Results from Europe’s largest travel firm Tui Travel are released tomorrow (Tuesday) with the City looking to see if it can match the performance of resurgent rival Thomas Cook.
Tui Travel chief executive Peter Long will use Google’s head office in London to unveil full-year results as he emphasises his firm’s “technological innovations” and the benefits of its own roadmap for growth.
Greg Johnson, an analyst at Shore Capital, told The Herald in Scotland: “Given the location of the presentation at Google’s HQ, we would expect management to use the results presentation to demonstrate the progress being made in this area.
“Apart from reducing distribution costs we see online development as an opportunity for both yield management and customer acquisition.”
Johnson said Cook’s resurgence had “raised the bar” on profit margins.
“If Thomas Cook delivers on both ‘wave one’ and ‘wave two’ profit-improvement targets, assuming limited slippage in trading it would imply around 8 per cent operating margins – El Dorado to a tour operator historically,” he said.
“Tui Travel’s margins were 3.4% in 2012 and we forecast increasing towards 5% by the end of the five-year roadmap.”
Wyn Ellis, an analyst at Numis Securities, told the newspaper: “Thomas Cook, as it has recovered from its financial crisis, has been the stellar performer in the tour operator segment.
“Tui Travel, in the meantime, has continued to make encouraging strategic progress and we believe that its superior business model leaves it well placed for further strong progress.”
Ellis is forecasting an 18% rise in underlying profits to £580 million, while other analysts are expecting underlying pre-tax profits to climb by 16% to £452 million.
Thomas Cook last month highlighted the effect of travel restrictions amid the political unrest in Egypt – a popular winter destination – which it said cost it around £10 million in profit.
The unrest could hit Tui’s current-quarter trading, according to Numis.