Consumers cold to winter holidays
Britain's biggest holiday firm TUI Travel outperformed its rival Thomas Cook but warned winter bookings in the UK had slowed down in the face of weak consumer sentiment.
The Thomson Holidays and First Choice owner reported a 12% year-on-year drop in winter 2011/12 bookings as of November 27, compared to an 11% decline at its last update on September 11, as capacity - hit by turmoil in Egypt and Tunisia - was reduced 9%.
But the recent weak trade followed a record full-year performance as higher margin holidays helped drive a 15% increase in underlying operating profits in the UK to £147m and an 18% rise in group profits to £471m in the year to September 30.
TUI said sales of differentiated products - concept holidays unique to TUI brands - such as water park SplashWorld, Holiday Village resorts and child-free Couples holidays, grew 14% in the UK in the year to September 30.
The robust performance comes shortly after Thomas Cook spooked holidaymakers and investors when it turned to its banks for extra support in the wake of deteriorating sales. Shares in TUI were more than 2% higher following the full-year results. TUI said it was experiencing a later booking profile, reflecting the continuing issues in north Africa and the consumer spending squeeze, driven by higher prices and muted wage growth.
TUI said capacity in the UK had reduced as it moved aircraft within the group to serve higher demand in its markets in Canada and Scandinavia.
The group said average selling prices are up 5%, reflecting cost inflation of around 4% but also the higher proportion of differentiated products, which are up 12% in current trading.