Tourists have been piling into Spain over the last two years due to security concerns around other summer destinations such as Tunisia, Egypt, and Turkey.
Visitors to Spain jumped 12% in the first half of 2017 to 36.4m.
Reports have also circulated in the past week that chronic overcrowding in some of Europe’s most beloved tourism hotspots is fuelling a backlash by locals against visitors.
“Spain is pretty full,” Fritz Joussen told reporters after the group reported third-quarter results.
“Last year we had an all-time high and this year we will be on similar levels.”
Mr Joussen said most people in Spain were happy with tourists because they help provide jobs and support the economy. But with prices for Spain rising due to high demand, other more affordable destinations could come into play.
“If demand is very high, prices are high and other destinations build because they are more affordable and that is what is happening right now,” Mr Joussen said.
The higher prices could be a factor in particular for UK customers, who have seen the cost of their holidays rise due to the weak pound following the country’s vote to leave the EU. “Initially we saw some weakening demand, but it’s now resilient so people are getting used to higher prices,” Mr Joussen said of UK customers.
He said TUI would probably not reduce capacity for Turkey next year, because demand was coming back. And he said TUI would look at adding Tunisia back into its programme but no decision had been taken.
Rival Thomas Cook is planning to restart holidays to Tunisia but said it would take time to set up.
Mr Joussen was speaking after the group increased its sales target for the year to “significantly more” than 3% growth and reported a 38% rise in core profit to €221.6m, partly thanks to the later timing of Easter.
It confirmed a target for core earnings to rise by at least 10% this year.