Tui switches capacity as Turkey slumps 40%

Tui switches capacity as Turkey slumps 40%

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Tui Group today confirmed a “significant shift” in demand away from Turkey, with summer bookings down by 40%.

The Thomson and First Choice parent company said it had acted swiftly to “remix” capacity to alternative destinations.

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

“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.”

The disclosure came as Europe’s largest travel group claimed a good underlying performance in the three months to December 31 despite “geopolitical turbulence” in some destinations.

Underlying losses for the group's first quarter were trimmed to €102 million from €105 million in the same winter period a year earlier as turnover rose by 5.4% to €3.7 billion.

The group’s northern region delivered a good performance, with a strong end of summer 2015 trading result in the UK.

Summer 2016 is in line with company expectations with 33% sold to date, with overall volumes up 1% and average selling prices up  2%.

UK booking performance remains strong for the coming summer, up 9% but with average selling price down by 1%.

Tui said: “Delivery of merger synergies and the Hotelbeds disposal process are on-track.

“Based on current trading and the resilience of our integrated business model, we continue to expect to deliver at least 10% growth in underlying EBITA [earnings] in 2015/16.”

Tui Group chief executive, Friedrich Joussen, said: "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.”

He added: “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.”

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