TUI Travel, Europe's biggest tour operator, reported a sharp decline in winter bookings, overshadowing third-quarter earnings ahead of market expectations today.
TUI Travel, created two years ago from the tie-up of TUI AG's travel division and Britain's First Choice, said bookings for the winter 2009 to 10 season were down 21 per cent on the previous year in Britain.
In the last four weeks, the trend had improved, with winter bookings down 6 per cent. Rival Thomas Cook, which is due to give a trading update tomorrow, was down 2.1 per cent at 231 pence.
“The surprise in today's statement is weakness in winter 2009 trading in the UK activities,” said Deutsche Bank analyst Simon Champion. “This is an early stage for the period, but nevertheless may put some pressure on underlying margins.”
TUI Travel said it had cut the amount of winter holidays on sale by 15 per cent to adjust to falling demand.
It said it had taken a cautious approach to the season as winter holidays can be more discretionary for consumers because they are often second holidays following a main summer vacation.
“We anticipate market conditions will remain challenging and expect the later booking pattern to continue in the next financial year," said chief executive Peter Long.
TUI said it was well placed to meet expectations for its current financial year to end-September. TUI Travel said the summer 2009 season was in line with its hopes, while summer 2010 had started positively in Britain.
TUI and rival Thomas Cook have reduced the number of holidays they sell by more than a quarter in the past two years, enabling them to raise selling prices and avoid offering heavy late discounts to fill empty slots.
This has helped them to increase their profits while smaller operators have struggled to stay afloat. Britain's third-biggest travel firm, XL Leisure, fell into administration last year.
Reuters