Tui sees improvement in under-pressure bookings

Travel operator TUI has reported an improvement in under-pressure bookings over the last month, following a seven per cent drop in bookings for the UK over the summer and two per cent drop in Germany.

Derren Nathan, head of equity research at Hargreaves Lansdown, thinks TUI needs to continue pulling in late demand for hotel rooms and cabins without making large price reductions.

He said: “Robust demand for TUI-branded summer getaways and improved final-quarter booking trends in the Markets + Airline platform are set to see the group’s operating profit land in the middle of its previous guidance. TUI’s reputation for trusted, good-quality holidays is also standing it in good stead, especially when disruption risk makes customers value reassurance that they will be looked after if things go wrong. However, the more commoditised Markets + Airline division continues to lag prior periods and is seeing a later booking pattern.

“Forecasts point to improved profitability next year at €1.5bn but getting there won’t be without challenges. Geopolitical uncertainty feeds into both higher fuel prices and consumer sentiment, while booked revenue for winter is down seven per cent in Markets + Airline. Prices are holding up across TUI’s offering, but occupancy is down in both Hotels & Resorts and Cruises. Having added capacity in these divisions, TUI now needs its differentiated proposition to pull in late demand for rooms and cabins without giving too much away on price.”