Corporate streamlining as part of the proposed TUI AG and Tui Travel merged entity will see it save £45 million a year within three years, but the firm will retain multi-national headquarters.
TUI AG chairman Friederich Joussen, who will become joint chief executive along with Tui Travel chief executive Peter Long, said: “We will save costs.
“This does not mean we will relocate everyone to a certain location we are interested in using the best tenants and work as a truly virtually integrated company.
“We are truly international and we have to be multi-locational in order to keep the best tenants.”
The merged firm would have four separate headquarters in Germany and the UK which Joussen described as “sub-optimal” so there would be some relocation of assets.
As well as the £45 million savings in exceptional costs, the merger will also mean the merged company will receive further cash tax benefit of £35 million.
Joussen said both these figures had been audited and so were included in today announcement of the proposal to merge.
He added further benefits would come from the merger including better yield management of owned hotel assets and a de-risking of its accommodation assets by better guarantees of occupancy.
Working together will also help Tui to broaden both its hotels and cruise content over a five year period.
“We will broaden our unique holiday portfolio which is a strategic advantage for the tour operator. The differentiated hotel portfolio has always been cornerstone of the strategy and we can broaden that.
“We can actually guarantee occupancy levels much more easily when we run an integrated business. The last advantage is we will change our yield management so we behave more like hotels.”
Currently 15% of Tui’s content is provided by its own brands including Riu Hotels, Robinsons resorts, Tui Hotels and resorts, and Tui Cruises.
The group has plans to expand all four areas and said it has the flexibility for that 15% figures to as much as double.
Long said quality in-house product will be a huge asset to the merged Tui, because access to quality content is becoming more restricted as emerging markets like China start to travel more.
He cited the Maldives as one destination where he said 25% of room are taken by Chinese travellers.
“We are taking the best of both businesses to create a stronger business with long term sustainability and you have de-risked growth.
“As you grow your hotels portfolio if you have your own distribution channel you are de-risking and that enables us to strengthen our position.
“It’s working and strengthening us against many competitors round the world that we compete with. We see more growth.”
Long said Tui was also changing the mix of product it sells, with a move away from low-margin flight-only pointing to profit warnings from firms selling only flights.
“There is huge added value doing what we do. That’s why we believe our model is sustainable going forward and why there is the opportunity to grow.”