Return Predicts Despite Spend Inflation As Profit More Holidaymakers Tui To

TUI predicts return to profit as holidaymakers spend more despite inflation

Wed, 11 May, 2022 - 19:55

Zuzanna Szymanska

Holiday giant TUI expects to become profitable again this year as people are more eager to pay more for higher hotel grades or extra services, and because high fuel costs may not last.

Its announcement chimes in with other recent positive updates from the travel sector including stronger-than-expected sales at airlines and airport operators.

TUI expects the recovery to be lasting as people are valuing experiences more highly than goods, and as fuel prices should eventually normalise, chief executive Fritz Joussen said after TUI’s second-quarter results.

Commenting on oil price levels of $105 to $110 a barrel, Mr Joussen said: "Historically, I have not seen such pricing levels last very long".

Asked if consumer worries about rising living costs might curb soaring demand, he said:

I think there might even be upside potential if oil and gas prices normalise because they are the driver of inflation today.

Many analysts say the effects of inflation are the main risk to the travel industry’s 2022 earnings.

He also said rising average travel prices — thanks to more guests treating themselves with higher hotel categories, and people booking longer holidays making rooms more scarce — were covering higher fuel costs.

“There will be practically no last-minute offers at low prices this summer,” Mr Joussen said.

He added that he expects TUI’s capacity to almost reach the pre-crisis level of 2019 this year. The shares ended 4% higher in Frankfurt trade today.