Tui sticks to earnings target as terror reroutes tourist flows 

• Sales growth won’t meet previous target of at least 3%
• Occupancy, prices at RIU hotels rise on Spanish travel gains

TUI AG, Europe’s largest tour operator, cut its forecast for sales growth this year in a further sign that terrorist attacks are curbing growth in the travel industry.

Revenue will rise by about 2 percent in the year ending Sept. 30, down from an earlier prediction for growth of at least 3 percent, the Hanover, Germany-based company said Thursday in a presentation for analysts. TUI maintained its forecast for an increase of at least 10 percent in underlying earnings before interest, taxes and amortization, the company said in a statement.

TUI and competitors Thomas Cook Group Plc and Norwegian Cruise Line Holdings Ltd. are feeling the effects as tourists shun countries targeted by terrorist attacks since early last year, including Tunisia, Egypt and Turkey, and seek locations they perceive as safer. TUI has compensated for those shifts by sending clients to hotels in the western Mediterranean or further abroad. It typically incurs losses in the first two fiscal quarters, and generates the bulk of profit in the fourth.

Underlying profit in the third quarter, which also excludes currency effects, takeovers and disposals, climbed 1.1 percent to 180 million euros ($201 million). Third-quarter sales, including discontinued operations, dropped 5.4 percent to 4.83 billion euros.

Room occupancy at the RIU hotel division, which has large operations in the booming travel market of Spain, rose 5 percentage points while the average rate per bed increased 3 percent. Earnings declined at hotel operations in North Africa and Turkey, which in addition to terrorist incidents in recent months was also the site of a failed military coup in July.

Foreign currency swings will shave about 100 million euros from operating profit this year, the company said.

Source: Bloomberg

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