TUI reports resilient demand for holidays from UK customers

Travel giant TUI has said there is 'resilient' demand for its holidays from UK customers, despite having hiked winter travel prices 8% to make up for the weak pound.

Library image of the opening market ceremony for TUI
Library image of the opening market ceremony for TUI

UK bookings over winter 2017/2018 were down 3% when accounting for its cruise business, but the company said that was due to very strong comparative figures a year earlier when bookings jumped 12%.

Regional demand was also cheered in light of the 8% rise in average selling prices for the winter period, which TUI said reflected the “ongoing impact of the weaker pound sterling” and resulted in “more normalised trading margins”.

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The company said overall bookings for summer 2018 have started well, with the UK “broadly in line” with the prior year - down 1% - and average selling prices up 3%.

The FTSE 100-listed firm logged an 8.1% rise in revenues to 3.5 billion euros (£3.1 billion), up from just shy of 3.3 billion euros (£2.9 billion) a year earlier.

When stripped of currency effects, turnover climbed 9.1%.

Pre-tax losses, meanwhile, narrowed from 103.3 million euros (£91.8 million) to 72.5 million euros (£64.4 million ) for the period.

Chief executive Fritz Joussen said TUI was still on track to see underlying operating earnings rise at least 10% for the full year, as its hotels and cruise operations continue to grow.

“Our strategy is successful. Our focus is on hotels and cruises. While we used to be a trading company, we have now become developers, investors, and operators.

“This makes TUI more profitable, and we now generate our earnings more evenly across 12 months,” he said.

As a whole, underlying earnings for its holidays and resorts business nearly doubled, rising 91.9% to 94.4 million euros (£83.9 million) in the first quarter to December 31, compared with 49.2 million euros (£43.7 million) a year earlier.

Its holiday experiences and cruise businesses saw underlying earnings rise 64% and 33%, respectively

Together, those operations helped make up for a a drop in its sales and marketing division - which saw losses widen to 133.4 million euros (£118.6 million) from 129.4 million euros (£115 million) a year earlier - as well as all other segments which logged a 110.9% slump in underlying earnings.

Administrative costs for the first quarter grew 7.1% to 307.8 million euros (£274 million) .

Mr Fritz said TUI was turning attention to its destination services business - which has been identified as one of its “strategic growth areas”.

The business pools all services including transfers, activities and excursions during customer holidays.

“Here, we see great potential to grow through the strength and comprehensive presence of the TUI brand. We know our customers. Our customers know us, and they trust the TUI brand.

“This should help us develop more and better service offerings and generate additional turnover,” Mr Joussen said