Tui poised to launch new pan-European budget brand

Tui Group is planning to launch a new pan-European budget holiday brand “in the very near future”.

Sebastian Ebel, chief executive, outlined the plans on Tuesday, as the European tourism giant unveiled its Q1 results – with group revenue almost constant year on year at €4.9 billion and underlying group profit (EBIT) rising to €77.1 million from €50.9 million in the same period a year earlier.

He said Tui was not planning to expand in the budget hotel sector, where it has its Suneo brand, but it is looking at expanding its dynamic packaging product.

“We believe that the core competency of Tui is in the club and in the four or five-hotel segment – that is where we have the knowledge, we have the customers,” he said when asked about budget hotel brands.

“To move into the budget segment and to get a decent return, it is more challenging.”

He said Tui’s budget market share is “significantly below” the market share it has in the upper segment.

“This upper segment is very stable. It is resilient. But for the time being, in the core market, it’s not really growing – so for us, the opportunity is in the lower end of the market, and this means a different product, different cost structure,” he explained.

“We need to get decent margin. We don’t go for market share. We go for margin.

“And if you want to be successful in this market segment, you need a different cost structure, less complex product and so on.

“We will use this to bring a European product on one platform into the market.

“It will be in the very near future, and what is important for us that we do it with a brand for all the markets.”

He continued: “It will be very much based on dynamic packaging. But of course, like others do in this lower end segment, you can also go for some contractual agreements with a fluid pricing, so it will be something also in between.”

Ebel said he had been a “big fan” of Tui’s former budget brand 1-2-Fly but added: “It will not be the brand 1-2-Fly.”

Tui currently offers city breaks with budget carriers such as easyJet and Ryanair.

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