TUI profits jump as consumers defy terror threat

Travel giant TUI took a 52 million euro (�37.6 million) hit from the Tunisia attack in June. Picture: PA
Travel giant TUI took a 52 million euro (�37.6 million) hit from the Tunisia attack in June. Picture: PA
Have your say

TUI, the world’s biggest package holiday business, revealed yesterday that consumers are showing defiance to the recent string of terrorist atrocities, with bookings up for 2016.

The company said passengers are seeking the sun in such long-haul destinations as the Caribbean and Mexico after a series of terrorist attacks this year, from Tunisia and Sharm el-Sheikh in Egypt to the killing of 130 people in Paris last month.

Overall winter 2015-16 long-haul bookings are up 9 per cent, TUI said, while UK bookings for summer 2016 are ahead 11 per cent.

It came as Peter Long, the group’s joint chief executive, unveiled a 23 per cent rise in earnings to €1.07 billion (£775 million) for the year to end-September.

Long, who said the beach massacre in Tunisia that saw 33 of the group’s customers killed was the “most tragic” event in his 30-year career, said 15 per cent growth in underlying earnings showed “the resilience of our integrated business model”.

He said: “This was driven by a particularly good performance in Northern Region, Hotels & Resorts and Cruises, despite the tragic events in Tunisia.”

The travel giant took a €52m euro hit from that attack in June and cut its guidance for the year ahead after also cancelling all flights to Sharm el-Sheikh in Egypt following the terrorist bombing of a Russian airliner last month.

On Tunisia, Long added: “The horror of it is something that will live with us, and me, forever.” He said resorts in Tunisia and Sharm el-Sheikh were now like “ghost towns”, saying that it remained to be seen if they ever fully recovered.

Long praised TUI staff’s handling of the tragedy, which saw the group fly home tourists from Tunisia and cancel all holidays there, with the UK Foreign Office and other governments still advising against visits. The group said its hotels and resort arm saw a €26m euro impact from the Tunisia beach attack, with another €17m put by to cover prepayments for accommodation in the area.

In August, TUI confirmed the cost of flying tourists home from the North African country was €10m. Strong trading in other regions and favourable currency exchange rates helped the group offset the exceptional financial items, with other favoured destinations for tourists now including the Canary Islands and Mauritius.

However, the group reined in its earnings growth forecasts for next year. It said that the continuing cancellation of flights to and from Sharm el-Sheikh was now expected to see current year earnings rise by about 10 per cent.

That is down from previous guidance of an increase of 12.5 per cent to 15 per cent. TUI has 13 hotels in Sharm el-Sheikh, with the resort accounting for half of its business in Egypt.

One leisure analyst commented: “These numbers show the underlying resilience of TUI, and consumer sentiment generally, to shocks.”