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How quickly the travel market in Germany will recover in the coming year is still “a big question mark” for TUI boss Fritz Joussen. He did not want to make any forecasts on booking and turnover figures when presenting the annual balance sheet.
But the world market leader in package tours is optimistic about its German customers and refers to recent experiences: "As soon as we opened a destination again, it was booked immediately."
For a long time it was considered uncertain in the tourism industry how quickly Germans would book vacations again.
After all, the pandemic is currently threatening to get out of control, and hard lockdowns and partial lockdowns are likely until next year.
Who wants to commit to a holiday destination?
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After the cancellation and rebooking chaos of the Corona year 2020, many tourists might be tempted to wait until there is more security and then possibly travel more last minute.
But according to the TUI figures, more optimism could be appropriate.
"People say: we are fed up with it, we want to go on vacation," says Joussen, referring to survey results which show that traveling is one of the most missed activities during the Corona period.
Despite all the uncertainties, next summer is already being planned.
Source: WORLD infographic
The program for May 2021 is already 50 percent booked, according to the TUI boss.
The booking numbers are already three percent above those of the pre-Corona year 2019. "The market is intact, our business model is future-proof, and customer demand is there," says Joussen: "Vacation trips remain very relevant for people."
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The great need of many people to make up for the missed trips in the coming year, however, comes up against a still limited tourist infrastructure in many countries.
According to the laws of supply and demand, this means that travel is becoming more expensive.
“The average prices for the 2021 summer program are currently 14 percent higher than for 2020,” confirms the TUI boss.
Source: WORLD infographic
The ailing travel giant urgently needs higher margins.
Because the group's coffers benefit less from the booking figures than it appears at first glance.
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Half of the TUI program was booked in May, but it has also shrunk by around 20 percent.
In addition, a considerable part of the vouchers and rebookings from the 2020 cancellation year are likely to be involved.
When debts will be repaid is still open
The federal government has already had to grant TUI loans three times, a total of 4.8 billion euros so far.
The latest tranche was accompanied by a state entry in the form of a silent participation.
The owners, above all the Russian main shareholder and steel entrepreneur Alexej Mordaschow, made their contribution.
Nevertheless, the balance sheet as of September 30th of this year shows a net debt of 6.4 billion euros.
How and how quickly this debt can be repaid is still open.
With the canceled winter season, the start of the new financial year is also bumpy.
According to the company, total bookings for winter 2020/21 are currently 82 percent below the previous year.
In negotiations with the creditors, the repayments due at the beginning of next year could be postponed to mid-2022.
Joussen believes he can do without “fire sales” of parts of the company.
The announced reduction of around 8,000 jobs worldwide has almost been achieved, said Joussen.
In the course of digitization, jobs in the holiday areas in particular will be eliminated.
The fleet of the airline TUIfly is to be reduced from 39 to 17 planes.
"The group initiated cost-cutting and financing measures at an early stage and accelerated the global realignment," says Joussen.
At the same time, he announced that the long-term goal of reducing costs from EUR 300 million to EUR 400 million per year would be tightened.
Greece was particularly popular in 2020
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The past tourism year, which began in October 2019, initially went very well for TUI.
In January of this year, the group even achieved a new booking record with an increase of 14 percent.
In mid-March, TUI then had to completely stop all travel activities due to the global travel warnings.
At the height of the crisis, TUI burned 550 to 650 million euros per month.
The tourism group was only able to generate sales again when it was allowed to fly the first holiday guests to Mallorca in a pilot project in mid-June.
From July onwards, trips abroad became possible again in many cases with numerous restrictions.
Greece was booked particularly strongly in 2020.
Since the restart in the summer, TUI still had two million customers.
Nevertheless, at the end of this year there was a loss of three billion euros (EBIT) on the books.
In 2019 it was still a profit of 893 million euros.
At 7.9 billion euros, annual sales were 58 percent below the previous year's figure of 18.9 billion euros.
"A complete resumption of business is also to be expected in the cruise segment as soon as vaccines become widely available," says the TUI boss confidently: "The restart of cruises in summer 2020 has shown the great interest of customers."
Meanwhile, the group is planning a further restructuring of the cruise business. The TUI subsidiary Hapag-Lloyd Cruises, which specializes in luxury and expedition cruises, has already been sold to the joint venture TUI Cruises, in which TUI and the cruise giant Royal Caribbean Cruises each hold half. Joussen said they would do a similar thing with the British cruise line Marella.