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TUI's summer holiday booking rise puts it ahead of Thomas Cook

Published 31/03/2016, 09:16
© Reuters. Tourists walk on the narrow Vida (Life) street located in the Santa Cruz neighborhood in the Andalusian capital of Seville, southern Spain
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By Sarah Young

LONDON (Reuters) - TUI Group (L:TUIT) said summer holiday bookings were higher than last year, outshining rival travel firm Thomas Cook (L:TCG) which said last week that customers were delaying plans due to security concerns.

TUI said bookings for the summer, when it makes all of its profit, were up 2 percent and average selling prices were up 1 percent, putting it on track to meet a target of growing core earnings (EBITA) by at least 10 percent this financial year.

Shares in TUI, which has a market capitalisation of 6 billion pounds ($8.6 billion), gained 4.5 percent to 1,075 pence at 0756 GMT after what Cenkos analyst Simon French called a "reassuring" update.

The booking pattern seen by TUI contrasts with a warning from smaller rival Thomas Cook which said on March 22 that summer bookings were 5 percent lower than last year, as customers organised holidays later due to concerns about security in formerly popular destinations.

An attack on tourists in Istanbul in January has caused demand for trips to Turkey to plunge in recent months, while last year there were also attacks in Paris, Egypt and Tunisia. Earlier in March, 31 people were killed in attacks in Brussels.

Instead of North Africa and Turkey, TUI said tourists were choosing to go to Spain, including the Balearic and Canary Islands, as well as further afield to Mexico, Jamaica, the Dominican Republic and Costa Rica.

Numis analyst Wyn Ellis said TUI's move to sell more upmarket holidays, which are exclusive to its customers, meant its booking profile was different to Thomas Cook's.

"TUI has positioned itself particularly well with what it calls a differentiated product which has an earlier booking pattern," he said.

While Thomas Cook has also positioned itself to sell exclusive holidays, it is less advanced at doing so, exposing it to tougher competition from online holiday firms such as On The Beach Group (L:OTB) and customers who tend to book later.

© Reuters. Tourists walk on the narrow Vida (Life) street located in the Santa Cruz neighborhood in the Andalusian capital of Seville, southern Spain

Shares in Thomas Cook traded down 0.3 percent to 91.5 pence.

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