TUI Travel Forecasts Decrease in Travel for 2010 Winter Season
Wednesday, August 19th, 2009
TUI Travel, the largest holiday company in Europe may have reported higher-than-average revenue for its third quarter profit report, but the company expects a significant drop in travel for the 2010 winter season. According to a recent update in the Wall Street Journal, TUI's Chief Financial Officer says that he expects the 2009/10 winter season to be even worse than last year's drop in winter travel. The company has maintained profitability by cutting capacity and raising its prices considerably, but does not foresee a steady growth trend in the near future.Market conditions are expected to be bleak through early spring 2010, according to market research analysts and experts at TUI. TUI has had to make many operational and sales adjustments to accommodate for this year's ongoing decline in demand for both business and leisure travel.
Reduced demand for travel is a worldwide phenomenon as more people avoid booking exotic vacations, sightseeing tours and travel packages to both domestic and international hotspots. Job losses and tighter household budgets mean few people are making travel plans each season, and even as airlines and hotels offer discounted rates and packages, only some avid travelers are taking the bait. TUI is among several leading tour operators around Europe experiencing the effects of the recession, and have been adjusting their rates and programs in hopes of staying afloat.
Bloomberg.com reports that winter bookings in the United Kingdom were down 21 percent from last year, and bookings in the Nordic region were down 29 percent from last year. Late summer bookings have brought in some revenue for the major travel and tour operators around England, but this looks to be a short-term trend. Still, TUI believes that it is well-positioned for the decline in demand for travel this winter, and is modifying its strategic plan accordingly.
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