Holiday giant TUI bets on UK and German Covid recoveries to save its summer holidays

World’s biggest tour operator plans to offer 80% of its usual holiday programme this summer betting on a surge in demand – particularly from Britain – as that country’s Covid-19 vaccination programme gathers pace

Greece is likely to be the first destination to reopen as early as April after the tourism-reliant Mediterranean state indicated it intended to let in people with proof of vaccination.

Holiday giant TUI has stuck with plans to offer 80% of its usual holiday programme this summer, betting on a surge in demand – particularly from Britain – to fill hotel rooms as that country’s Covid-19 vaccination programme gathers pace.

The world’s biggest tour operator said 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,” TUI chief executive 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 programmes.

Without a summer rebound, the Hanover-based company risks running out of cash, even after receiving €4.8bn in German government and private funding.

TUI said it currently had €2.1bn of financial resources.

“That should be enough until summer, until the business takes off in summer,” Mr Joussen said.

But there is still great uncertainty over the European travel market for the peak holiday months this year.

In Britain, TUI’s biggest market alongside Germany, the government has repeatedly warned people not to book trips abroad for the summer. It is currently in the process of tightening border controls.

TUI said it was ready to relaunch its business in the coming weeks and that it had 2.8m bookings for this summer, adding that customers were likely to book much closer to their departure date this year.

TUI is pinning its hopes on vaccine success in key markets.

Germany may be TUI’s biggest headache, with only 500,000 of the 2.8m 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,” Mr Joussen said. 

As soon as borders open, people will go on vacation.” 

TUI, which is cutting a many as 8,000 jobs to survive the crisis, saw its rescue funding topped by a third tranche of German aid in December. So long as there’s a rebound in July, August and September, no additional liquidity will be required, Mr Joussen said.

TUI saw revenue tumble 88% in its fiscal first quarter through December, with its usual net loss for the period swelling to €802.9m.

The CEO called on governments to “use all opportunities” to ease restrictions and restore travel freedoms as soon as possible.

He said Greece was likely to be the first destination to reopen as early as April after the tourism-reliant Mediterranean state indicated it intended to let in people with proof of vaccination.

TUI’s net debt is €7.2bn and summer cancellations could be painful.

• Bloomberg and Reuters