Tui outlines impact of Tunisia and Greece crises

Tui outlines impact of Tunisia and Greece crises

The terrorist attack in Tunisia cost Tui Group €10 million in cancellations and repatriation of holidaymakers in the three months to June 30.

Europe’s largest travel group took a €40 million hit to quarterly underlying earnings following the beach massacre in Sousse and lower profits in its central and western region.

However, the Thomson and First Choice parent company said the UK delivered a strong trading performance with higher load factors and margins despite the events in Tunisia and financial turmoil in Greece, describing this summer’s trading as “robust”.

Tunisia accounts for about 3% of Tui’s total capacity, with 24 managed and leased hotels.

“The Foreign Offices of the UK, Belgium and Netherlands are currently advising against unnecessary travel to Tunisia,” Tui said.

“Our policy is to follow Foreign Office advice therefore we have cancelled flights from these source markets. To date, most customers who had booked holidays to Tunisia this summer have rebooked with us for alternative destinations.”

The company added: “Economic uncertainty in Greece adversely impacted trading to that destination at the end of June and in the first half of July; however, we have seen an improvement in bookings in more recent weeks and cumulative bookings remain ahead of prior year.

“The situation in Greece has had a greater impact on late trading from Germany than from other source markets.”

Winter 2015/16 trading was described as being in line with expectations.

Tui added that it was pleased with early trading for summer 2016 in the UK.

“Our resilient business model, with its scale and strong supplier relationships, means that we are able to flex our tour operator programme in response to changes in customer demand, the group said.

“Our portfolio of businesses means that we continue to deliver growth in earnings even when we face challenges in specific parts of the group.”

Tui forecast growth in operating profits of between 12.5% to 15% for the current financial year.

Joint chief executives, Friedrich Joussen and Peter Long, said: “This quarter was marked by the tragic events in Tunisia at the end of June.

“Supporting our customers, their families and our colleagues through this sad time remains our highest priority. We are very proud of the commitment and dedication our colleagues have shown throughout this unprecedented situation.

“Recent weeks have also seen continued economic uncertainty in Greece.

“Within our business model there is an inherent assumption that we will face a level of disruption as a result of external events.”

They added: “We are continuing to deliver our growth strategy as the world’s leading tourism business. In spite of the events in Tunisia and Greece, we have continued to deliver strong growth in underlying EBITDA. This demonstrates the resilience of our integrated business model.

“Tourism earnings growth was driven by [the company sectors of] Cruise, Hotels & Resorts and a strong performance by the UK. Hotelbeds Group has also delivered growth in earnings.”

Underlying earnings [EBITDA] for the quarter increased to €194 million from €164 million in the same period a year earlier as the negative impact of Tunisia and an earlier Easter were offset by a €20 million gain from foreign exchange.

Losses for the nine months to June 30 were cut by €100 million to €78 million.

Tui re-emphasised that control over distribution “continues to be central to our marketing and sales strategy”.

The group said: “All source markets are focused on delivering more direct and more online sales. In the 9-month period controlled distribution grew by three percentage points to 70%.

“Online distribution grew by three percentage points to 41%. Good progress was made across all source markets.”

It reaffirmed plans to capitalise on the strength of the Tui brand “on a global scale”.

Tui said: “A global brand experience and a global brand identity offer many advantages for our customers, suppliers and for our employees.

“We are taking a phased approach to brand migration in order to mitigate risk and preserve local brand equity.

“Starting this autumn, Netherlands will be the first source market to migrate, followed by France and Belgium.”


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