cuts in the holidays on offer, mean TUI has fewer holidays left to sell in all its key markets.

The company said its winter programme was almost fully sold after a strong performance in the late booking period.

It narrowed operating losses in the three months to December 31 – covering the first quarter of its financial year – to £34.9m from £63.3m a year earlier.

With pricing remaining strong, TUI said it was well positioned to meet its expectations for the year to the end of September.

German-owned TUI merged with rival First Choice in 2007 amid a wave of consolidation in the sector as demand for package holidays contracted. The firm said it had increased its cost-saving target from the deal by £25m to £200m a year.