Saga’s travel arm is introducing a tailor-made initiative as it seeks to capture a larger share of a market estimated to total 52 million trips a year.
‘Experienced gap year’ trips, multi-generational holidays and premium jet tours are among the new developments as part of a digital transformation.
Destinations across Asia and the United Arab Emirates have gone live today (Tuesday) and more will be added over the next three months.
More: Saga’s cruise and tour operations suffer under Covid impact [March 22]
Saga to work with ‘smaller number’ of agents [January 22]
The disclosure came as Saga Group expects continued recovery in its cruise and travel businesses as it reported a return to underlying profit in the first half of the year.
The travel and insurance company for over-50s produced a profit of £14 million in the six months to July 30 against an underlying loss of £2.8 million in the same period last year. This came as revenue rose by 65% year-on-year to £258.3 million from £156.4 million.
However, it suffered a pre-tax loss of £257 million in the period, which Saga said reflected a £269 million impairment of insurance goodwill, “representing a reduced view of future motor and home margins per policy”.
Saga downgraded its full year profit forecast to between £20 million-£30 million compared to previous guidance of £35 million-£50 million.
The group said: “Looking ahead to the second half of the year, we expect a continued recovery in our cruise and travel businesses.
“We anticipate that the headwinds experienced in the first six months will recede as customer demand continues to rebuild and we are able to grow our bookings.
“Whilst we are mindful of the broader inflationary environment in the UK, the exposure within these businesses has been largely offset or, in the case of fuel, hedged, and at present, we are not seeing any impact to demand from our customers.”
Titan Travel and Saga touring were combined in the period to deliver cost efficiencies, margin benefits and improved customer choice as part of “radical” improvement plans, moving it from being largely paper brochure-based, to a digital business with dynamic pricing.
Booked revenue at September 18 for 2022-23, which currently includes river cruise, was £137.6 million. But this does not represent a typical year due to Covid-19 restrictions at the beginning of the year, “deliberately delayed product launches and the reset of the business”.
Saga added: “As such, the business is expected to report a small loss for the full year, but this will be significantly ahead of the prior year.
“Consequently, the bookings of £76 million for 2023-24 are behind the same point in the prior year, reflecting the conscious re-positioning of the business ahead of our new touring, escorted stays and tailor-made propositions which have begun a phased launch.
“Our call centre has seen record levels of call volumes in the last month, as demand for holidays and tours picks up. This has resulted in longer average wait times for customers as we ramp up the capability in our teams.”
Saga’s two ocean cruise ship business generated positive earnings in the six months with a load factor of 66%, with bookings at September 18 reflecting a load factor of 74%.
The ships are on target to achieve an 84% load factor in the second half of the year as they return to to pre-pandemic operating conditions following the removal of all temporary Covid-19 measures.
Strong early bookings for 2023-24 has put the group on course to deliver earnings of £40 million per ship.
The ocean and river cruise teams were also combined, encouraging cross-selling between the two. The river cruise to ocean cruise cross-sell at July 31 was 18% and vice versa at 6%.
“Both represent improvements year-on-year and demonstrate a tremendous opportunity moving forwards,” Saga added.
Group chief executive Euan Sutherland said: “I am pleased to report that, for the first six months of the year, Saga returned to an underlying profit, as we were able to resume more normal cruise and travel operations.
“Following our return to service after the pandemic, our ocean cruise business secured strong bookings and is on track to achieve our targets for this year and next, while we also made the final preparations for our new digital Saga Travel business which has just launched the first of our new products.
“Looking ahead, while we are mindful that the external environment remains challenging, we are confident that Saga is now in a stronger position than it was before the pandemic.
“We are determined to build Saga into the largest and fastest-growing commercial network for older people in the UK, building a customer lifetime value model and creating long-term value for our investors.”
Saga Travel chief executive John Constable said: “Our research has shown that our customers are keen to travel, explore and have new and different experiences with a brand they trust for quality, service and expertise. They know what they want and what they don’t.
“We are in a great position to respond to that and innovate the market, which we’re doing through our new ‘Tailor-Made Travel by Saga’ service, our plans to introduce experienced gap-years, multi-generational holidays and, thanks to its huge success, a further roll-out of our premium jet tours.”
Sutherland added: “Travel lies at the heart of the Saga brand and we are really excited about the plans that have been developed by John and his team.
“We are building the travel company for the experienced generation based around a dynamic, digital offering that will allow us to win a greater share of a market with more than 52 million trips a year.”
More: Saga’s cruise and tour operations suffer under Covid impact [March 22]
Saga to work with ‘smaller number’ of agents [January 22]