Middle East conflict has cost Europe’s largest travel firm €60m so far, and timing of decisions over trips has shifted
Holidaymakers are waiting until the last minute to book their trips because of the continuing uncertainty caused by the war in Iran and the cost of living crisis, according to Tui, Europe’s largest travel company, which said the war had cost it €60m (£51m) so far.
In the weeks after the outbreak of the war at the end of February, Tui recorded a temporary drop-off in customers wanting to travel to Cyprus or Turkey, in what the company called a “volatile market”.
Tui’s chief executive, Sebastian Ebel, said: “Travel remains highly relevant to people’s lives, but the timing of travel decision has shifted. Wars and geopolitical tensions, consumer caution, economic weakness and rising inflation in Europe’s core markets – all these factors have influenced consumer sentiment and the timing of purchasing decisions.”
Two of Tui’s cruise ships – Mein Schiff 4 and 5 – were in the Gulf in Dubai and Qatar when the conflict in Iran broke out. They were unable to continue their journeys through the strait of Hormuz, leading to the ships being out of service for 12 weeks. The cost of these “bad luck incidents”, as the company called them, of repatriating customers and the lost income from the ships was €40m.
“We had to repatriate all customers, 5,000 customers on board, which was a significant cost. And of course, when the ship is not cruising, you don’t have the income,” Ebel told reporters.
The company reported a 43% slide in pre-tax profits to €153m (£131m) between April and June, down from €267m a year earlier, while it reported a 3% fall in customers during the period to just under 10 million.
Tui’s markets and airlines division swung to a €17m loss in its third quarter from a €50m profit a year earlier as it was hit by weaker demand for holidays, high fuel prices and a competitive travel market.
Tui usually makes most of its money between July and September, and the company said demand for summer holidays had picked up in the past four weeks as the peak summer season got under way.
This was despite the string of heatwaves that have hit western Europe, and Ebel told reporters that “destinations were quite often cooler, significantly cooler than the weather here in Germany”.
He added that hotel owners had been investing in air conditioning, “not only in their rooms, but also in the common facilities, from the dining room to the spa”.
Europe’s changing climate is prompting some holidaymakers to fly outside peak holiday times in the “shoulder season” – which typically includes March to May and September to November – to take advantage of cooler temperatures.
“It’s important to build the offers also for November, December, February, March, because we do see there is opportunity,” Ebel said, adding the company now flies to Heraklion in Crete in November and discussed with local organisations whether restaurants would stay open during this month to serve tourists.
He said: “From a weather standpoint, it’s supporting this trend. The hotels need to support that and some have invested not only in cooling but also in heating; that has helped customers feel comfortable even if there is cooler weather.”
US-Israel war on Iran
UK cost of living crisis
