TUI and the struggling travel industry
Friday 14th August 2020
It is known that the coronavirus pandemic has battered the travel industry. However, one of the hardest hit companies has been TUI. During July, it was announced that TUI had lost €1.4bn as a result of the pandemic. The recorded revenues from April to June 2020 were only €75 million, which is down 98% from the same period in the previous year.
Although travel operations began to restart over the past few months, the German company announced in July that it would be shutting down 166 stores in the UK and Ireland. Since bookings decreased 81% over the summer, it is unsurprising that the company is struggling to keep stores open. TUI has stated that even before the pandemic, more bookings were occurring online. The pandemic has simply ‘accelerated’ this process according to the company.
However, it has now been released that bookings for the following year have increased by 145% as consumers appear optimistic regarding the pandemic’s course. This is needed to offset the lack of hotel bookings due to decreased occupancy to enforce social distancing. Additionally, cruises are still suspended.
The British government has recently announced its travel restrictions to mainland Spain. This restricts travel to only that which is essential. TUI is not alone in its fear that this will further damage the industry. British Airways and EasyJet have both openly criticised the government’s decision with BA stating it was a ‘low for British holidaymakers’, frustrating an already suffering industry. With fears that France may join the quarantine list, it seems that the travel industry will continue to struggle.
However, TUI’s chief executive Fritz Joussen emphasises that the travel industry has the highest standard of hygiene in all markets. Further, Joussen is optimistic that, with assistance from the government, the company will strengthen its position in the market. This government assistance includes a €1.2bn fund from the German government as well as €1.8bn from a German state lender. This funding will help the German company throughout the dry winter period and hopefully assist recovery.
Ultimately, the optimistic bookings reveal that consumers are willing to fund this industry. However, should the government continue to change its position on travel over the next few months, this may lead to further decline that even state assistance cannot recover.
