Travel giant Tui has revealed it has already taken a £35million hit from the Iran war and has cut its profit guidance as consumers delay booking their holidays.
Europe’s biggest tour operator said the conflict and uncertainty about how long the conflict will last continued ‘to limit near-term visibility and drive consumer caution’.
It now expects annual profits to September to be in a range of £960million to £1.22billion – compared to its previous steer of £1.3billion to £1.4billion. It also suspended its sales guidance.
The German firm said it had absorbed around £35million in extra costs from the war in March, including paying for holidaymakers and staff to return home.
It said it had repatriated 5,000 customers from two of its cruise ships, which had been trapped in the ports of Abu Dhabi and Doha following the outbreak of the conflict in late February.
Last weekend, both ships were able to leave the Persian Gulf during the brief ceasefire and will commence cruises in the Mediterranean from mid-May.
A further 5,000 holidaymakers and 1,500 crew members were repatriated from other European markets.
Caution: Tui said the war is hitting demand for Eastern Mediterranean destinations
Tui runs flights, package holidays and cruise voyages in the Caribbean and Mediterranean as well as around the Canary Islands and is popular among British holidaymakers.
Shares trading on the Frankfurt stock market were down 2 per cent on Wednesday after the update.
In its division for flights and hotel bookings, holidaymakers have shown ‘increased caution’ and been booking closer to their departure dates, the group said.
Demand has also shifted away from Eastern Mediterranean destinations, including Turkey, Cyprus and Egypt, towards the Western Mediterranean, such as Spain and Malta.
Airline revenue for this summer is presently 7 per cent below last year while hotel occupancy rates are also 7 per cent down.
It said there was a ‘sustained, strong booking environment’ for its cruises.
Tui said it had hedged 83 per cent of its jet fuel requirements for the summer and 62pc for the winter season, while it has hedged more than 80pc of its annual energy costs for its cruise businesses.
Last month, online travel firm On The Beach suspended its annual guidance, citing a ‘significant slowdown in demand’ for popular destinations, including Turkey, Greece, Cyprus and Egypt.
And online travel agent Loveholidays reportedly delayed its £1billion flotation amid the market turmoil and disruption to travel caused by the conflict.
The profit warning comes as British holiday operators have reported higher Easter and summer bookings this year as the war persuades Britons to opt for staycations rather than overseas trips.
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