Tui to reveal strength of holiday sector amid price rises
Investors will be keeping an eye on the group’s booking numbers when it reports its full-year financial results on Wednesday.
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Your support makes all the difference.Holiday giant Tui Group is set to reveal whether shrinking budgets and rising prices have put consumers’ holiday plans on ice over the winter season.
Investors will be keeping an eye on the group’s booking numbers when it reports its full-year financial results on Wednesday.
It previously said that winter bookings were more than three quarters of pre-pandemic levels, stressing that holidays and travel experiences were more important to people in the post-Covid era.
This is despite Tui’s average selling prices for holidays jumping by a quarter over the winter season, all the while inflation has eroded household incomes and led to reports of consumers cutting back on non-essential purchases.
Many would like to see what Tui predicts for further price hikes in the new financial year – a belief that customers will continue to swallow further increases suggests consumer sentiment is holding strong
In its third quarter trading update, Tui said it had observed a trend toward people booking higher value and longer holidays, and that summer bookings in the UK were 4% above pre-pandemic levels by number.
Analysts said it will be crucial for the firm that consumer confidence does not weaken in the face of higher prices.
Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown, said: “One aspect that will be watched closely is pricing.
“So far, it seems Tui has been able to increase the prices it charges customers by double digits, which helps offset the group’s own soaring costs.
So far, it seems Tui has been able to increase the prices it charges customers by double digits, which helps offset the group’s own soaring costs
“Many would like to see what Tui predicts for further price hikes in the new financial year – a belief that customers will continue to swallow further increases suggests consumer sentiment is holding strong.
“Should the opposite ring true, this could have implications for Tui’s margins next year.”
Furthermore, investors will be looking for an update on how well the group has recovered following a wave of disruption over the summer.
In September, Tui revealed that staff shortages at airports, which led to flight cancellations and lengthy delays, had cost the firm 75 million euros (£66 million) in the three months to the end of June.
Shareholders will be keeping their eyes peeled for an update on the impact of disruption spilling over into its final financial quarter.
Significant disruption is expected over Christmas with border staff set to strike at six airports from December 23 to Boxing Day and December 28 to New Year’s Eve.
Analysts pointed out that the company’s hotels and resorts arm will also be one to watch, with the hotel industry being hit by rising costs and wage pressure amid staff shortages.
But Tui previously said that its hotels business was already back to 2019 levels, and expected bookings to remain strong throughout its fourth quarter.