Low Demand in Turkey Diverts Interest to the Mediterranean for TUI

Oia, Santorini. Photo source: Pixabay

Low demand for holidays to Turkey and North Africa in the first half of its financial year took a toll on TUI Group’s (TUI)  shares, which dropped by about 5 percent in early trading, after the tourism operator reported its financial results this week.

The slumping demand due to political turmoil in the region was offset by growing interest for Mediterranean destinations such as Spain and Greece, and the Caribbean. The group’s hotels are already 62 percent booked for the summer ahead, 4 percent higher than last year, with holidays to Greece, Bulgaria, Croatia and Cape Verde setting the trend.

TUI reported an 8 percent increase in revenue for the six months to the end of March compared to last year, while customer numbers were up 4 percent. Group losses dropped year on year to 308.6 million euros against a loss of 394.6 million euros last year.

TUI said, however, that it remains on target to increase its growth by at least 10 percent in underlying earnings in its full-year results, along with a 3 percent rise in revenue.

“Our transformation to an integrated tourism business is on track. We are delivering strong growth in our hotel and cruise brands. These two segments contribute half of our operating result on a full year basis,” said TUI chief executive Fritz Joussen.

“The TUI Group is changing quickly – our guidance remains unchanged despite a challenging environment. We reiterate our guidance to deliver at least 10 percent growth in underlying EBITA this year,” Joussen added.

At the same time, the travel group, which was hoping for a special aviation deal, warned that Brexit was growing into a risk and a potentially weak pound was likely to hurt the group over the summer.