Tui faces challenging year as summer bookings drop

Europe’s largest travel operator, Tui, has reported a drop in summer bookings alongside a widening loss for the first quarter of the year. The company, headquartered in Germany, recorded an underlying loss before interest and tax of €206.8 million for the three months to the end of March, compared to a €188.7 million loss over the same period last year.

The group highlighted that revenues had increased by 1.5 per cent during the period, reaching €3.7 billion. Strong performances were noted in segments such as Musement, which organises tours and activities, as well as hotels and resorts. Despite this, Tui’s bookings have faced headwinds due to what it described as a “challenging” trading landscape in Europe, compounded by the later timing of Easter, which impacted consumer behaviour.

Chief executive Sebastian Ebel pointed to the broader economic environment as a key factor, noting that Europe must shift towards growth-focused strategies. He called for greater investment and reduced bureaucracy to spur economic momentum. He also projected a demanding second half of the year for the European economy, adding weight to the group’s cautious outlook.

Summer bookings in the UK have remained on par with the previous year, with 65 per cent of offerings sold. However, German bookings have dropped by 3 per cent year-on-year. This decline contributed to a 9.5 per cent fall in Tui’s Frankfurt-listed shares during afternoon trading, with the price dropping to €6.84.

Despite these obstacles, Tui is maintaining its financial guidance for the year. The company expects revenues to increase between 5 and 10 per cent, with earnings before interest and tax forecasted to grow by 7 to 10 per cent. Booking momentum reportedly improved in early May, suggesting that summer figures may eventually match those of the previous year.

Tui, which owns a diverse portfolio of over 400 hotels, 18 cruise ships, 125 aircraft, and 1200 travel agencies, is looking to diversify beyond Europe. Expansion efforts into Asia and Central Europe are underway in an effort to generate additional revenue streams. Ebel stated that it may take three years before these initiatives yield tangible results in the company’s financial performance.

The travel giant’s broader challenges come in the wake of its decision to delist from the London Stock Exchange in favour of a single Frankfurt listing last year. Originally created through the 2014 merger of Tui Travel of Britain and Germany’s Tui AG, the company continues to adapt to the evolving dynamics of the travel industry.