TUI Travel says holidaymakers are trading up

By Matthew Scuffham

LONDON (Reuters) - Holidaymakers are trading up as they look to escape the miseries brought about by the economic downturn, Peter Long, chief executive of Europe's biggest travel firm, TUI Travel (TT.L), said on Thursday.

Long said average selling prices to customers have risen 13 percent this summer compared to last year, with the increase due, not just to higher prices, but to customers upgrading their holiday plans.

"It's not all cost (increases). It's a mixture, with customers trading up which is a positive trend. We're seeing strong demand to medium hall destinations like Egypt.

"Every day you read comments about a recession and it's depressing for people. The main holiday is something people need because they need to recharge their batteries even more."

Long said on a conference call that the majority of TUI Travel's customers save for their annual holidays and are, therefore, not dependent on borrowing to fund their excursion.

"Our customer base are good, hard working people from 'middle England'. They work hard, save, put money away each month, and they say we're going to go on holiday," he said.

Long also said he remains confident that months-old talks with Germany's Lufthansa LHAGe.DE over a merger between Lufthansa's Germanwings airline and TUI's TUIfly will reach a successful conclusion by the end of the year.

"I believe we'll get a good outturn. There's a degree of complexity that we're working through and a deal's not done till your happy with the shape of it," he said.