Holiday giant TUI betting on UK jabs to rescue its 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 in a statement on Tuesday that while current sales are at only 56% of 2019 levels, 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 a UK travel market that’s still deteriorating amid new strains of coronavirus even as the country rolls out one of the world’s fastest inoculation programs. Without a summer rebound the Hanover-based company risks running out of cash even after receiving 4.8 billion euros ($5.8 billion) in German government and private funding.
Shares of TUI traded 2.8% lower as of 8:05 am in London, where they have their main listing, trimming gains this
year to 13%. That’s after the stock lost more than half its value in 2020.
TUI saw revenue tumble 88% in its fiscal first quarter through December, with its usual net loss for the period swelling to 802.9 million euros.
Like other leisure firms, TUI has seen any immediate recovery in demand undermined by reimposed lockdowns as the pandemic continues to rage. While Britain’s inoculation program is ahead of Germany, TUI’s other big market, people returning from abroad will be required to take two tests and quarantine in a hotel for 10 days from next Monday.
Still, Joussen said the trend towards buying costlier holidays reflected in bookings “is
a good signal” and that “customers are in the starting blocks.”
He said on a conference call that Greece is likely to be the first destination to reopen as early as April after the tourism-reliant Mediterranean state indicated that 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.”