Tui Travel has cut capacity from the UK by 9% for both this winter and summer 2012, the firm has revealed in its year-end results announced this morning.
Winter sales are 12% down, driven by ongoing turmoil in North Africa and “a weaker consumer environment”.
Summer 2012 sales from the UK are 11% down with 19% of the programme sold and average selling prices 9% up. The proportion of differentiated holidays sold is eight percentage points up at 65%.
The UK and Ireland contributed a £22 million improvement in operating profit to £149 million in the year to September which helped to offset the negative impact of unrest in North Africa earlier in the year.
The growth of higher margin differentiated products has underpinned volume and margin performance, the company said. Differentiated holidays accounted for 47% of the total product mix in 2011 for the year, up 5 percentage points on 2010.
Sales of unique differentiated products such as SplashWorld, Holiday Village, Sensatori and Couples grew by 14% in the year while sales of lower margin “commodity products” declined by 5%.
The Couples child-free resort concept of 16 properties, which was introduced for this year, was described as being “a particular success”.
The First Choice Holiday Village portfolio has also been expanded with a new unit in Tenerife and a planned opening in Menorca. Exclusive products which can only be booked via Thomson and First Choice accounted for a further 19% of Tui’s customers.
Online distribution accounted for 39% of bookings in 2011 with more customers booking using its websites than by any other distribution channel.
“Significant enhancements were made to both the Thomson and First Choice websites that have improved navigation, customer experience and ‘look to book’ ratios,” the company said. Thomson is one of the top three most visited travel websites in the UK.
The UK business delivered the final £5 million of post merger synergies in the first quarter, and delivered a further £12 million of cost savings, mainly relating to pensions and back office cost reductions.
“Our business in Ireland delivered a turnaround of £4 million in the year, with the completion of the programme of capacity rationalisation and cost savings which commenced in 2010,” the company said.
The number of holidaymakers carried from the UK and Ireland was up by 1% to 5.4 million as revenue from the region rose by 6% to £3.6 billion.
Looking forward, Tui said: “As with the rest of the travel and aviation industry, we continue to operate in a challenging geopolitical and economic environment which is demonstrated by the later booking profile that we are seeing in some source markets.
“We have adjusted our winter capacities to reflect the current market conditions and are trading in line with our expectations. Summer capacities will be flexed to match profitable demand.
“We remain focused on our strategy of increasing the proportion of sales of differentiated and exclusive product, and on increasing controlled distribution with a focus on online to enhance our customer access and reduce distribution costs.”