TUI sticks to profit forecast despite impact from terrorist attacks

Thompson and Frist Choice travel brochures.

Thompson and Frist Choice travel brochures. - Credit: PA

Thomson and First Choice owner TUI said yesterday that summer holiday bookings to Turkey had slumped by 40% after recent terrorist attacks.

The travel giant said holidaymakers were staying away from the country and turning instead to resorts in Spain and the Canary Islands.

But TUI said it had got off to a good start to its financial year and maintained its guidance for a 10% rise in annual underlying earnings despite the impact from attacks in a raft of popular tourist destinations in recent months.

Terrorist attacks in Turkey, Paris, Egypt and Tunisia have hit the travel sector, with the outbreak of the Zika virus adding to the woes.

Friedrich Joussen, chief executive of TUI, said: “It is evident that there has been a significant shift in demand away from Turkey, with summer 2016 bookings to that destination currently down around 40%.”

But he added: “We have delivered a good underlying performance in the first quarter in spite of the backdrop of geopolitical turbulence in some of our destinations.”

The group saw a 7.2% improvement in seasonal underlying losses in its first quarter to 97.3million euros (£75.3m).

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TUI said demand for holidays in Turkey – which was the destination chosen by 14% of its customers last year – fell particularly in its German business after 10 German tourists were killed in a suicide bombing in Istanbul last month.

Turkey has also been impacted by a drop in demand amid general security fears, as it borders with Syria, which is gripped in a civil war between its government and rebel groups, including Islamic State.

TUI’s results for the year to the end of last September showed the impact from the beach massacre in Tunisia in June, as well as the move to cancel all flights to Sharm el-Sheikh in Egypt following the terrorist bombing of a Russian airliner.

TUI has 13 hotels in Sharm el-Sheikh, with the resort accounting for half of its business in Egypt.

The group took a 52million euro (£37.6m) hit from the Tunisia attack but strong trading and currency exchange rates helped it offset the cost to post a 23% leap in underlying earnings to 1.07billion euros (£775m) for the year to the end of September.

In its update yesterday, TUI said it had seen a 16% rise in demand from UK holidaymakers for long-haul bookings over the winter following the recent attacks across Europe, with destinations such as Mexico, the Dominican Republic and Jamaica becoming more popular.

But there is also mounting evidence that the Zika virus could be having a damaging impact on customer appetite for holidaying in the Caribbean, after Jamaica announced it had been infected by the virus.

TUI said that, overall, winter UK bookings were up 3%, with selling prices 1% higher, while summer bookings in its UK business were 9% higher.