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TUI and On The Beach have both reported lower summer 2021 booking demand
Thursday 11 Feb 2021 Author: Mark Gardner

Almost since the pandemic began both holidaymakers and travel companies circled summer 2021 as the period when we could finally get away again, but recent booking trends reported by some firms suggest that could be in doubt.

Any hit to demand this summer, the crucial trading period for travel firms where they look to recoup losses made in winter, could have a significant negative impact on the share prices of airlines and tour operators. This is important as shares in many of these companies have already risen close to pre-pandemic levels on the expectation of a substantial recovery in bookings this summer. That leaves them vulnerable to sharp declines if expectations aren’t met.

In its first quarter results (9 Feb), tour operator TUI (TUI) revealed that summer bookings, including amendments and voucher rebookings, are down 44% compared to summer 2019 levels, which it has chosen as a comparative period as it was undistorted by Covid-19.

TUI is optimistic of a surge in late demand and has maintained 80% of its operating capacity compared to summer 2019 levels, and says it ‘shares the industry expectation of delayed bookings whilst vaccine programmes are underway, the rollout of which will support the lifting of extensive travel restrictions.’

Any setback to people taking summer holidays could put pressure on TUI’s finances which are already weak thanks to very high levels of debt.

Helping dent public confidence towards travel have been recent comments from politicians and officials. Environment secretary George Eustice said the risk of new coronavirus variants arriving from other countries is set to ‘remain prevalent’ and added that ‘for now we have to be cautious about international travel’, while Professor Jonathan Van-Tam believes people are ‘making guesses about the unknown’ in booking holidays abroad.

Online package holiday provider On the Beach (OTB) said its summer 2021 bookings have been ‘very weak’ due to travel bans and quarantines, with its bookings taken in the four months to 31 January down 83%. Its UK website traffic and spend on online marketing activity has fallen 73% and 85% respectively.

Further evidence that UK holidaymakers are becoming more cautious comes from Thomas Cook, whose brand was bought by Chinese private equity investor Fosun after the original firm’s collapse in 2019. Thomas Cook said 40% of its recent holiday bookings have been for October rather than the summer.

According to media reports, smaller independent holiday providers are also reporting similar booking patterns with customers holding off until later in the year.

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