Dearer holidays as TUI sees demand rise

Thomson owner TUI Travel said prices strengthened in recent weeks after UK bookings improved 6 per cent in the period between November 22 and January 31.

It added: "We are seeing holiday demand improving across all our source markets, with sustained improvements in booking volumes over the last three to four months."

TUI said the average cost of a winter break was also 10 per cent higher in the UK after it managed to match capacity to demand.

Across the quarter to December 31, the company said losses widened by 72m to 107m due to planned capacity reductions and tougher comparisons with a year earlier.

TUI said there had been a significant improvement in profitability in the current quarter, leading TUI chief executive Peter Long to suggest that the worst of the downturn may be behind the company.

He added: "I expect positive momentum in each of the remaining quarters of 2010 as trading benefits from improved demand in all source mar- kets."

In the UK, TUI has increased capacity for this summer by 3 per cent.

It has added an extra ship to meet demand for cruise trips, while it has increased its presence at regional airports where it is either under-represented or where a competitor has gone out of business.

"We continue to monitor supply and demand and have retained sufficient flexibility to adjust capacity accordingly."

In TUI's last trading update in December it said average selling prices were up by 7 per cent for the summer.

Crawley-based TUI, which owns First Choice, employs around 50,000 people and operates a European airline consisting of over 150 aircraft.

TUI said UK bookings for winter were down 1 per cent between November 22 and January 31 – a better than expected performance despite the impact of the cold snap on footfall at its high street outlets.

Bookings were down 17 per cent in the three-week period of cold weather, but recovered in recent weeks to leave the company with 24 per cent fewer holidays left to sell.