Long-haul trip demand grows despite flu scare

May 12 2009 by Iain Laing, The Journal

THE Mexico swine flu outbreak has failed to dent demand for long-haul trips as holidaymakers switch to other far-flung destinations in search of the sun, according to TUI Travel.

The company said only about 250 of the 2,500 passengers in Mexico at the time of the flu crisis had accepted its offer to be flown home early.

TUI, which owns First Choice and Thomson, said long-haul bookings were up 2% in the past two weeks, with demand surging for trips to Jamaica, Egypt and the Dominican Republic.

The weakness of the pound has also boosted non-euro destinations, now accounting for 32% of all trips compared with 29% previously.

TUI’s Thomson arm has suspended all trips to Mexico destinations Cancun and Cozumel until Friday, offering travellers the option to switch or cancel altogether and receive a refund.

It is also offering alternative holidays or dates for those booked to travel to Mexico between May 14 and 22.

Shares in the firm were badly hit in the early stages of the swine flu outbreak as investors feared demand for travel would be badly affected.

But the stock last week recovered some of the ground lost as concern over the severity of the virus receded.

German-owned TUI has also said Mexico accounts for only 2% to 3% of its holiday programme.

The group said it was seeing an improved picture in general for holiday demand as the slump in travel showed signs of bottoming out.

The number of bookings from the UK fell 11% in the past eight weeks – an improvement on the 17% fall seen cumulatively since the end of last September.

TUI has slashed capacity to match falling demand as consumers have cut back on spending in the recession, with a 17% cut for the UK summer programme.

It is flying its planes 58% full, according to its load factor figure, which is flat on a year ago. But average selling prices are up as the reduction in capacity has left it with fewer last-minute holidays to discount.

Average charter trip prices in the UK are 10% up, while prices are ahead by 7% for short-haul holidays and 10% for long-haul in the northern region.

The company said sun-seekers were continuing to switch to all- inclusive package holiday deals to save cash, with sales now accounting for a third of bookings. Holidaymakers were also booking later.

The group is due to report full interim figures next Tuesday, but said it was well placed to meet its full-year expectations, with winter 2008/09 bookings in line with management forecasts and load factor targets met for the season.

TUI later said in a statement it was extending cancellations on Thomson and First Choice holidays to Cancun and Cozumel up to and including May 18.