Cash-strapped consumers are still prioritising spending on holidays but are choosing more affordable destinations including Egypt, Bulgaria and Tunisia for their annual break, according to Europe’s biggest package trip operator.
Tui said new customers with smaller budgets who are not able to find a package holiday in more traditional locations such as Spain are looking elsewhere.
Inflationary pressures have eased, the travel company said, and the average selling price of its holidays have levelled out, although the cost of a trip remains at a “significantly higher level” compared with 2019.
Prices are now “at a level where we think it will remain”, said Sebastian Ebel, the group’s chief executive.
“We also see quite often new customers who have less income but still want to travel, and they have a budget of €1,000/£800 per vacation, and if they don’t see it in Spain, then they look for alternatives, and they find alternatives,” Ebel said.
“Mallorca will be full in summer, the Canary Islands are full now in winter. But there’s enough choice for customers to find the right vacation.”
The widespread return of travellers to Tunisia and Egypt marks a turnaround for the countries as holiday destinations after a series of Islamic State terror attacks around the time of 2015 led to a plunge in visitor numbers.
Meanwhile, Tui reported an annual pre-tax profit of €1.3bn (£1bn) in the 12 months to the end of September, a 35% increase compared with a year earlier.
The company said the strong performance of package holidays and in its cruise division contributed to the rise in operating profit, helping the business to strengthen its finance and bring down its debt levels.
The travel company said it continued to reduce its net debt, cutting it by €500m to €1.6bn, amid its recovery from the coronavirus pandemic, when most international travel was halted.
The Germany-headquartered company received multiple bailouts from the country’s government in 2020, the first year of Covid lockdowns, when Tui reported a €3bn full-year loss.
More than 20 million customers travelled with Tui in the 12 months to 30 September, an increase of 7% on a year earlier, as consumers continued to spend on travel.
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After a wave of anti-tourism protests over the summer in Spain’s most popular tourist destinations – from Málaga to Mallorca and Gran Canaria to Granada – Tui’s boss said he had “taken these protests very seriously”.
Ebel said he travelled to Mallorca and spoke to local people about the issues, after tens of thousands of protesters called for a rethink of a business model that they say has pushed up housing prices and driven local people out of cities.
“We bring customers who stay in a hotel so they don’t take an apartment away; we bring customers into hotels where our employees have good contracts, good working conditions,” Ebel said.
“On the other hand, we recognise that there is, in some areas, big constraint on housing. We have been and we are ready to build more housing for our own people.”