Tourism boon from trips to escape gloom
CONSUMERS trying to escape the economic gloom by taking last-minute breaks are set to help tour operators to post higher annual profits this week, but trading will stay tough.
Thomas Cook and TUI Travel are likely to report relatively strong numbers today and Tuesday respectively, as appetite for holidays holds up despite late bookings.
Cook is tipped to report pre-tax profits of £310m, slightly up from last year’s £309m, while Thomson and First Choice parent TUI is set to post pre-tax profits of £365m, against £320m at the same time last year.
“We expect underlying earnings to be relatively resilient, with consumers continuing to attribute a high priority to holidays,” analyst Sam Hart at broker Charles Stanley said.
The downturn has hit demand for overseas breaks, but firms have cut routes and capacity.
Shares in Thomas Cook and TUI have faced pressure recently, however, after analysts were downbeat about future earnings.
Operators faced high costs, weak demand and growing difficulty in cutting capacity, broker Morgan Stanley said.
There is also concern about rising debt, higher fuel costs, the weak pound making overseas trips dearer and challenges from low cost airlines.
Analysts will look out for the firms’ views about the outlook amid fears that bookings are lagging previous years.
They have also flagged up the possibility of comment on a cash call at Thomas Cook as it looks to refinance a €1.1bn (£1bn) bank facility.