Package holidays experienced a “renaissance” in 2012, according to Tui Travel chief executive Peter Long.
Speaking to the Daily Telegraph, Long outlined the company’s investment in “differentiated” product holidays involving hotels and activities that cannot be bought through any other operator, such as the Sensatori brand.
“These are hotels that are specified by us and built by our partners. It’s the completely opposite end of a canteen-type atmosphere, to choices of restaurants and real variety,” Long said.
According to a recent note from Morgan Stanley, package holidays grew by 5% between 2010 and 2012, increasing their share of the overseas holiday market by three percentage points. Independent holidays declined 5%.
Long believes that Britons have safeguarded their annual holiday abroad at all costs to escape the drudgery of long hours, falling real incomes, not to mention the pitiful weather back home.
All-inclusive packages have boomed in particular as households have stuck to rigid budgets.
“We have seen huge growth in that area – over half of our holidays are now all-inclusive in terms of our mainstream business,” said Long.
“It has probably gone from a third up to 50%. Customers like the certainty, they know they can budget very clearly and they know if there are any issues… we deal with it.”
Tui has set out to expand at a compound annual growth rate of between 7% and 10% over the next five years even though it is not banking on a consumer recovery for another 36 months.
Long said he believes Tui will hit that goal by continuing to lure holidaymakers away from rivals – including Thomas Cook – with its “unique” packages.
“There is clear blue sky between us and any competitor because we are so uniquely positioned, and no-one could quickly replicate what we have built over the last six years,” he said.
“We are not assuming there is going to be an improvement in the overall economic environment. We believe we can grow in that environment and take market share on the basis that the strong get stronger.”
Long, who banked nearly £6.5 million for 2012 in pay and share sales, offered rival Harriet Green “all the best of luck” in her efforts to revive Thomas Cook.
What Green has revealed of her strategy so far “all looks sensible”, Long said, before adding: “It is a long, hard slog to rehabilitate that business in the UK.”
If anything, Tui will widen the gap over its competitor in 2013, according to Long. It has used the last 12 months to lure desired hoteliers away from its rivals.
“We are quite clear that the real benefit comes in 2013 as we have accelerated on our journey of exclusive holidays,” he said.
“We have been able to accelerate that journey because hoteliers have been very receptive to partnering with us.
“Why? Partly because there is a weakened competitor. We have taken advantage of that. We have also taken the opportunity to eliminate the number of hotels we share.
“That translates into volumes being up and an increase in market share in 2013. That’s where the win will come for us.”