TUI’s CEO Friedrich Joussen Pokes a Nose Out After Months of Lockdown

TUI CEO Friedrich Joussen has announced Greece, Cyprus, Croatia, Bulgaria, Spain, Austria, and Denmark as destinations that are “well prepared” for the summer 2020 tourist season. But the ramifications of the TUI boss’ statements may be much more far-reaching than 2020.

In an announcement via an interview with BILD TV, the TUI boss said; “We have developed a health check for all tourist destinations and will only offer holidays in safe countries.” The TUI executive went on to stress that Germany must first open up its own borders. The German businessman claimed:

“Mallorca is in the first place definitely. Hotels there have been tested and could be opened immediately and host tourists. Similarly, Greece, Cyprus, Croatia, and Bulgaria are well prepared for summer tourism. And of course, Austria and Denmark.”

With a special reference to Greece, Joussen said some hotels have been left vacant, in order to receive tourists in case they become infected with Covid-19. Of course, TUI has a lot invested in sending guests to Greece, but the focus by Joussen seems long-range to me. In point of fact, I believe I was wrong about TUI following Thomas Cook into oblivion. Thomas Cook, after all, was not propped up by the government like TUI is. Germany seems to have a far bigger interest in the giant tour operation than would-be investors in TC did. TUI is the perfect vehicle for Germany to control still more of Greece.

According to Reuters, TUI bookings are currently at about 25% of normal capacity, Chief Executive Fritz Joussen. A story at Travel Weekly about the Spain market cited the TUI chief on what his company has done in the run-up to normalizing markets:

“In times of corona, we want to make holidays as normal as possible and as responsible as necessary, during the flight, in the hotel and at the holiday destination.”

TUI has been propped up by a state credit Germany of €1.8 billion euros, and there are rumors of another €1.2 billion euros from the government waiting in reserve. For hoteliers and other businesses that feed TUI revenue, there is no such safety net. And this makes me wonder at what TUI’s plans are for places like Crete, Santorini, and other markets where there will soon be hotels aplenty for sale. Take the case of Santorini, George Filippidis, general manager of the Andronis Suites hotel told CNN recently:

“We expect 15% percent of the visitors compared to previous years. The economic damage will be huge. We will operate at a loss for 2020 but we want to open so that we offer employment to our staff, and support the local community that is wholly dependent on tourism.”

What this represents is a devastation nobody in the business has seen. Even the 2008 Great Recession did not hit Santorini and other destinations so hard. The situation is dire, and giants like TUI are not simply planning on staying afloat this year. My sense is, a lot of property is going to change hands once the full impact of pandemic 2020 hits. I’ve talked with half a dozen hotel and resort owners on Greece’s biggest tourism magnet of Crete, and the only ones not feeling intense pain are those who are connected at the hip to the German market.

While some others have decent bookings, others who sell to a more diverse set of partners are worried. Greek hoteliers rely all too frequently on contracts instead of scores of independent bookings. In fact, most of the big resorts could care less about their own direct bookings. Independents are in a different situation, and they’re the ones TUI and other potential investors will look at when the coffers run dry later this year.

Back in April, carried out by the Institute for Tourism Research and Forecasts (ITEP) showed that 65 percent of hoteliers consider it likely or very likely they’d declare bankruptcy (46.6 percent say likely and 18.3 percent very likely) due to the shutdown over the pandemic. This was even before it was known just how abbreviated the 2020 season might be. Now here’s the big “hint” for those who wonder at TUI’s long term intentions.

Speaking at the general assembly of the German Hellenic Chamber of Commerce and Industry, Greece’s Minister of Development and Investment Adonis Georgiadis, said the New Democracy led government prefers privatizations to take over major companies facing possible bankruptcy over the COVID-19 aftermath. A bigger hint could only come via a Frankfurt press release that Deutsche Bank will buy all of Greece once the price is right. Sorry, I hope my suspicions are wrong.

BNP Paribas, BofA Securities, Deutsche Bank, Goldman Sachs International Bank, HSBC and J.P. Morgan were all announced as joint lead managers for the new Greek bond issue which must have come about via intense Athens-Frankfurt-New York negotiations. I won’t attempt to become a financial analyst, but if I can imagine 100 Crete hotels sold to TUI or other German investors, you can be sure their investment teams are wringing their hands wondering about property deals.

Hotels are already hitting the market. It took me all of 20 seconds to locate 30 on the normal market from Santorini to Athens. The number of hotels for sale here in Heraklion Prefecture has gone up exponentially on the open market. I’ve experience searching real estate sites since moving here in 2017, and I’ve never seen so many on the market. In Chania, there are dozens of new listings for independent hotels. Once the numbers are in later this year, one can only imagine what will be on the auction circuit.

In the coming months I expect smaller hedge funds, Europe corporations, and giants like Blackrock to snap up properties for pennies on the euro in Greece. If I am right, the only business entities you see afloat in 2021 will be those closely tied to TUI and the German bankers, or those well funded by Greeks with the resources to stay the course. Airbnb properties will go on the block too, for those property owners who’ve spread their capital too thin. And thousands of restaurants and retail outfits will come under the wings of big business. Again, I hope I am wrong. But there its is, the story I think is behind TUI’s boss sticking his head out after so many months.