Tui Group today claimed to have overcome the “challenging” summer heatwave and airline disruption by reiterating a projected 10% rise full year earnings.
In contrast to rival Thomas Cook, which issued a profits warning on Monday, Tui reported that summer bookings had grown in all major markets.
The company said in a trading update this morning: “As anticipated, volumes to Spain have continued to normalise compared with the very high growth seen in recent years.
“As noted in our third quarter update, there are a number of external factors which have made operations more challenging, including the unusually hot summer in northern Europe and higher than normal level of airline operational disruption.
“Despite this, we have continued to grow our customer base, demonstrating once again the strength of the Tui brand and product offer, coupled with further growth in the proportion of direct and online distribution.”
Summer revenue for Tui’s northern region, including the UK and Ireland, rose by 4% year-on-year with customer numbers up by 2%.
Overall package holiday numbers rose by 4% helped by increased capacity to Turkey, Greece and North Africa as well as smaller destinations such as Bulgaria, and an increase in the volume of customers staying in group hotels
The company said its financial year was closing out in line with expectations “and we reiterate our guidance of at least 10% growth in underlying EBITA”.
Tui added: “Whilst at an early stage, trading for future seasons is overall in line with our expectations. Our strong positioning as a leading holiday product provider with own distribution, as well as our balanced portfolio of destinations and markets, mean that we are well positioned to continue to deliver against our growth strategy.”
Group chief executive Friedrich Joussen said: “The financial year is closing out as we expected, with the fourth consecutive year of double digit growth in underlying EBITA [earnings] since the merger.
“Having continued to expand our hotel and cruise offer, occupancies and yields remain high, and the number of customers purchasing holidays from us has grown in all major markets, even with the sustained period of hot weather in northern Europe this summer.
“This demonstrates the strength and resilience of demand for our holiday experiences, although as previously stated the hot weather has limited our ability to outperform.”
He added: “Whilst at an early stage, trading for future seasons is overall in line with our expectations.
“Our strong positioning as a leading holiday product provider with own distribution, as well as our balanced portfolio of destinations and markets, mean that we are well positioned to continue to deliver against our growth strategy.
“We therefore reiterate our guidance of at least 10% underlying EBITA growth in full year 2018.”
The company reported a return in demand for Turkey, North Africa and increased demand for Greece, as well as delivering new openings in south east Asia and the Caribbean.
However, demand for Spain is “normalising from the very high levels seen in recent years”.
Tui added: “We have a strong pipeline of hotel openings for full year 2019, including year round destinations such as Cape Verde, Mexico, the Caribbean islands and the Maldives, and we expect to deliver on the guidance we set out at the time of the merger of around 60 additional hotel openings by the end of full year 2019.”
The introduction of new Tui Cruises ships Mein Schiff 1 and Marella Explorer this summer “have gone very well” with yield performance remaining strong across thr company’s three cruise brands.
Destination experiences continues to perform “very well” with strong organic growth in the final quarter.
“Having expanded our regional capability in destinations with the acquisition of the destination management business of Hotelbeds Group, we recently announced the acquisition of Musement, an online platform for selling tours and activities in destinations around the world,” the company said.
“This will enable the creation of a scalable digital platform to source, produce and distribute tours and activities to Tui and non-Tui customers.
The company is due to issue its full year results on December 13.