TUI enjoys strong holiday demand

Consumers seem unwilling to forego their holiday despite a slowdown

TUI Travel, which owns Thomson and First Choice, says demand for package holidays remains strong despite the strong euro and the economic downturn.

The firm said there was no evidence that consumers were trading down or curtailing their holidays.

But TUI said it was cutting capacity in coming seasons to "retain flexibility" should the economic slowdown begin to change consumers' holiday plans.

It said revenue rose 9% to �3.6bn in the three months to 30 June.

TUI Travel was created through the merger of the travel arm of German firm TUI and UK company First Choice last summer.

'Enormous value'

TUI Travel's upbeat outlook follows a similarly rosy assessment of the market from rival Thomas Cook.

"Our customers continue to place enormous value of their holidays and we are seeing no evidence to suggest that demand is slowing for any of our seasons on sale," said Peter Long, TUI Travel's chief executive.

He said UK sales were up 5% on last year and the average selling price was up 13%.

"In addition, we are currently recovering input cost inflation for all open seasons," Mr Long added.

He said that the strength of the euro in part mitigated the increase in oil, which is priced in dollars.

Bookings for winter and summer 2009 are also robust, TUI said, with average selling prices up 8% and 12% over last year.

The group added that its German business was also strong.

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