Holiday makers will not be spoilt for choice this winter as travel giant Tui has announced further cuts to winter capacity due to changing restrictions as a second wave of Covid-19 hits the UK and other parts of Europe.
This follows the company’s disappointing and unprecedented 83 per cent nosedive in summer bookings.
Russ Mould, investment director at AJ Bell, said: ‘Despite this optimism, Tui has seen a decline in booking volumes, holiday prices, holiday capacity and a shift in consumer trends whereby many people are waiting until the last minute to book, which clouds earnings visibility.
‘The fact that governments keep changing travel advice is not helping matters, but the pandemic is a fluid situation and companies like Tui will simply need to keep on their toes and be ready to either seize opportunities to sell more holidays if conditions permit, or hunker down and go into survival mode if conditions worsen.’
The Anglo-German business said it has cut its fourth quarter programme from 30 per cent to just 25 per cent, with the upcoming winter holiday capacity recently reduced by around another fifth.
The company has also switched its focus to alternative low-risk destinations.
But there’s still much uncertainty that Tui has to deal with.
It said that the last month has been impacted by ‘continuous changes in travel advice by various governments across our markets’.
Russ Mould, investment director at AJ Bell
Typically travel companies rely on advance bookings but travellers are exercising caution and only booking at the last minute.
Tui added that holiday prices have been slashed by 19 per cent, while it has also seen winter sales fall 59 per cent against the same period last year.
The company has done much to try and curb costs since the pandemic hit. Back in May, Tui revealed plans to axe 8,000 jobs and shut 166 of its high street stores earlier as part of its cost-cutting measures.
It reduced its fixed costs by more than 70 per cent during the lockdown period and said it now hopes to permanently reduce its cost base by 30 per cent across the group.
The chief executive of Tui Group, Friedrich Joussen, said: ‘We have successfully restarted our operations; customers are enjoying their holidays with newly adapted hygiene protocols and we have taken 1.4million customers on their holidays since restart.
‘Destination availability at present is highly influenced by government policy and development of the pandemic, meaning the environment remains volatile, and is likely to remain so for the next few quarters.
‘Our integrated model, underpinned by our trusted and leading brand, offering differentiated products and attractive value propositions, combined with proven flexibility in a volatile environment, means we are strategically well placed to benefit as leisure travel volume recovers over the coming seasons.’
Last week Easyjet announced that it had hired Tui executive Kenton Jarvis, who will become the company’s chief financial officer. But Tui’s rival is also suffering reduced bookings with summer capacity less than 40 per cent.
The travel sector is not the only one that’s been impacted by tighter restrictions due to Covid-19. Restaurants and pubs have also suffered heavy losses and today it’s been announced that they have to adhere to a 10pm curfew and offer table service only.
In response, Wetherspoons announced it will cut up to 450 of its 1,000 jobs at airport pubs.
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