Europe is in the midst of a holiday boom with companies from travel operators to airlines posting surging customer numbers and revenue.
TUI AG joined the party today with strong interim results pointing to a 15% increase in revenue in the first quarter as higher demand and improving prices helped lift the top line.
After a promising winter booking season, summer bookings have proved to be robust, and the group’s total bookings across all seasons are 8% ahead of last year.
The company said it reaffirmed its full-year guidance of revenue increasing 10% and EBIT expanding by 25%.
Such growth in revenue and earnings clearly pleased investors on Tuesday with TUI AG shares 3% higher at the time of writing.
“TUI has reported record sales as resilient consumers take to the air. Cost of living pressures and economic uncertainty aren’t stopping us from making our sunny getaways. A lot of the operational work TUI has done means it’s in a better position to capture this demand. Efforts to expand higher-end offerings in its hotel portfolio is a shrewd move and could help it remain competitive if lower earners start to pull back on booking holidays,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
However, Lund-Yates continued to caution that the group may suffer when the boom in demand for holiday’s were currently experiencing recedes.
“TUI operates a hefty cruise business too, and the cash flow dynamics of operating enormous ships makes it more exposed if and when holiday spending starts to wane. So while the group’s done pretty much everything it can within its control, there remains an element of uncertainty. Unlike airlines with short-haul focus, a lot of TUI’s routes fall into the more expensive medium-haul bucket, further increasing risk.
“There are questions swirling about TUI’s potential decision to drop its London listing. The added complexity and cost of maintaining dual listings since Brexit has seen others decide to go down a similar route. While it does little to change the business case, the optics for London are less than ideal.”
