More holidaying abroad despite higher prices, says TUI

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THOMSON and First Choice holiday operator TUI Travel has seen improved demand for package holidays this summer, despite higher average prices.

The group said it had already sold more than a third of its UK summer holidays, with bookings 9% ahead of last year as more customers opt for the certainty of all-inclusive deals rather than DIY trips and look to avoid a repeat of last year’s wash-out summer.

Chief executive Peter Long said: “Those customers who decided either to stay in the UK or book late and didn’t get what they wanted in terms of their preferred choice have contributed to strong demand for sales for winter and summer.”

The group said average selling prices were up by 4% on a year earlier, around half of which reflected cost inflation and the rest from selling more exclusive holiday deals.

TUI said it had increased capacity by 3% in the UK, boosting its market share.

Meanwhile, price hikes at rival Thomas Cook pushed cumulative bookings at the troubled group down 5% in the UK, as the group reduced its capacity and attempted to stem losses by managing its margins.

But the UK’s second biggest travel company said that while global economic conditions and consumer confidence remained challenging, its turnaround plans were firmly on track.

TUI, which has a bigger summer than winter programme of holidays, narrowed its operating loss by 15% to £93 million in the three months to December 31.

The group said it has already sold 83% of its winter holidays at higher average selling prices in its key markets.

Rival Thomas Cook said revenues in its first quarter fell 8% to £1.7 billion, but higher margins had helped narrow its operating loss by 24% to £70 million.

It comes after the 172-year-old group issued a string of profits warnings in recent years as it has struggled with falling sales.

It said average selling prices were 12% higher in the UK as it sold less holidays with fewer discounts.

The group, which employs 31,000 staff, also said underlying margins had improved despite rising fuel prices, as it closed shops across the group.