TUI basks in the sun as Brexit fails to dent holidays

● Thomson owner expects earnings to rise some 12% to 13% this year ● UK business robust, says group

Brexit worries and instability in Turkey have failed to dampen the outlook at TUI, Europe’s largest tour operator, which has raised its profit guidance for the full year to the end of September.

The group said demand has remained strong from holidaymakers in the UK, where its brands include Thomson and First Choice. Revenues in the summer season were up 5 per cent as Britons defied concerns that the devaluation of the pound since the Brexit vote on 23 June would undermine the market for foreign holidays.

Bookingsfromtheukforthe 2016-17 winter season are also robust with an increase of 22 per cent on the same period a year earlier. Destinations such as Mexico and the Dominican Republic have increased in popularity as holidaymakers avoid the troubles in traditional winter hotspots Turkey and Egypt, which has pushed long-haul bookings up by 26 per cent.

TUI said it now expects underlying group earnings to rise 12 to 13 per cent for the full year, as strong demand from the UK offsets weakness in the Nordics and Germany. That compares to a forecast of growth of at least 10 per cent made in August.

Turkey’s popularity as a holiday destination has plunged since an attack on tourists in Istanbul in January, followed by a failed coup in July. Tour operators such as TUI and smaller rival Thomas Cook have been forced to quickly add more flights and hotels in alternative markets to cope with the shift, analysts said.

Earlier this week Thomas Cook, which has a higher exposure to Turkey, reported a 4 per cent fall in summer bookings led by a 40 per cent drop in trips to Turkey. Friedrich Joussen, chief executive of German-headquartered TUI, said his company has by contrast seen a 1 per cent increase in overall bookings, rising to 7 per cent excluding Turkey.

“This demonstrates the strength of our integrated business model and the success of our content-centric strategy, as well as the continued delivery of our merger synergies,” Joussen added.

Analysts said TUI has also benefited from its fleet of more than 10 Boeing Dreamliner 787 aircraft, which are suited for meeting demand for longhaul winter sun breaks. TUI is the only leisure airline operating the Dreamliner.

TUI also confirmed that it has begun marketing Travelopia, its specialist holiday arm of more than 50 different brands offering luxury, adventure and education holidays.