BGN Entrepreneur

It is a measure of how far the travel industry has come that the markets have taken swine flu in their stride. Fears of a Sars-like disaster have been quickly dispelled as the big tour operators have used their flexible business models to switch capacity from Mexico to other long-haul destinations. TUI travel, the Thomson and First Choice operator, announced that bookings to Jamaica were up by 30% in the past two weeks, with Egypt up by 23% and the Dominican Republic up by 19%.
In a reassuring trading update ahead of next week’s half-year results, TUI Travel said that it had completed its winter program in line with expectations, with reduced capacity leaving it with fewer holidays to sell, meaning stronger pricing in the late booking market. Capacity cuts have also helped its summer program pricing, with average UK selling prices up by 10%. With consumers having more money in their pockets due to lower mortgage and household bills, trading has picked up, with volumes in the past eight weeks down by 11% against a cumulative decline of 17%.
The main doubt about TUI Travel is the intentions of TUI AG, its German 51% shareholder, which has talked about taking it private or swapping its debt for its continental assets. The uncertainty is unhelpful, but does not detract from the improving trading outlook.

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