Tui Q3 results: Operator’s profits up 14% for three months to June. Ian Taylor reports
Tui says booking trends unaltered since Brexit vote
Tui reported the UK vote to leave the EU had “no impact” on bookings as it unveiled a 14% increase in underlying operating profit for the three months to June.
Chief executive Fritz Joussen
insisted: “There has been no slowdown of bookings in the UK after the referendum. We don’t see a change in booking patterns. People want to travel.” The group’s quarterly turnover
for April, May and June was down almost 6% on last year at €4.6 billion, given Easter fell in March this year, but Joussen hailed “a good trading performance” in the UK, in cruise and at hotel group Riu. He repeated Tui’s previous forecast of 10% growth in operating profit for the full year. Turnover for the nine months
to June was down almost 1% on last year, with Joussen attributing the fall to “a decline in bookings to North Africa and Turkey and the impact of terrorist attacks”. But Joussen said the UK “continues to deliver a strong performance, with improved load
14%
Tui Group’s rise in underlying operating profit in its third quarter
factors and margins . . . with revenue and bookings up 6%, demonstrating the resilience of demand”. He reported short-haul growth
driven by Spain, Greece, Cyprus and Portugal, and long-haul bookings up 16% “driven by growth to Mexico, the Dominican Republic and Jamaica”. Joussen said UK cruise sales also “continue to perform well”
following the launch of new ship Tui Discovery in June 2016. Tui said UK bookings for winter 2016-17 were up by 20% year on year “with growth driven by increased long-haul capacity, including the Caribbean, Mexico, Thailand and Mauritius [and] medium-haul to the Canaries and Cape Verde”. However, Joussen said: “Trading
JOUSSEN: ‘The UK continues to deliver a strong performance’
in some source markets has been significantly impacted by geopolitical events.” In the Nordics region, revenues
were down 9% and bookings down 12%. In Germany, revenue and bookings were both down 3%. Joussen said: “We experienced significant pressure on trading as a result of the decrease in demand for Turkey, which accounted for over 20% of Nordics customers in summer 2015. In addition, Nordics foreign offices advised against all unnecessary travel to Turkey in the days after the July attempted coup.” In Germany, he said: “We continue to increase our market share. However, current trading is strongly influenced by events in Turkey, which accounted for nearly 20% of German customers in summer 2015.”
‘We must propel sales online in Germany’
Control over distribution “remains central” to Tui’s strategy, with “all source markets focused on delivering more direct, more online sales”, according to chief executive Fritz Joussen. This objective looks set to mean substantial change in Germany where online sales for 2015-16 to date make up just 14% of Tui’s total, compared with 58% in the UK. Joussen said: “The cost of sale in Germany is high
compared to all other markets. Customers in Germany pay more for vacations, but the margin on our German sales is low. The inefficiency is strong. “Over time, if you don’t make it go away, somebody else will. How it will happen is a question for the market. [But] the drive online will happen in Germany.” He added: “We said the turnaround in Germany will take three to five years.”
WAGGOTT: heads Travelopia, Tui’s for-sale group of businesses
18 August 2016
travelweekly.co.uk 63
Travelopia sell-off ‘remains on track’, reports Joussen
Tui’s disposals of bed bank Hotelbeds and former specialist group business Travelopia “remain on track” as the group refocuses its strategy. The group announced the €1.2 billion sale of Hotelbeds to private equity firm Cinven and the Canada Pension Plan Investment Board in April. It confirmed its specialist business, since renamed Travelopia and headed by former Tui chief financial officer Will Waggott, was up for sale in May. Joussen said proceeds from the
sell-offs would “be used to invest in growth and strengthen Tui’s balance sheet”. He added: “Our transformation
to a hotel and cruise group and our presence in more than 100 countries make Tui Group more flexible, resilient and stronger.” Former chief executive Peter
Long, who stood down in February, frequently argued Tui’s lack of its own hotels and ships conferred flexibility. But Joussen said: “We changed our strategy. We were a trading company and we became an integrated tourism company. “We had a lot of events, in Paris, in Brussels, in Nice. What we see is how valuable our integrated business is because we can make an integrated decision.”
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