Europe’s largest package tour operator, TUI, revealed that cash-strapped consumers are opting for more affordable holiday destinations such as Egypt, Bulgaria, and Tunisia.
The travel company reported that inflationary pressures have diminished, leading to stabilization in the average selling price of holidays.
Despite this levelling out, the cost of trips remains “significantly higher” compared to 2019 levels.
Inflationary pressures have pushed travellers to seek value-for-money options when traditional hotspots like Spain exceed their budgets.
TUI’s CEO, Sebastian Ebel, highlighted the emergence of new customers with limited budgets who continue to prioritize vacations despite financial constraints.
“We also see quite often new customers who have less income but still want to travel, and they have a budget of €1,000/£800 per vacation, and if they don’t see it in Spain, then they look for alternatives, and they find alternatives,” Ebel said.
Destinations like Mallorca and the Canary Islands remain fully booked during peak seasons, but Ebel assured there are ample choices for travellers.
The resurgence of Tunisia and Egypt as holiday destinations marks a positive turnaround after the 2015 terror attacks significantly impacted visitor numbers.
This shift reflects evolving consumer priorities, with many gravitating toward regions offering a mix of affordability and experiences.
TUI’s financial recovery accelerates with profit growth
TUI reported a significant 35% increase in pre-tax profits, reaching €1.3bn for the year ending September 30.
The recovery has been bolstered by robust demand for package holidays and a thriving cruise division.
The company successfully reduced its net debt by €500m, bringing it down to €1.6bn as it continues to rebound from pandemic-era losses.
More than 20 million travellers chose TUI in the past year, a 7% increase from the previous period.
This growth underscores the enduring appeal of travel, even as inflation influences spending habits.
The company’s recovery follows substantial government bailouts during the COVID-19 crisis, when TUI faced a €3bn full-year loss due to travel shutdowns.
Now, the operator is leveraging its strong performance to rebuild finances and meet rising demand for international travel.
Addressing anti-tourism protests in Spain
Amid rising anti-tourism protests across Spain, TUI has taken steps to engage with local communities.
Demonstrations in popular destinations like Mallorca and Gran Canaria have raised concerns over housing affordability and urban displacement.
Ebel said he travelled to Mallorca and spoke to local people about the issues, after tens of thousands of protesters called for a rethink of a business model that they say has pushed up housing prices and driven local people out of cities.
“We bring customers who stay in a hotel so they don’t take an apartment away; we bring customers into hotels where our employees have good contracts, good working conditions,” Ebel said.
“On the other hand, we recognise that there is, in some areas, big constraint on housing. We have been and we are ready to build more housing for our own people.”
He also acknowledged housing challenges and expressed readiness to invest in new housing solutions for employees.
TUI’s recovery signals resilience and adaptability as it navigates evolving travel trends and socioeconomic pressures.
With a strategic focus on affordable travel and community engagement, the company is poised for sustained growth.
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