The ongoing war in Iran and the cost of living crisis in Europe are causing holidaymakers to wait until the last minute to book their trips, resulting in a significant financial impact on Tui, Europe's largest travel company. The company has already lost €60m due to the conflict, with a temporary drop-off in customers wanting to travel to Cyprus or Turkey in the weeks following the outbreak of the war. Tui's chief executive, Sebastian Ebel, noted that the timing of travel decisions has shifted, with factors such as wars, geopolitical tensions, consumer caution, economic weakness, and rising inflation influencing consumer sentiment.
The conflict in Iran has had a direct impact on Tui's operations, with two of its cruise ships, Mein Schiff 4 and 5, unable to continue their journeys through the Strait of Hormuz, resulting in a 12-week period of lost income. The cost of repatriating customers and the lost income from the ships was €40m. Ebel explained that the company had to repatriate 5,000 customers, which was a significant cost, and the ships not cruising resulted in lost income. The company reported a 43% slide in pre-tax profits to €153m between April and June, down from €267m a year earlier, while it reported a 3% fall in customers during the period to just under 10 million.
Despite the challenges, Tui has seen a pickup in demand for summer holidays in the past four weeks, as the peak summer season got under way. Ebel noted that destinations were often cooler than the weather in western Europe, and hotel owners had been investing in air conditioning to make their facilities more comfortable for tourists. The company is also seeing a trend of holidaymakers flying outside peak holiday times to take advantage of cooler temperatures, and is adapting its offers to meet this demand. Ebel stated that it is essential to build offers for the "shoulder season", which typically includes March to May and September to November, and the company is now flying to Heraklion in Crete in November.
The changing climate in Europe is also prompting Tui to adjust its strategy, with Ebel noting that some hotels have invested in heating as well as cooling to make their facilities more comfortable for tourists. The company is discussing with local organisations whether restaurants would stay open during the off-season to serve tourists, and Ebel believes that there is an opportunity to build offers for the off-season. As the travel industry continues to navigate the challenges posed by the war in Iran and the cost of living crisis, Tui is adapting its strategy to meet the changing needs of its customers.
