We’re all going on a summer holiday if TUI is to be believed. Its bookings are picking up and the company has its eyes on a return to profit very soon. It’s a similar message to the one issued by International Consolidated Airlines in that the travel sector is slowly recovering.
The big problem with TUI and many other travel companies is that they have large debts to pay down and costs are going up. So, while demand is picking up, getting their finances into better shape might take even longer.
“The war in Ukraine only appears to be having a limited impact on travel demand. When the war began, there were fears in the market that people would not want to travel around Eastern Europe in case the invasion spilled over into other countries. Subdued demand by TUI customers for holidays in Poland would suggest this ‘spill-over’ fear still exists, albeit principally confined to this country,” said AJ Bell’s Russ Mould.
“While bookings in general are in recovery mode, there remains a big risk that momentum won’t be sustained given the pressures on consumers from the rising cost of living. We’ve already seen reports that big ticket retail items like sofa and electronic goods are suffering, so it makes sense to also suggest that holiday plans might be delayed once again if the costs keep going up.
“For those who haven’t already booked their summer break, the longer they leave it, the higher the potential not to go away at all given the direction of travel for inflation.
“TUI argues there is pent-up demand for a summer holiday and that is certainly true. However, some families may not feel comfortable digging into their savings to fund a week on the beach when they can see their monthly bills going up by a large amount.”
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