Tui warns over Omicron hit – but sees holidaymakers splash out on pricier breaks next year

Travel giant Tui has warned that latest COVID fears could hit its winter holiday programme even as it looks to a bounce back in demand for the year ahead.

The company said consumers were splashing out on pricier breaks in 2022 but that it now looked likely to have to cut capacity for the current season “towards the lower end” of its plans.

Shares fell 6% on the update, despite Tui pointing to signs of recovering demand and a “trend towards higher value travel”.

The company said average selling prices for the coming year were 15% ahead of pre-pandemic levels while for the summer they are 23% higher.

It said: “For winter and the coming year, it is clear that holidaymakers are choosing higher-value offers, more package tours and are also prepared to plan a larger budget for their holidays.”

Tui’s update came as it reported a 40% fall in sales to £4.03bn (€4.73bn) for the year to the end of September, a period when trading continued to be held back by the pandemic.

It also suffered a second year of big annual losses, in the red by £2.09bn (€2.46bn), though that was smaller than the £2.7bn (€3.2bn) loss recorded in the prior year, also hit by COVID restrictions.

Chief executive Fritz Joussen said Tui had a “successful summer” after the relaunch of travel and that it had “recovered significantly” in the last quarter.

“We expect summer 2022 and the peak travel season to return to booking levels similar to pre-Corona 2019,” he added.

Tui reported that it had taken 4.1 million bookings for the coming financial year already, after 5.4 million holidays in the whole of the 2020/21 period.

It said it was currently planning for capacity over this winter at 60%-80% of pre-pandemic levels.

But it added: “The increased media coverage of rising incident rates and the emergence of new Omicron variant has weakened this positive momentum, particularly for winter.”

Tui said that “in light of recent trends, capacity will likely be modified towards the lower end of our winter capacity plans”.

The update comes after the return of pre-departure COVID tests for all UK arrivals was described as a “devastating blow for aviation and tourism”.

EasyJet said last week that it had seen early signs of a softening of bookings amid the emergence of the Omicron variant.

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