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Europe’s top travel company, Tui, has experienced a 10% decline in revenue from summer holiday bookings made by customers in the UK. This drop comes amid growing caution linked to the conflict involving Iran. Alongside this trend, the company has observed a noticeable shift in traveler preferences, with increased demand for destinations in the Western Mediterranean rather than the Eastern Mediterranean. Additionally, customers are tending to book their holidays closer to their departure dates.
In response to these booking patterns, Tui has decided to reduce the number of seats it buys from its airline partners by approximately 4-5% for the summer season. However, the company will maintain its own airline operations at current levels. Despite this seat reduction, Tui’s chief executive, Sebastien Ebel, remains confident that there will be no shortages of jet fuel over the coming weeks, despite industry concerns stemming from the geopolitical situation.
These concerns relate in particular to the Strait of Hormuz, a crucial passageway for oil and liquefied natural gas shipments. Its closure or restricted access has driven up jet fuel prices, prompting some airlines to raise ticket prices or decrease capacity to attract uncertain travelers. Tui’s first-quarter report revealed a financial setback of €40 million (£34.7 million) tied to the US-Israel-Iran conflict, including costs associated with repatriation, welfare, and lost income. The company recorded an underlying loss before interest and tax of €188 million for the quarter, showing some improvement compared with the €207 million loss the previous year.
Despite an overall 7% decline in revenue from summer bookings compared to last year, industry experts highlight the lingering uncertainty among consumers. Russ Mould, an investment director at AJ Bell, points out that although the travel sector stresses no immediate fuel shortages exist, “consumers are getting jittery.” Similarly, equity analyst Aarin Chiekrie from Hargreaves Lansdown notes that potential holidaymakers are “understandably more cautious” but have not abandoned plans entirely. Instead, many appear to be postponing bookings until closer to travel dates, which, while not ideal for the industry, is considered preferable to a complete loss of demand
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