The group warned geopolitical and economic instability would make the second half of the year "challenging", despite posting improved half-year results and extending its run of consecutive operating profit growth to 14 quarters.

Tui said the Iran crisis, coming soon after the impact of Hurricane Melissa in Jamaica, created €45 million in additional costs during the second quarter alone, building on an £8.5 million loss that masked an otherwise historical first quarter back in February.

However, the group still managed to narrow quarterly losses, with underlying earnings before interest and tax (ebit) improving 8.9% year on year to €188 million for the January-to-March period. Half-year ebit also improved by €45 million to €111 million, while revenue edged up 1.3%.

Package holidays 'gold standard' for unnerved clients

Announcing the results in Hanover, Germany on Wednesday 13 May, Ebel positioned package holidays as the "gold standard" for consumers unnerved by ongoing uncertainty in the Middle East.

"We offer our customers a high level of security and quality, especially in turbulent times. Package holidays remain the gold standard," he said.

Mathias Kiep, Tui's Chief Financial Officer, added that these results were evidence of the brand's "resilience". "Our strong results in the first half of the year show that we can successfully offset the financial burdens from the war in Iran and Hurricane Melissa in Jamaica," he said. "Despite all the challenges in the world, we are looking forward to the second half of the year with confidence."

Tui has suspended its previous revenue forecast of 2%-4% growth for the full year, with the group now expecting underlying ebit for the fiscal year to land between €1.1 billion and €1.4 billion, with the ambition of coming close to last year’s €1.4 billion result.

Late booking trend

The update also laid bare a summer market defined by late-booking behaviour, with Tui claiming "just under half" of consumers planning a summer holiday had yet to book as rumours of jet fuel "rationing" and spiked prices continue to swirl.

As anticipated, demand is gravitating toward western Mediterranean hotspots, with Spain, the Balearics, Canary Islands and Greece emerging as the strongest-performing destinations for this summer.

The company said demand remained robust for differentiated products, with dynamic package bookings climbing 12% year-on-year to 500,000 and more than half of Tui’s available capacity already sold.

Cruise and experiences spike but resorts hold steady

As in the first quarter, cruise was one of the standout performers across the group, delivering first-half underlying ebit growth of 25.9% to €163.5 million despite disruption. 

Tui said cruise occupancy would have reached 98% without the impact of the Iran war, although occupancy still remained high at 93%.

Its Hotels & Resorts division held steady despite softer demand for Mexico and the aforementioned disruption in Jamaica, while Tui Musement, its new experiences-led platform, increased sales by 6% to 1.6 million following a recent partnership announcement with Jet2.

Meanwhile, the Markets + Airline division (spanning tour operations, retail distribution and aviation) improved underlying ebit by 7% to €339.5 million, which Tui attributed to tighter cost controls and operational efficiencies.

Tui said its focus for the second half of the year would remain on growing differentiated products and dynamically packaged holidays, while "maximising use" of its own assets, including its hotel, cruise and airline capacity. 

The group added that higher average prices are expected to help offset increased costs during the remainder of the financial year.