Holiday Giant TUI Counts on U.K. Vaccines to Rescue Summer
(Bloomberg) -- TUI AG stuck with plans to offer four-fifths of its usual holiday program this summer, betting on a surge in demand from Britain to fill hotel rooms as the country’s Covid-19 vaccination program gathers pace.
The world’s biggest tour operator said Tuesday that while current sales are at only 56% of 2019 levels, average prices are higher and customers are sitting on savings with money to spend, suggesting there’ll be a late surge in bookings as more people get jabs.
“The English market has a special significance for our company,” Chief Executive Officer Fritz Joussen said. “We see an impressive pace and ambitious targets for vaccinations there. Demand remains strong. People want to travel.”
TUI is betting on the rapid pace of the U.K. vaccine rollout to stimulate a recovery, even as the country further tightens travel restrictions against new strains of the coronavirus. Without a summer rebound, the Hanover-based company risks running out of cash despite receiving 4.8 billion euros ($5.8 billion) in German government and private funding since the start of the crisis.
TUI shares traded 3.5% lower as of 3:58 p.m. in London, where they have their main listing, trimming gains this year to 11%. The stock lost more than half its value in 2020.
The company saw revenue tumble 88% in the quarter through December, with its usual net loss for the period swelling to 802.9 million euros. Hopes for an early recovery have been dashed by reimposed lockdowns aimed at containing new forms of the virus.
Britain confirmed Tuesday that all incoming travelers will need to take two Covid-19 tests during 10 days of self-isolation, having already produced a negative result before boarding their plane. Those arriving from the highest risk countries will have to quarantine at a designated hotel at a cost of 1,750 pounds ($2,412), with a fine of up to 10,000 pounds for failing to do so.
Fines will also be levied for failing to take tests, while people who conceal the fact that they have traveled in a red list country could face 10 years in jail.
Still, Joussen said the trend toward purchases of costlier holidays reflected in bookings “is a good signal,” with “customers are in the starting blocks,” and that a recovery in July, August and September will ensure no additional liquidity will be required.
Greece is likely to be the first destination to reopen, he said on a conference call, after the tourism-reliant Mediterranean nation indicated it intends to let in people with proof of vaccination.
The CEO called on governments to “use all opportunities” to ease restrictions and restore travel freedoms as soon as possible, saying he expects Britain to achieve herd immunity and vaccinate 75% of its population by mid-July.
Germany may be TUI’s biggest headache, with only 500,000 of the 2.8 million summer bookings to date coming from Europe’s largest economy.
“It should have vaccinated faster, but everybody has understood now that it is a big project,” Joussen said. “As soon as borders open, people will go on vacation.”
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