(Bloomberg) -- For Brits suffering from Brexit hangover, tour operator TUI has a simple answer: cheaper vacation destinations.
U.K. customers are feeling the pinch as their holiday budgets of 1,000 pounds ($1,300) a trip are being squeezed by the pound’s drop since Britain’s 2016 referendum to exit the European Union, making some popular venues like the Caribbean too pricey, TUI AG Chief Executive Officer Fritz Joussen said Wednesday.
As a result, the German travel company, whose offerings include cruises as well as resorts on islands such as Aruba and Jamaica, is shifting capacity to more affordable destinations, including Bulgaria and Croatia.
The currency’s drop “makes holidays more expensive for customers in the U.K.,” Joussen told journalists on a conference call. “If a vacation to some destinations for that price is no longer possible, the destinations will change.” For Hanover, Germany-based TUI, the weaker pound squeezes margins, as costs are in euros and dollars, while British revenue is generated in the U.K. currency.
TUI is seeing some of that shift already, Joussen said, with “slightly weakening” demand for trips to the Caribbean, though tourists from other countries, especially the U.S., have so far filled those empty beds. Prices at some destinations in Spain have also been “very high,” Joussen said, but they have since receded.
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