Next year’s holiday will cost you more

As the pound falls again, Thomson warns tourists . . .

HOLIDAYMAKERS have been warned to face the cost of the their summer breaks rising next year because of the recent fall in the pound.

Travel giant Tui, which owns Thomson and First Choice, warned British holidaymakers that because a number of its reservations are made a year in advance and paid for in euros by the operator, this would have an impact on this year.

While the tour operator said 60pc of the holidays it sells in the UK are packages paid for in pounds, it secures its hotels and airlines with euros and since the referendum the value of sterling against the euro has fallen 9pc.

Chief executive Friedrich Joussen insisted full-year profits were on target but he warned that if the pound continue to be weak, prices would increase next summer to pay Tui’s extra costs.

The latest warning comes after a summer of disruption for the holiday giants as British tourists change their plans because of a perceived terror threat in some countries.

Yesterday Tui said 2m of its 20m customers had changed their holiday plans in the wake of terrorist attacks – heading for Spain and Greece instead of Turkey and North Africa.

Joussen said: ‘If you go to a euro country and the pound stays weak then prices will go up, that’s clear. How big that increase will be remains to be seen.’

Tui claims it has held prices flat over the last three years, but Joussen said: ‘Now you’ll see an increase.’

The travel industry has been hit hard by a summer of woes.

Budget tour operator Low Cost Holidays collapsed into administration affecting consumer confidence, and EasyJet and British Airways owner IAG issued profits warnings in the wake of the referendum.

Tui, whose shares were up 2.87pc, or 29p to 1041p, has less exposure to Turkey than rival Thomas Cook. But over the third quarter sales dropped 5.7pc due to attacks which caused travellers to delay making holiday decisions.

Operating profit remained strong – up 1pc to £155m as holiday makers flocked to Spain from Turkey causing demand to peak and prices to rise.

Bookings to Turkey have fallen 40pc, but Tui’s slate of summer holidays have been 87pc sold.

Cruises and transatlantic destinations have been popular with Spain at capacity, and there was strong demand for Greece and Cape Verde.

Joussen said: ‘Spanish destinations are becoming more lucrative because capacity is very tight and the prices there are rising.

‘No-one is immune to external impacts. Today, we are in a better position to cushion geopolitical challenges.

‘However, it has been demonstrated that we have launched the right strategy and have developed a sophisticated risk management system.’

Demand from UK holidaymakers had not been hit by the decision to leave the European Union with Brits still keen to get some summer sun, despite the weak pound making it more expensive to go abroad.

Joussen said: ‘Despite the weaker pound, the desire of Brits to go on holiday has not been affected. There’s been a very strong performance from the UK, bookings have risen very strongly.’

The firm has 1,800 travel agencies and owns six airlines with more than 130 aircraft. It also owns 13 cruise liners and holidaymakers stay in 300 of its hotels containing 210,000 beds. Tui sends 30m customers to 180 different regions.

In 2015 it employed 76,000 staff and is jointly listed on the Footsie and the Frankfurt Stock Exchange.