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TUI AG, Europe’s largest tour operator, said demand for summer vacations in Turkey tumbled about 40 percent following a suicide bombing at a tourist attraction in Istanbul last month.
Summer 2016 bookings for the popular travel destination fell as families that flocked to Turkey’s Mediterranean beaches seek alternatives following the January bombing that killed 11 Germans, TUI’s largest customer group. The shift in demand helped lead to a 13 percent increase in the average revenue per bed at TUI’s Riu hotel chain, which has a large presence in Spain, the company said in a statement on Tuesday.
“It is evident that there has been a significant shift in demand away from Turkey,” Chief Executive Officer Fritz Joussen said in a statement on Tuesday. “Our own hotels in destinations outside Turkey, such as Spain and the Canaries, are benefiting from the shift.”
Recent terrorist attacks in Turkey, Egypt and Paris have made security a key concern for many vacationers. Shifting clients to similarly priced destinations is becoming increasingly difficult as empty beds in locations perceived as safer are becoming scarce. While bookings for Turkey could still come later, a sustained drop will be hard for the travel industry to absorb. About one in seven of TUI’s customers went to Turkey last summer, and travel warnings by several governments have already closed parts of Tunisia and Egypt to European tourists since last year.
TUI’s revenue in the quarter ended Dec. 31 rose 5.4 percent to 3.72 billion euros ($4.2 billion). The seasonal loss, measured as underlying earnings before interest, taxes and amortization before currency fluctuations, narrowed to 97.3 million euros from 104.8 million euros a year ago. The company again wrote down the value of its 12.3 percent stake in container shipper Hapag-Lloyd AG, incurring a charge of 41.6 million euros. TUI reiterated that underlying earnings excluding exchange-rate shifts will rise at least 10 percent in the year ending Sept. 30.
“Our first quarter was very strong,” said Joussen. “But the big challenge this year is yet to come, and that is Turkey.”
This article was written by Richard Weiss from Bloomberg and was legally licensed through the NewsCred publisher network.