Brexit-hit pound is forcing Britons to choose cheaper holidays, says Tui
Travel giant Tui has said the Brexit-hit pound is forcing British holidaymakers to switch to cheaper destinations and revealed it is drawing up contingency plans for disruption from the UK's divorce from the EU.
Tui boss Fritz Joussen said Britons are beginning to cut back on long-haul holidays and some European resorts as the weak pound is making trips more expensive, but confirmed the group is still seeing record numbers of UK bookings as holidaymakers choose alternative destinations such as Croatia and Bulgaria.
The group called for a "workable solution" for airlines, including keeping current arrangements in place until a Brexit deal can be reached.
It said: "Whilst we are not able to control the outcome of these negotiations, we are putting contingency plans in place in order to manage potential disruption to our operations."
Tui, which ditched the Thomson name in the UK in October as part of a global rebrand, made the plea as it reported a 12% surge in underlying earnings to £1.1 billion euros (£968 million) for the year to September 30.
It also said it was set to grow annual earnings by at least 10% again in the new financial year and for each year to 2020.
Mr Joussen said Brexit and the fall in the value of the pound is already having an impact on the group's profit margins, as well as the spending power of Britons.
He said while Britons have maintained the average spend of £1,000 on their foreign holiday, they are having to change destinations due to poor exchange rates.
"In reality, if the vacation to some of the destinations for £1,000 is not possible any more, then the destinations will change," said Mr Joussen.
But Tui has not seen any drop off in UK demand and is forecasting another strong year ahead for bookings thanks in part to the collapse of Monarch.
It is also seeing a strong recovery in demand for trips to Turkey, with bookings for next summer up 70% year-on-year as holidaymakers return to the country after terrorist attacks in recent years.
The group's annual results showed earnings were boosted by strong sales of its own-brand hotels and cruise trips, which offset unexpected losses at its airline, Tui fly.
It suffered a bottom line hit of 39 million euros (£34 million) at Tui fly after flight crews called in sick during an industrial dispute, while it was also hit by the collapse of Air Berlin, which saw it renegotiate flight agreements.