(Bloomberg) -- Thomas Cook Group Plc said a slump in Europeans traveling to sunspots hit by a spate of terrorist attacks is effectively over as tourists flock back to eastern Mediterranean and north African countries.
The holiday giant’s bookings in Turkey for the coming summer season are approaching previous levels and it’s also piling on capacity to Tunisia and Egypt, Chief Executive Officer Peter Fankhauser said in an interview in London.
Demand is being driven by a perceived lower terror threat as time passes, combined with a jump in the cost of vacations in Spain, where Thomas Cook and rivals piled on capacity to offset the collapse elsewhere, prompting hotels to increase fees. British travelers in particular are also becoming more value-driven after the pound weakened following 2016’s Brexit vote.
“I’m fine with demand,” Fankhauser said. “Turkey is back. It was always attractive and the value is now unbeatable because they were hit hard and there are some fantastic deals. Spain has seen increased demand and an unfavorable currency situation and it’s becoming quite expensive.”
British interest in Turkey returned fastest. Bookings from Germany took longer to recover after 12 people from the country were killed in a 2016 suicide bombing in Istanbul, and amid heightened political tensions between the states. The Turkish revival, together with the collapse of rival Air Berlin Plc, has also buoyed earnings at Thomas Cook’s Frankfurt-based airline Condor.
Thomas Cook resumed travel to Tunisia with three U.K. flights a week and will move to 11 a week this summer. The country had 35 services prior to an attack in the resort of Sousse in June 2015 in which a gunman prowled the beach and hotels murdering 38 people, mostly British clients of rival operator TUI AG.
“We are going back in very carefully,” Fankhauser said. “We want to be sure that the security standard is really fulfilled. You can never guarantee security, but we can be sure those hotels are taking it very seriously.”
Egypt is also recovering, though flights to Sharm el-Sheik remain grounded after the suspected bombing of a departing Russian jet in 2015, with the rival Red Sea resorts of Hurghada and Marsa Alam picking up the slack. The latter has become a “mixed” resort with Britons joining the German visitors who previously dominated, he said.
Thomas Cook is turning away from those hotels in Spain, its biggest destination, where the price of accommodation has jumped without any accompanying investment in the standard of facilities, the CEO said.
“Some places have taken the chance to upgrade but some haven’t and those people are going to suffer,” he said. “If the customer can choose between a five-star hotel in Turkey and a four-star one in Spain they tend to go for the better product.”
Croatia, Bulgaria and the Italian islands of Sicily and Sardinia, pushed by Thomas Cook as major new destinations at the height of the terror wave, are doing well but remain too small to provide significant alternative accommodation, according to Fankhauser.
Thomas Cook shares traded 1.1 percent higher as of 1:29 p.m. in London. The London-based company, which traces its history back more than 175 years to the first organized rail tours, is scheduled to report results for the fiscal first half ended March 31 on May 17.
©2018 Bloomberg L.P.