TUI, Europe’s largest tour operator, cut its forecast for sales growth this year in a further sign that terrorist attacks are curbing growth in the travel industry.
Revenue will rise by about 2 per cent in the year ending 30 September, down from an earlier prediction for growth of at least 3 percent, the Hanover-based company said on Thursday in a presentation for analysts.
TUI maintained its forecast for an increase of at least 10 per cent in underlying earnings before interest, taxes and amortization, the company said in a statement.
TUI and competitors Thomas Cook and Norwegian Cruise Line Holdings are feeling the effects as tourists shun countries targeted by terrorist attacks since early last year, including Tunisia, Egypt and Turkey, and seek locations they perceive as safer.
TUI has compensated for those shifts by sending clients to hotels in the western Mediterranean or further abroad. It typically incurs losses in the first two fiscal quarters, and generates the bulk of profit in
Underlying profit in the third quarter, which also excludes currency effects, takeovers and disposals, climbed 1.1 per cent to €180 million (£154 million). Third-quarter sales, including discontinued operations, dropped 5.4 per cent to €4.83 billion (£4.14 billion).
Room occupancy at the RIU hotel division, which has large operations in the booming travel market of Spain, rose 5 percentage points while the average rate per bed increased 3 per cent.
Earnings declined at hotel operations in North Africa and Turkey, which in addition to terrorist incidents in recent months was also the site of a failed military coup in July.
Foreign currency swings will shave about €100 million (£86 million) from operating profit this year, the company said.
© Bloomberg
