Tui reports resilient British demand despite weakness of pound

Holidays giant Tui yesterday revealed that demand from Britons has proved resilient despite the group hoisting average winter travel prices 8 per cent to offset the weakness of sterling.

Tui said that although UK bookings over winter 2017-18 were down 3 per cent including its cruise business, they were up against strong comparators a year earlier when bookings jumped 12 per cent.

The group said the price rises reflected the continuing weakness of sterling and had contributed to “more normalised” profit margins.

Tui added that overall bookings for summer 2018 had started well, with the UK broadly in line with the previous year – down 1 per cent – and average selling prices up 3 per cent.

The FTSE 100-listed firm logged an 8 per cent rise in revenues to €3.5 billion (£3.1bn) in its first trading quarter to end-December 2017, up from just shy of €3.3bn a year earlier.

Pre-tax losses narrowed in the quarter to €72.5 million from €103.3m in the same period a year ago.

Chief executive Fritz Joussen said TUI was still on track to see underlying operating earnings rise at least 10 per cent 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,” he said.

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

Underlying earnings for the company’s holidays and resorts business nearly doubled to €94.4m 4, from €49.2m a year earlier.

Its holiday experiences and cruise businesses saw underlying earnings rise 64 per cent and 33 per cent respectively.

Administrative costs for the first quarter grew 7 per cent to €307.8m.

Joussen 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.

Joussen said: “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.”