Boost for TUI as holidaymakers opt for all-inclusive deals

The owner of Thomson and First Choice has reported a rise in sales of all-inclusive holidays as cash-strapped consumers look to save money.

TUI Travel said more holidaymakers were opting for packages that included meals, which are perceived as offering better value. They accounted for 46 per cent of its sales so far in 2011, compared to 44 per cent the previous year, according to a trading update yesterday.

The number of summer holidays booked by UK customers were down 2 per cent since its last update in May, but the company said this was a "particularly pleasing" performance, given the weak consumer sentiment. And its average selling price was up 4 per cent, driven by the rise in all-inclusive deals.

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UK consumers have been cutting back on holidays in recent months amid the financial gloom. Rival Thomas Cook has warned on profits three times in the past year and chief executive Manny Fontenla-Novoa resigned earlier this month.

TUI's overall sales in the three months to 30 June were up 13 per cent to 3.8 billion while underlying profits rose 57 per cent to 88 million, as it benefited from the later Easter this year.

The group was also helped by weaker comparatives against the previous year, when flights were disrupted by the Icelandic ash cloud.

However, the north African market was taking longer than expected to recover after the recent uprisings, TUI noted. The firm has focused more on holidays to destinations such as Spain, Greece and Turkey, as an alternative.

As well as choosing more all-inclusive holidays, UK consumers are also reducing the length of get-aways to save on cash.

The firm reported a 24 per cent rise in ten- or 11-night stays, while one-week trips were up by 4 per cent. It also said sales of its exclusive holidays, which can only be booked in its shops or on its website, were up 15 per cent.