Cold weather boosts TUI summer bookings

Snow and ice at home has led to a 9 per cent rise in summer holiday bookings at Thomson Holidays owner TUI Travel as Britons plan their escape to the sun.

Europe’s biggest tour operator said it continues to see “very strong” trading momentum in the UK despite a 4 per cent increase in its average summer prices, as holidaymakers seek to avoid another washout. TUI has also increased its summer capacity in the UK market by 3 per cent.

Strong sales in the UK and Nordic region helped its core business increase summer bookings by 2 per cent, offsetting weaker performances in France and Germany.

It has sold almost half its summer holidays across its mainstream holiday business.

The group – which also owns brands including First Choice, Gulliver Travel and LateRooms.com – said demand was driven by its online business and direct distribution, with online accounting for 40 per cent of its sales in the UK.

The company said: “This is against a backdrop of uncertainty in the eurozone, highlighting that demand for the annual holiday remains resilient against a weak macro-economic environment.”

TUI’s strong trading comes amid a turnaround battle at rival Thomas Cook, led by new chief executive Harriet Green. This involves more than £400 million of cost cuts, axing 2,500 jobs or 16 per cent of its 15,500-strong UK workforce and closing 195 high street travel agencies.

Sales in TUI’s core winter business ended down 4 per cent, with flat trading in the UK and a 30 per cent fall in France, helping it narrow winter losses.

TUI’s UK winter capacity was flat on a year ago, while it cut capacity in France by 33 per cent.

It expects 7-10 per cent growth in underlying full-year operating profit.

Numis Securities analyst Wyn Ellis described the pre-close trading update as “very strong” and upgraded the firm from “hold” to “add”.

Ellis added: “The poor weather across much of Europe is clearly providing a helpful tailwind but we believe it is also increasingly apparent that TUI’s strategy of focusing on ‘differentiated’ and ‘exclusive’ product is paying dividends.”