Despite financial pressures, travelers are still prioritizing their holidays, choosing cost-effective destinations like Egypt, Bulgaria, and Tunisia over pricier traditional hotspots, according to Europe's leading package holiday operator.

Tui has observed that budget-conscious travelers, unable to book vacations in popular locations like Spain, are opting for other destinations.

Although inflationary pressures have eased, Tui reported that the average holiday prices have stabilized but remain “significantly higher” than in 2019.

“We believe prices have reached a sustainable level,” said Sebastian Ebel, Tui’s CEO.

Ebel added, “We’re seeing new customers with limited incomes who still want to travel. For example, they might have a budget of €1,000 (£800) for a vacation. If they don’t find options in Spain, they’re exploring alternatives—and they’re finding them.”

“Mallorca will be at full capacity this summer, and the Canary Islands are currently full during the winter season. But there are plenty of options available for travelers to plan their ideal holiday,” he continued.

The resurgence of traveler interest in destinations like Tunisia and Egypt signifies a recovery for these countries, which suffered a sharp decline in tourism following a wave of Islamic State terror attacks around 2015.

On the financial front, Tui posted a pre-tax profit of €1.3 billion (£1 billion) for the 12 months ending in September, marking a 35% improvement from the previous year.

This increase was largely fueled by strong demand for package holidays and success in the company’s cruise division, which aided in strengthening its financial position and reducing debt.

Tui revealed it cut its net debt by €500 million, bringing it down to €1.6 billion, as the company continued recovering from the pandemic, which previously caused a halt in global travel.

Back in 2020, during the initial Covid lockdowns, Tui reported a staggering €3 billion annual loss and required several bailout packages from Germany’s government to stay afloat.

In the latest 12-month period, over 20 million customers booked with Tui, a 7% increase compared to the year prior, reflecting the growing demand for travel despite economic challenges.

Meanwhile, concerns over "over-tourism" have caused friction in Spain’s top travel destinations, such as Málaga, Mallorca, Gran Canaria, and Granada. Over the summer, large-scale protests called for a rethinking of tourism business models believed to have driven up housing costs and displaced locals.

Ebel addressed these concerns and personally visited Mallorca to discuss the situation with local residents. “We understand these protests and take them very seriously,” he remarked.

He explained, “Our customers stay in hotels, so they aren’t taking residential apartments. Additionally, the hotels we partner with offer strong labor standards and proper contracts for their workers.”

“That said, we do recognize the significant housing challenges in some areas. We’re committed to actively working toward solutions, including building more employee housing where needed,” Ebel concluded.