TUI Group Switches Capacity Due to Shift In Demand Away From Turkey

By ,   February 10, 2016 ,   Cruise Industry

TUI Group confirmed a considerable shift in demand away from Turkey and summer bookings down by 40%. Thomson and First Choice parent company announced it had acted fastly to “remix” capacity to alternative destinations. According to TUI:

“Due to ongoing geopolitical uncertainty in the region, summer bookings to Turkey from all source markets are around 40% below prior year.

“In summer 2015, 14% of our source market customers travelled to Turkey, with a lower proportion from the UK, and a higher proportion from Germany and Nordics.

“In response to the decline in demand, we have rapidly reshaped the summer programme by adding capacity to alternative popular and profitable destinations, such as Spain and Greece, including taking additional capacity in our group hotels.”

TUI Cruises

Image: liverpoolecho.co.uk

The largest travel group in Europe claimed a good performance in the 3 months to December 31, 2015 despite “geopolitical turbulence” in a couple of destinations. Underlying losses for the first quarter were cut off to €102 mill from €105 mill in the same period a year earlier as turnover increased by 5.4% to €3.7 billion.

The northern region of the group delivered a good performance, with strong end of 2015 summer trading result in the United Kingdom. Company expectations for summer 2016 show 33% sold to date. Overall volumes are up 1% and average selling fares up 2%. UK booking performance for the coming summer remains strong, up 9% but with average selling fare down by 1%.

According to TUI Group chief executive, Friedrich Joussen: 

"We have delivered a good underlying performance in Q1 [the first quarter]  in spite of the backdrop of geopolitical turbulence in some of our destinations, with a 7.2 % improvement in underlying EBITA. Northern region and Riu have performed particularly well, and we remain pleased with demand and yield performance in our cruise business. We are continuing to deliver our merger synergies as planned, with a further €10 million realised in the quarter, and the disposal process for Hotelbeds remains on track.”

“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%. Our scale business model and own hotel content means that we have been able to act quickly to remix capacity to alternative, profitable destinations. In addition, our own hotels in destinations outside Turkey, such as Spain and the Canaries,  are benefitting from the shift in demand.”