Skift Take

Tour operators have longed for Turkey and, to a lesser extent, Egypt and Tunisia to return to their previous popularity. All of these destinations offer better value to consumers than Spain, which is at close-to-full capacity and more expensive. Their return is also good news for the people who rely on tourism for a living.

“Spain is full” has been a familiar refrain from European travel bosses for the last year or so.

The Mediterranean destination has long been popular, especially with sun-starved Northern Europeans, but recently its historic cities and sandy beaches have pulled in even more tourists.

The UNWTO’s latest tourism report revealed that in 2016 Spain saw its international arrivals increase by 10.3 percent to 75.6 million.

While Spain might be trending upward (as indeed are the likes of Cyprus and Portugal) other destinations popular with European vacationers found it much, much tougher.

In 2016, Turkey reported a 30 percent drop in foreign arrivals, Egypt’s international tourist number declined by 43 percent, and although Tunisia saw a 6.8 percent rise, the figure is still down from 2014.

All these declining numbers are a result of terrorism and other geo-political issues that have dogged each of these countries in their own specific ways.

This made things hard for tour operators in 2016, who couldn’t rely on the usual supply of cheap hotel beds in the Middle East and North Africa and instead had to fight for hotels in pricier Western European destinations.

Recent results for the big European travel companies show that this might be changing.

TUI Group’s chief executive Fritz Joussen said the company was “pretty bullish on Turkey,” adding: “I mean we see not only a stabilizing demand, not only Russia coming in, but also rebuilding demand in Europe.” This certainly wasn’t the case for TUI earlier this year.

The same trend has been seen by TUI’s smaller rival Thomas Cook with chief executive Peter Fankhauser saying, “we have seen a continued pick-up in demand for Turkey.”

According to Fankhauser, there has also been growth in both Tunisia and Egypt, as well, and this will help ease the situation in Spain.

“The pressures on margins in Spain, at a certain level, are going to be less because… the more Turkey is normalizing, the more Tunisia is coming up as a fully fledged destination, the more Egypt is coming up, especially during winter, the less we have cost pressure on Spain. And this situation is going to normalize,” he said.

Turkey at least looks like it is winning back consumers. For the first six months of the year foreign visitor numbers are up by 14 percent. Tunisia can also expect to bounce back in 2018 after the UK Foreign Office relaxed its travel advice.

Monarch Still Suffering

Both TUI and Thomas Cook saw an improvement in their respective third quarter financial results, something that should not come as a shock given the kinder operating environment so far in 2017 – a very different story from 2016.

UK airline and tour operator group Monarch is not a publicly listed company and only has to file accounts once a year and its results for the year up to the end of October 2016 have just been released.

Revenue slumped by 18.6 percent to $868.6 million (£674.3 million). It crashed from a pre-tax profit of $23.8 million (£18.5 million) in 2015 to a loss of $383.8 million (£298 million) last year. Granted much of this was down to accounting write-downs related to aircraft leases and impairments but it is still a troubling sign.

Monarch cited the closure of Egypt’s Sharm el Sheikh airport to UK airlines, terrorism in Turkey, and Brexit as three of the reasons for the revenue drop.

The worrying thing for Monarch is that trading doesn’t seem to have improved so far this year either as the accounts note that “yield pressure” has continued, which will lead to “a large year over year fall in annual revenue.”

It shouldn’t be forgotten that Monarch came close to going out of business last year and has struggled on a number of occasions in the past. But its continuing woes show it isn’t simply a case of having a benign operating environment, you need to have a viable business model, too.


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Tags: thomas cook, tui group, turkey

Photo credit: TUI Group's Magic Life Jacaranda resort in the Antalya region of Turkey. The tour operator has seen an upturn in fortunes for the country. TUI Group

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