UK winter bookings down

Britain’s biggest holiday firm TUI Travel outperformed its rival Thomas Cook but warned that winter bookings in the UK had slowed down in the face of weak consumer confidence.

The Thomson Holidays and First Choice owner reported a 12 per cent year-on-year drop in winter 2011/12 bookings by November 27, compared to an 11 per cent decline at its last update on September 11. This came as capacity – hit by turmoil in Egypt and Tunisia – was reduced by nine per cent.

Recent weak trade followed a record full-year performance as higher margin holidays helped drive a 15 per cent increase in underlying operating profits in the UK to £147 million.

There was also an 18 per cent rise in group profits to £471 million in the year to September 30.

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 been reduced as it moved aircraft to serve higher demand in its markets in Canada and Scandinavia.

The group, which serves around 30 million customers and operates in 180 countries, said average selling prices were up five per cent.

This reflected cost inflation of around four per cent and the higher proportion of differentiated products, which are up 12 per cent in current trading.

“We are pleased with our robust performance in 2011 and have delivered another year of profit growth against a backdrop of unrest in key North African destinations and weak consumer sentiment in some markets,” said Peter Long, TUI chief executive officer.

Looking ahead, TUI said it was early in the booking cycle for summer 2012 as most of its markets launch their main edition brochures this month.

But so far it has sold 19 per cent of the season’s programme, with bookings 11 per cent lower than the year before, partly reflecting the reduction in capacity, while average selling prices are up nine per cent.

Thomas Cook secured an additional £200 million in funding last month after it revealed sales had deteriorated as a result of low consumer confidence and the unrest in North Africa.

TUI took out a series of adverts in print and online shortly after Thomas Cook revealed its troubles.

This sparked criticism because it drew consumers’ attention to Cook’s financial situation.