Thomas Cook: Greece again among summer season winners with strong demand for 2018

 Thomas Cook, Europe’s second-largest tour operator announced a group-wide 13% rise in bookings for this summer (as of May 5), driven by particularly strong demand for Turkey, Greece and Egypt. Bookings are also higher for smaller destinations such as Croatia and Italy, as well as Tunisia which is making a comeback. But bookings for the Spanish islands are down after Cook decided to cut capacity for the summer due to strong competition and pressure on margins.

According to the following report by fvw.com, Thomas Cook Group presented lower half-year losses and good bookings for summer 2018, including in Germany, driven by strong demand for the Eastern Mediterranean and North Africa.

Regarding source markets, Continental Europe bookings for summer 2018 are up 2%, with good growth in Germany (+4%), France (+15%) and Belgium (+8%), and average prices 4% higher. Stefanie Berk, head of Central Europe & East, commented: “Demand has risen strongly especially for Turkey, Egypt, Tunisia and Morocco. Greece is again one of the season’s winners, and bookings are also significantly stronger for Italy and Austria than last year.”

Northern Europe is growing well, with bookings up 7% and average selling price up 5%. UK tour operator bookings are up 4%, with pricing up 6% despite pressure on margins. The Group Airline is also heading for a strong summer, with bookings up by 18% and average selling prices 2% higher, after a 10% capacity rise and strong demand for short-haul capacity.

During the six months ending March 2018, Thomas Cook increased revenue by 5% to £3,227 million, driven by growth to Egypt and long-haul destinations. The seasonal underlying EBIT loss was slightly reduced to £169 million, mostly due to better airline results, although the reported operating loss increased to £214 million due to separate financial charges. The seasonal net loss was reduced to £255 million.

The winter 2017/18 programme closed in accordance to expectations. Overall Group bookings increased by 10%, with strong demand for the Canaries, Egypt and Turkey. Average selling prices were broadly flat, reflecting a shift in the mix from long-haul to short/medium-haul destinations.

Thomas Cook's Continental Europe tour operating business

The Continental Europe tour operating business had a good half-year, increasing revenues to £1,256 million and reducing the seasonal loss slightly to £49 million. “Demand for most destinations has been robust, with growth to Egypt, Greece and Tunisia helping to offset declines to Mexico and the Caribbean following Hurricane Irma last autumn,” Cook commented.

Nevertheless, the German business saw its seasonal underlying loss increase despite growing revenues due to weaker margins to long-haul destinations (partly due to a disadvantageous hedging position for the US Dollar) and strong market competition, especially to Egypt. Elsewhere, there were better results in Belgium, France and Russia, and stable results in the Netherlands and Eastern Europe. The Northern Europe tour operating business performed very well in the first half, achieving significant revenue growth to £614 million and a £9 million increase in underlying EBIT to £41 million.

On the contrary, the UK increased half-year revenues to £528 million but the seasonal loss deepened to £77 million, mostly due to weaker margins to the Canaries, the company’s top winter destination, caused by strong hotel cost inflation, together with a weaker Sterling and increased levels of market competition. “As a consequence, while customer demand remains strong, our UK business has not fully passed on these significant inflationary cost increases through higher selling prices.” In response, Cook is shifting capacity towards the Eastern Mediterranean, closing British travel agencies and taking other cost-saving measures.

Thomas Cook Group Airlines recorded a strong half-year, profiting from higher capacity demand from other tour operators following the collapse of Monarch and Air Berlin/Niki. Revenue increased by 9% to £1,313 million on a like-for-like basis, passenger numbers were up by 11% to 6.6 million, while yields increased by 1% and 3% in long-haul and short/medium-haul respectively. Underlying EBIT improved by £20 million to a seasonal loss of £59 million due to the higher yields and better results from Condor.

Thomas Cook CEO on results and current trading 

Commenting on the results and current trading, CEO Peter Fankhauser noted: "Thomas Cook has had a good first six months of the year, delivering improved financial results combined with tangible strategic progress. The work we've done in the past two years to improve customers' experience of our flights and our holidays is bearing fruit with revenue growth of 5%, and a positive booking position for the summer.

"The improvements in customer satisfaction have come from our focus on fewer, better hotels and our holiday programme for Summer 2018 is in great shape. Two-thirds of our customers tell us they want to personalise their holidays and we are innovating to satisfy this demand. This includes the successful introduction of 'Choose Your Room' across 300 hotels for the summer and, more recently, 'Choose Your Favourite Sunbed' which we are rolling out to 50 hotels.” Thomas Cook said it has so far taken 13,500 ‘Choose Your Room’ bookings while 50% of all available sunbeds have already been booked.

Fankhauser added: "Customer demand for this summer is good in all our markets, particularly in our Nordic region. We continue to experience margin pressure in the UK tour operator due to a combination of hotel cost inflation in Spain, currency impact and capacity increases in the market. We have taken action to help mitigate this pressure, including taking out holiday capacity from Spain and moving it to the Eastern Mediterranean.

"Our Group Airline performed particularly well in the first half. Condor delivered a strong turnaround, and has benefitted from our ability to provide a reliable and high-quality service during a period of disruption and consolidation in the German aviation sector. Our booking position for the summer is strong, and bookings are well in line with our capacity growth of 10% to an expanded range of destinations, including 70 new routes across the group.”

Read more at fvw.com

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