The world’s largest integrated tourism group, TUI Group, is planning to open new hotels in low-cost European destinations such as Bulgaria and Croatia aimed at British holidaymakers whose spending power has slumped since the Brexit referendum hit the pound.
TUI cited surveys which show that British tourists typically spend around £1,000 on a holiday, a figure that has remained steady as the value of the pound has fallen against the euro and the dollar since June 2016, pricing many out of once popular destinations such as the Caribbean.
Speaking on a conference call on December 13, TUI’s CEO Fritz Joussen said the firm was planning ahead even though he acknowledged this was “very difficult” while negotiations are ongoing and there is still considerable uncertainty about the outcome.
“The facts are that after the Brexit vote the pound diluted 20% … historically UK customers spend round about £1,000 on their vacation and all market research shows that will stay very stable,” Joussen said. If this means in future a €1,000 vacation is no longer possible for British customers, “destinations will change,” he added.
TUI has responded to the fall in spending power by investing into new developments in countries such as Bulgaria and Croatia, said Joussen.
Investments already made include the opening of the first TUI Blue hotel in Croatia in July, at what is believed to be the oldest hotel building on the Croatian Adriatic coast.
On the other hand, TUI reported continued strong demand for travel from the UK, partly driven by the collapse of Monarch, which has benefitted its rivals.
As well as the plans for Southeast Europe, Joussen also noted a comeback in Turkey and North Africa, while its strongest growth areas were the Caribbean and Southeast Asia.
Overall, the firm reported that it increased its underlying Ebitda by 12.0% in the 12 months to September, despite a “challenging market environment”, while turnover was up 11.7% to €18.5bn.
The Germany-based company is listed on the London Stock Exchange, where it is a member of the FTSE 100 index. It employs 67,000 people in more than 100 countries, serving 20mn customers a year.