Turkey Holidays Down 40% On Security Worries

The world's largest tour operator, TUI Group, has blamed security concerns among its customers for a 40% fall in the number of bookings for holidays in Turkey.

The London-listed firm made the announcement in its first-quarter results but said it was maintaining its guidance for a 10% rise in underlying full-year profits despite the slump.

TUI (Other OTC: TUIFF - news) , behind the Thomson and First Choice brands, said it had expanded capacity in destinations such as Spain and Greece in response while it has also invested in Cape Verde and Bulgaria.

Terror attacks in Turkey, Egypt, Tunisia and Paris in recent months have hit demand for the travel industry, while the Zika outbreak in the Americas is also hurting bookings.

The start to any year is crucial for holiday firms because the bulk of summer bookings tend to be made during the first three months.

TUI said demand for breaks in Turkey fell - particularly in Germany - after 10 Germans were killed in a suicide bombing in Istanbul last month.

A total of 14% of its customers visited the country last summer.

Turkey borders Syria, which is currently in turmoil amid a civil war that has seen so-called Islamic State take a foothold.

The resulting refugee and migrant crisis has placed huge pressure on southern European nations while Russia has told its citizens to avoid Turkey after it shot down one of its warplanes last year.

Turkey has responded to the growing tourist exodus by offering jet fuel subsidies to operators.

TUI reported a loss before tax of €220.2m (£171.2m) between October and December - traditionally a quiet period - despite a 5% rise in revenue.

The company stopped flights to Sharm el-Sheikh in November following the bombing of a Russian airliner, while 33 of its customers were killed in the Tunisian beach massacre last June.

While security fears are likely to pull holiday costs down in areas considered potentially hostile, stronger demand elsewhere could force those prices higher.

No-frills airlines such as Ryanair and easyJet have reacted to the concerns by cutting prices in recent months - aided by weaker fuel costs.

TUI chief executive, Friedrich Joussen, said: "Our scale business model and own hotel content means that we have been able to act quickly to remix capacity to alternative, profitable destinations.

"In addition, our own hotels in destinations outside Turkey (such as Spain and the Canaries) are benefiting from the shift in demand.

"Based on current trading, and the resilience of our integrated business model, we continue to expect to deliver underlying (profit) growth of at east 10% in 2015/16."

Its share price fell 2.3% when the FTSE 100 (NasdaqGS: Z - news) began trading on Tuesday.