Rewe to cut summer package holiday prices by 6 pct

FRANKFURT, Oct 27 (Reuters) - Rewe, Germany's third-largest tour operator, plans to cut prices for the upcoming summer holiday season by 6 percent at its package tour operator unit, drawing further on cost-conscious holiday makers for growth.

Rewe aims to outperform the German market again in 2010 by cutting prices for the summer season on average by 6 percent, passing on lower wholesale prices from airlines and hotels, while expecting another tough year for the industry, it said.

"We don't expect to see an easing in the German travel market in 2010," Ralph Schiller, head of Rewe's package tour operator unit, said in a text for a speech prepared for the presentation of the summer programme on Tuesday.

"We expect zero growth at most for the overall market," he said, pointing to increasing customer concern about job losses and rising taxes. Rewe will react by making offers more flexible and by broadening its product portfolio, he said.

Bookings for the upcoming winter season were so far down 2.4 percent compared with last year, Rewe said, but added that it expects to catch up within the next couple of weeks.

Thomas Cook (TCG.L), Europe's second largest tour operator behind TUI Travel TT., also noted that holiday-makers were booking later than in previous years, it said in September, adding that its winter bookings were improving. [ID:nLU063347]

ALL-IN-ONE

Rewe outperformed the German market in the fiscal year to end-October with its package tours brands ITS, Jahn Reisen and Tjaereborg recording a 6 percent sales increase, while the market has declined at least 4 percent, Rewe said on Tuesday.

The United Nations' World Tourism Organisation has said international tourism will decline by 4-6 percent this year and travel companies around the world are struggling to cope with a drop in demand as consumers tighten their travel budgets.

Rewe's results reflect consumers' preference to book an all-in-one holiday in difficult economic times as it makes it easier to gauge the overall cost.

In contrast, Rewe expects full-year sales at its modular division -- selling parts of a holiday separately so that the customer can chose independently which flight, hotel or tour to go for -- slightly below last year, it said in July. [ID:nLT237364]

The Rewe unit is due to report full-year results on Nov. 19.

Rewe's travel and tourism activities are part of the privately held Rewe Group -- also Germany's second-largest food retailer -- generating about 10 percent of the group`s total sales. (Reporting by Eva Kuehnen; Editing by Jon Loades-Carter)