Return to pre-crisis levels: Tui is aiming for a strong summer vacation

The Antarctic has been reached - the expedition ship Hanseatic Nature with its vacationers is currently particularly far away from the Tui Group headquarters in Hanover.

Ice bathing on the shores of Deception Island is on the program, in Germany the Tui CEO Fritz Joussen speaks of warmer normality: "We expect the return to a booking level in the summer of 2022 similar to that of Corona 2019."

Timo Kotowski

Editor in business.

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The financial year ended on September 30th, however, brought a loss of 2.5 billion euros, but the first Corona year ended with a loss of 3.1 billion euros.

Sales fell by 40 percent to 4.7 billion euros.

Two years ago there was almost 19 billion euros in revenue.

In addition to the pictures from Antarctica, which Tui shows in an online Advent calendar with 24 travel impressions, there is also a hint of how happy one is to be “home” at last.

And that means being on the road with a travel company.

For 2022, TUI is convinced that many more vacationers will share the joy of being away from home.

Already more than four million bookings for 2022

Other tourism managers, on the other hand, had already expressed their concern that the number of travelers will be earlier in 2023 at the earliest. "I can't see this negative image," said Joussen. 4.1 million bookings have already been made for the new financial year, and 5.4 million holidaymakers traveled with Tui for the entire year in 2021. And Joussen went one better on the prognosis that normality would return in 2022. He expects Tui to develop better than tourism as a whole.

His forecast means “the pre-crisis level for us, not the pre-crisis level for the market”.

Because in 2019 there was still a major competitor, Thomas Cook, who disappeared into bankruptcy at the end of the season.

“20 percent of the market will be redistributed.

And those market shares will have to go somewhere, ”says Joussen.

"Travel is a mega trend."

The fact that long-standing, older customers are less likely to leave in the next few years is offset by the fact that young new customers have a great desire for vacation.

"Demographics are not good for insurance, but they are good for us," said Joussen.

Vacationers spend more

Currently, reports about the Omikron variant of the coronavirus are slowing down business somewhat, but this effect is not particularly great, Joussen asserts. There are few cancellations. Late autumn is traditionally a period of weaker business for travel companies. Customers paid more for future vacations - but not because of inflation. "The price level has not risen, but vacationers are booking a few more days or five-star instead of four-star hotels," said Joussen. The booking values ​​for the summer would be on average 23 percent higher than a year ago.

With government aid and internal austerity rounds, Tui got through the pandemic. The streamlining and more bookings than in 2020 provided bright spots last summer. The package tour business in Western and Central Europe - including the bookings of German customers that are important for Tui - was operationally profitable, as was the hotel division. Tui attributes the fact that the three summer months ended with an adjusted operating loss before interest and taxes of 97 million euros mainly to travel restrictions in Great Britain. Nevertheless, the summer was a “successful restart”, according to Joussen.

However, next summer should be decisive for Tui's recovery course.

For the winter half-year, the number of bookings - although they are higher priced on average - is 38 percent below the target normal level.

And despite the state aid and, most recently, a capital increase, which brought gross proceeds of 1.1 billion euros, equity is negative at minus 418 million euros.

Joussen preferred to point out that the group currently has a total of 3.5 billion euros in cash at its disposal than in the summer.

Tui has to pay back credit to customers

After the turn of the year, Tui will have to pay out credit granted to customers due to trips that were canceled during the pandemic.

In Germany, tour operators were only allowed to grant vouchers instead of refunds if they agreed to return their money to customers by mid-January 2022 if they were not redeemed.

"A few hundred million euros" credit has not yet been used for new bookings, said Joussen.

“But we won't have to pay out much.” Numerous customers are currently using their credit for 2022.

And a low three-digit million amount in disbursements would be "no big deal" with 3.5 billion euros in liquidity, said Joussen.

Debt reduction and repatriation of state aid will be a bigger issue.

Tui was able to reduce its net debt, but it still amounts to 4.9 billion euros.

Like Deutsche Lufthansa, the group also wants to repay silent contributions to the German economic stabilization fund in the amount of around one billion euros.

Asking shareholders for money one more time in the course of a capital increase is therefore a possible source of income for the group.

In 2021, the group had already sold hotel properties and brought the shipping company Hapag-Lloyd Kreuzfahrten, whose ship Hanseatic Nature is currently cruising in Antarctica, into a jount venture that only half belongs to Tui.