Travel giant Tui will update the market on how demand for holidays abroad are holding up when it reports first quarter figures this week.
Investors are waiting for news on how summer vacations are shaping up and keeping a close eye on signs that rising competition might be weighing on the firm’s performance.
Sector rival Thomas Cook recently cheered its own good start to the financial year following a 7% rise in revenues, and reported a 3% rise in summer season UK bookings though total UK bookings for winter were flat.
However, Thomas Cook’s boss Peter Fankhauser said the company was facing a “highly competitive – and, at times, unpredictable – market”.
The European travel industry has been finding its footing after the collapse of competitors including Monarch in the UK and Air Berlin in Germany, with the likes of easyJet, Wizz Air and British Airways picking up remaining assets or landing slots.
Tui said last year it actually took a hit after Air Berlin fell into administration, as it was forced to renegotiate a string of flight agreements.
Tui’s peers have also flagged up profit pressures amid a price war in Spain, as tourists continue to avoid destinations like Egypt and Turkey due to terrorist attacks and political unrest.
The company – which ditched the Thomson name in the UK in October as part of a global rebrand – last reported a 12% jump in underlying earnings to 1.1 billion euros for the year to September 30.
It also said the company was set to grow annual earnings by at least 10% again in the new financial year and for each year to 2020.
Tui warned last year that Britons were beginning to cut back on long-haul holidays and some European resorts as the weak pound is making trips more expensive.
Britons have maintained the average spend of £1,000 on their foreign holiday, but they are having to change destinations due to poor exchange rates, the company explained.
But Tui reported it was seeing a record number of UK bookings as holidaymakers choose alternative destinations such as Croatia and Bulgaria, and forecasted another strong year for bookings thanks in part to rival Monarch’s collapse.
It also logged strong recovery in demand for trips to Turkey, saying bookings for next summer were up 70% year-on-year as holidaymakers started to return to the country.