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Tour operator Tui is targeting expansion outside Europe to field demand from travellers seeking far-flung trips to Africa and Asia, as the higher end of the holiday market continues to boom.
Chief executive Sebastian Ebel said Tui saw significant potential to expand its long-haul destinations outside the traditional market for package trips to southern Europe, including in Africa, Latin America and Asia.
“There is a lot of growth outside the region of Europe,” he said, as the company announced a rise in second-quarter profits on Wednesday.
Ebel said destinations in Africa that had proved popular recently included the west African archipelago of Cape Verde, as well as Tanzania and Zanzibar, adding there was future potential to move into new markets further south on the continent. “I very much believe in Africa,” he added.
His comments came as the holiday group reported strong summer bookings, at higher prices, even as cracks in the post-pandemic travel surge have emerged at some airlines.
Tui, which operates more than 400 hotels, 17 cruise ships and five European airlines, has been focusing on increasing its customer base to reduce reliance on the peak European holiday periods by offering trips to new destinations.
Last year, Ebel predicted that the warming climate would lead to more people taking holidays in the cooler months, or holidaying in northern European destinations, though he said traditional summer holiday destinations in southern Europe were still expected to remain popular.
The tour operator reported a 37 per cent rise in underlying earnings before interest and tax to €232mn for the three months to the end of June, and said there were early signs of strong demand for travel into the winter.
The buoyant outlook came despite recent warnings from airlines about faltering demand in recent months, with companies from Ryanair to Lufthansa warning of pressure on ticket prices.
Tui said trading remained “robust”, with average prices for the period 3 per cent higher compared with the previous year, and summer bookings up 6 per cent. “Tui is very much at the higher end of the market, and this is very, very stable,” Ebel said.
Airline bosses have said the cracks in demand have largely come in the short-haul market in Europe and the US, and in economy class. Longer trips and more expensive flights in business or first class had been less affected, they said, with well-off consumers more insulated from an ongoing cost crunch. Other package holiday companies, including easyJet Holidays, have also reported strong summers, meanwhile.
“Holidays are highly prioritised amongst consumers, and this trend to spend for holidays is unchanged, and that’s really great,” Tui chief financial officer Mathias Kiep said.
Tui’s focus on growing its businesses outside of Europe came as new data showed long-haul trips had become more popular.
Travel booking company Amadeus said the five most popular destinations for passengers booking flights from the UK were all long-haul, including Dubai, New York and Bangkok. These intercontinental trips had overtaken shorter hops, such as to Paris and Amsterdam, in popularity since 2019, Amadeus said.
“Today, the front of the plane is increasingly made up of leisure travellers that are willing to spend on bucket-list trips and memorable experiences. The demand for long-haul destinations we’ve seen during the recovery appears to be sustainable,” said Decius Valmorbida, president of travel at Amadeus.
Conflict in the Middle East has slightly dented Tui’s business, and the company suffered a financial hit in the “two-digit millions” after being forced to reroute some cruise ships around Africa rather than through the Suez Canal amid tensions in the Red Sea.
Israel, Lebanon and Jordan “are not really existing any more for major tourism”, Ebel said, although he added that Egypt had proved more resilient.
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