Germany's TUI Group Hit by Drop in Bookings to Turkey

TUI Group, the world's largest tour operator, reported a 40 percent drop in bookings to Turkey this summer due to safety concerns and said it was investing in Cape Verde and Bulgaria as alternatives to security-threatened North Africa.

The company has delivered a good underlying performance in Q1 in spite of the backdrop of geopolitical turbulence in some of our destinations, with a 7.2 percent improvement in underlying EBITA. But after a suicide bomb killed 10 German tourists in Istanbul in January, demand had slumped.

About one in seven of TUI's customers went to Turkey last summer, and travel warnings by several governments have already closed parts of Tunisia and Egypt to European tourists since past year.

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.

The seasonal loss, measured as underlying earnings before interest, taxes and amortization before currency fluctuations, narrowed to 97.3 million euros from 104.8 million euros a year ago.

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

TUI reported strong annual results for the 2015 year to September 30 despite booking a euro 52 million (£37.6 million) cost linked to the terrorist attacks in Tunisia last June as well as the move to cancel all flights to Sharm el-Sheikh in Egypt following the terrorist bombing of a Russian airliner.

Its share price fell 2.3% when the FTSE 100 began trading on Tuesday. TUI has 13 hotels in Sharm el-Sheikh, with the resort accounting for half of its business in Egypt.

"Our own hotels in destinations outside Turkey such as Spain and in particular the Canaries are benefitting from this shift in demand", said chief executive Fritz Joussen.

But there is also mounting evidence that the Zika virus could be having a damaging impact on customer appetite for holidaying in the Caribbean, after Jamaica announced it had been infected by the virus.

The UK performed slightly ahead of the rest of Tui's business, with bookings for the current winter 3% higher, compared with a flat market overall. Rival Thomas Cook will reveal how it has fared in its trading update on Thursday.