Tui is reportedly freezing pre-payments and suspending contracts with some hotels amid a downturn in global travel caused by coronavirus.

Hoteliers in Spain and Greece said that Tui was in talks with a number of operators to invoke “force majeure” clauses in contracts and temporarily stop payments, according to the Financial Times.

The operator said: “We are in close contact with our hotel partners worldwide, jointly reviewing options for capacity management, to mitigate the impact for both Tui and its partners.”

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Tui has also frozen recruitment and was considering reducing staff hours.

One Greek hotelier, who contracts around 15 per cent of his rooms to Tui, was reported as saying that forward bookings were down around 40% and that as operators moved to freeze payments he would also be forced to cut payouts to suppliers.

Marella Cruise cancellations

Tui-owned Marella Cruises has been forced to cancel a number of sailings in Asia with Malaysia, Sri Lanka and India no longer accepting cruise ships and other countries imposing strict entry requirements.

Shares in Tui have fallen 57% in the past month and the cost of insuring its debt has risen almost fourfold since mid-February.

Tui has also been affected by the grounding of the Boeing 737 Max aircraft. This cost the company €293 million last year and the estimated earnings hit in 2020 is up to €400 million.

Coronavirus Spain surge

There has also been a surge in coronavirus cases in Spain this week – the largest market for UK overseas tourism with 16 million travelling there last year.

Becky Lane, an analyst at Jeffries, told the newspaper that Tui was “more stretched” than its peers and that a large amount of the €2.9 billion cash on the company’s balance sheet at the end of 2019 would be from customer deposits that might have to be refunded.

According to its latest trading update in February, Tui had net debt of just over €2 billion.