The Impact of COVID-19 on TUI: Case Study

The impact of COVID-19 on TUI: Case Study

Summary

Recent months have been unprecedented in the tourism sector. Travel restrictions, flight suspensions, falling consumer confidence and a slew of negative press are just some of the issues that intermediaries are having to contend with. As one of the world's leading intermediaries, TUI has been severely impacted.

Key Highlights

• All industry players have been and will continue to be affected as the impact of COVID-19 will continue to weigh heavily on the tourism industry for the foreseeable future. The most profitable months for travel companies historically are Q2 and Q3 when demand is typically at its highest. As companies reveal their financial results for FY2020 so far, it projects the impact of COVID-19. Depleting cash reserves is a short-term impact but in the long term COVID-19 may spur drastic changes across the traveler landscape. Cost cutting measures may become more permanent if proven efficient as more companies adopt an asset light business model.
• TUI has waived cancellation fees and is offering customers a 20% bonus if they choose to rebook their cancelled holiday rather than request a refund. The additional 20% bonus is being offered to customers separately to the Refund Credit Notes, in line with ABTA guidance. In providing an incentive, customers will be more likely to ask for a credit note, rather than asking for a full refund. This is so that the travel intermediary can conserve cash.
• TUI has extended the suspension of its holidays and cruises. All package holidays have been cancelled up to June 11. Nearly 900,000 holidays have now been cancelled by the travel giant as a result of COVID-19. This is an implication due to the ongoing travel restrictions, impacting demand. The usual busy summer period is no longer with TUI announcing summer holiday bookings were down by 59% in comparison to the same period last year.

Scope

• This case study looks at how the COVID-19 pandemic is impacting TUI and assesses the company's response.

Reasons to Buy

• Gain an overview of the current global COVID-19 situation
• Understand the impact that COVID-19 is having on travel intermediaries
• Assess the impact on TUI
• Understand what the future may hold for the company