Tui upbeat for summer with ‘promising’ bookings growth

The number of holidaymakers handled by Tui rose by 14% to 2.8 million in the traditionally weaker second quarter of the group’s financial year.

Europe’s largest travel company reported “promising” summer bookings up 5% year-on-year and prices up 4% amid a high demand for package holidays.

UK bookings for the summer are currently three per cent higher than this time last year, with 65% of the season sold. 

Tui “continues to closely monitor geopolitical events, particularly in the Middle East and on the Arabian peninsula. 

“Should the situation or customer demand change, the group’s business model allows it to flexibly shift capacity from the eastern to the western Mediterranean.”

The group expects full year revenue to increase by at least 10% and profits by 25% compared to the previous 12 months.

The outlook for the 2024 financial year “is based on the current macroeconomic and geopolitical uncertainties, particularly in the Middle East. 

“Expectations are based on the strong operating performance in the hotels and cruises segments in the first six months of the financial year and the return to our normal hedging policy in markets & airlines, as well as the continuation of the overall positive trends in our business in the second half of the year.”

The projection came as Tui cut winter losses in the quarter to March 31 by €54 million to €189 million over the same period the previous year as revenue rose by 16% to a record €3.6 billion for the three months. 

Tui attributed the improved performance to people’s continued “high willingness” to travel together with higher prices and record results for its hotels & resorts and cruise divisions.

The group hailed its travel agency network for contributing higher margins despite 80% of package holiday customers using the Tui app.

But losses in the group’s northern region – the UK, Ireland and Nordic countries – deepened by €17.4 million to €164.9 million due to the sale of a Canadian tour operator in May 2023 which had contributed positively in the previous year.

Direct distribution for Tui’s northern region was at 92% in the quarter, maintaining the high rate of the same period last year and pre-pandemic levels.

“Both our ongoing operations in UK and Nordic reported higher results supported by increased volumes at higher prices,” Tui said.

The group described travel demand as remaining good with a strong finish to winter 2023-24, and “promising” bookings for this summer.

The winter season ended with a strong lates market with bookings up 9% and average prices 3% higher. 

“The weather also motivated many last-minute travellers to make winter bookings,” Tui pointed out.

A total of 5.1 million customers took a holiday with Tui in the winter, with 700,000 more since the company’s last trading update in February. 

Demand was strongest for short and medium-haul destinations, with the Canary Islands and Egypt being the most popular destinations and increased demand for Cape Verde.

The summer programme is 60% sold with total of nine million bookings – an increase of five per cent over this time last year.

Medium and short-haul destinations are driving bookings for the summer with Greece, Turkey and the Balearic Islands the most popular destinations for summer holidays. 

Tui, addressing concerns about over-tourism which led to protests in the Canary Islands, said: “Despite protests highlighting issues such as rising housing prices and resource consumption, the general sentiment towards tourists remains positive. We continue our efforts to balance tourism benefits with community well-being.”

Group chief executive Sebastian Ebel said: “Travelling is very popular with people. We see trends that will further strengthen this in the future: experiences are becoming more important than possessions, and the middle classes are growing in many parts of the world. 

“The first two quarters of the financial year were very successful in operational terms. It clearly demonstrates the resilience of our business model and strategy and emphasises our strength in growing profitably in a dynamic market environment. 

“We are seeing high demand for package holidays, in particular, which we are producing more and more flexibly and dynamically and which continue to offer the highest level of protection for our customers. 

“Eighty per cent of our package holiday guests use our app, which we are developing into a fully comprehensive travel companion. 

“The digital services go hand in hand with our successful bricks-and-mortar sales organisation, which continues to play an important role. 

“Travel agencies stand for high-quality advice, service quality and higher contribution margins.” 

He added: “The significant increase in guests’ willingness to recommend Tui to others and the high customer satisfaction ratings in the first six months of the financial year show that we are on the right track. 

“We therefore continue to pursue our goals with determination and implement them consistently. The transformation of the segments remains a central component of our strategy and will show its positive effects in the coming quarters and financial years. 

“Tui’s international market position will also be further expanded. We are aware of the ongoing challenges in the geopolitical environment and confirm our expectations for the full year. We aim to increase revenue by at least 10% and underlying operating earnings by at least 25%.”

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