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Tour operators fell in European trading amid concern that leisure travel will suffer after the terror attack in Tunisia last week and the risk of a sovereign default in Greece, among the most popular tourist destinations in summer.
TUI, Europe’s largest travel company, fell as much as 116 pence, or 10 percent, to 997 pence in London, the worst intraday decline in more than 6 months. Thomas Cook declined as much as 11.5 pence, or 8 percent, to 132.7 pence.
The Friday attacks in Sousse, a destination popular particularly with Britons, left at least 38 people dead after a gunman opened fire on sunbathers on the beach. TUI said 25 of the victims identified so far were its guests, and that the number will likely rise. The incident was followed by Greece imposing capital controls over the weekend and shutting its banks in a bid to avert a collapse of its financial system.
“The terrorist attacks in Tunisia might lead to cancellations of bookings not only in Tunisia, but also in other north African countries,” Jochen Rothenbacher, an analyst at equinet Bank in Frankfurt, said in a note to clients on Monday. “The increased risk of Greece leaving the euro should also lead to cancellations.”
The terrorist attack happened at two adjacent Riu hotels, a brand that TUI co-owns. Thomas Cook said none of its guests resided at the hotels at the time of the incident. Both operators have flown thousands of guests out of the country following the shooting, and allowed clients with pending trips to rebook or cancel. Most of TUI’s clients canceling trips to Tunisia chose other destinations instead, the company said.
Equinet’s Rothenbacher cut his share price target for TUI to 14 euros from 17 euros today, keeping his “neutral” recommendation. TUI operates 23 Grecotels in Greece with more than 11,000 beds, or about 7 percent of its total bed capacity, he said, adding that the current issues should affect TUI in the short to mid-term only.
TUI spokesman Michael Roell said bookings to Greece are “slightly up” in 2015, after a strong increase last year, and that the situation had not kept guests from booking trips to the country in past months. TUI is passing on a recommendation from Germany’s foreign office to bring more cash when traveling to Greece, he said.
“There is a somewhat higher desire for information regarding Greece, but so far we have seen neither an increase in rebookings nor in cancellations of Greece holidays,” Roell said. “We had two aircraft leaving for Greece this morning and they were almost completely full.”
TUI sends about two million guests to Greece every year, meaning the country is the company’s third most-important destination on a group level. Thomas Cook said the shortage of cash is less pronounced on the Greek islands that attract many tourists than in large cities because local partners and hotels prepared by bolstering reserves.
This article was written by Richard Weiss from Bloomberg and was legally licensed through the NewsCred publisher network.