Analysis: Tui’s own products drive up group profits

He also reported Tui’s hotels and resorts occupancy up 3% year on year this summer, with the average daily room rate 6% up on a year ago.

Aside from Tui’s sales of its own product, Ebel reported: “We’re growing significantly in dynamic packaging.”

In fact, he suggested a wholesale switch to dynamic packaging in Tui’s Western Region – France and the Benelux countries – would turn around the business and “make it profitable in the next months”. The Western Region business recorded a 2% drop in revenue on 2024 in April to June and an 18% rise in operating loss.

By contrast, Tui’s Northern Region – including the UK and Ireland – recorded a 7% rise in revenue to €2.34 billion and an operating profit of €43 million, while its Central Region – dominated by Germany and Europe’s German-speaking markets – saw a 10% rise in revenue to €2.23 billion and a €25-million operating profit.

Tui revised its full-year guidance in light of the strong results, forecasting group operating profit would grow by up to 11% in the year to September.

In keeping with the expansion into new areas of demand, Ebel noted the recent launch of Tui Tours in Germany, aimed at extending the business into the domestic tours and events sector in its major source markets.

Ebel noted it was “a big market that we have not been in” and said tours will be available “in other markets soon”.

Tui’s markets and airlines

The emphasis in Tui results presentations these days is rarely on its traditional tour operating business.

Yet its markets and airlines division still takes the lion’s share of Tui revenue – €5.4 billion of the €6.2 billion in April to June and €12.6 billion of the €14.8 billion for the nine months to June.

The profits from this almost all come in the peak summer quarter.

Ebel noted: “Bookings are slightly below last year, with UK bookings up 1% on 2024 but Germany 5% down.” But emphasising the increased profitability, he insisted: “We focus on positive margins.”

The key to understanding the results, he said, was that: “We achieve a strong rate for our own differentiated products. We’re able to package Ryanair and easyJet flights, but with non-differentiated product it’s very competitive. With differentiated product you’re independent of that.”

Ebel said: "It’s our differentiated product which makes Tui unique. If we steer a Tui customer into a Tui hotel we see an incremental benefit.”

The process of transformation is not yet over. However, Ebel dismissed a suggestion that the group intends to shut retail outlets.

He insisted: “There will be no programme of restructuring, but we will significantly increase productivity. Transformation means higher productivity.”