Strong UK performance helps Tui trim winter losses

Strong UK performance helps Tui trim winter losses

A strong result from the UK helped Tui Group’s northern region deliver a ‘broadly flat” performance over the winter.

Sales of Canary Islands holidays, long haul and cruises were cited by the Thomson and First Choice parent as being key strengths.

Europe’s largest travel group today reported that overall losses for the six months to March 31 were trimmed by 13.5% year-on-year to €245 million from €283.1 million, excluding the earlier timing of Easter.

This came as turnover increased by 2.7% to €6.7 billion. The company described summer treading as being in line with expectations with UK revenue and bookings both up by 7%.

The overall summer programme is 59% sold with revenues up by 2% and bookings growth of 1%.

“As expected, we have seen a continued shift in the mix of bookings away from Turkey to alternative destinations. Overall, bookings excluding Turkey are up 8%,” Tui said.

The group confirmed that it continues to expect to deliver at least 10% growth in underlying profits in the current financial year.

An emphasis on long haul led to a 9% rise in winter carryings with summer bookings up by 10% with the Caribbean and Asia most popular.

Tui’s push for more direct bookings saw controlled distribution rise by one percentage point in the half year to 71%. Online distribution grew by two percentage points to 43%.

“Control over distribution remains central to our marketing and sales strategy,” the company said.

“We are capitalising on the strength of the Tui brand on a global scale. One brand offers significant opportunities in terms of growth potential, consistency of customer experience, digital presence, operational efficiency and competitive strength.

“It is our objective that there will be one brand wherever it is reasonable, but we will still ensure that we maintain our local roots.

“We launched our brand migration successfully in the Netherlands in October 2015, rapidly achieving strong unaided awareness of the Tui brand in this source market.

“Rebranding in Belgium, Nordics and the UK will follow over the next few years.”

The group confirmed plans to sell off its Specialist Group following the disposal of Hotelbeds for €1.2 billion last month. Underlying EBITA losses at the Specialist Group were disclosed at €18 million or €14 million excluding the negative impact of foreign exchange, with a good performance by luxury and tailormade brands.

Tui also revealed plans to acquire Canadian group Transat’s French tour operating business for €55 million.

Group chief executive Friedrich Joussen, said: "We are focussed on delivering our Tui Group strategy in becoming a content centric, vertically integrated tourism business.

“The agreement to dispose Hotelbeds Group for € 1.2 billion announced on 28 April 2016 and confirmation today of our intention to dispose Specialist Group enables us to focus fully on our growth strategy and to strengthen our balance sheet.

“The improvement in our H1 operating result demonstrates once again the delivery of our growth plans and the resilience of our business model, with UK, Riu and Cruises performing particularly well.

“We are continuing to deliver our merger synergies as planned, with a further €15 million realised in the year to date.

“Summer 2016 trading remains in line with our expectations, with source market booked revenues up 2%,
 a strong performance by our western Mediterranean and long haul hotels, and continued growth in cruises.


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