Half-year results

TUI Group delivers solid growth with a sunny outlook and more investments

TUI Group today presented healthy half-year results, including 10% customer growth in Germany, good summer booking figures and more investments in hotels and cruise ships.

May 09, 2018
All aboard. Fritz Joussen presented the half-year results on the new Mein Schiff in Hamburg
Photo: TUI AG / Christian Wyrwa

Europe’s biggest tourism group increased turnover by 7.2% to €6.8 billion for the six months from October 2017 to March 2018 and reduced the seasonal underlying EBITA loss by 26% to €158.6 million, driven by higher profits from hotels and cruises.

“We continue to deliver growth, all trends remain intact, and our very good trading performance for summer 2018 fully matches our expectations,” declared CEO Fritz Joussen at the presentation of the Group’s H1 results on board the new Mein Schiff 1 in Hamburg.

TUI was upbeat about its current “very good” sales performance for summer 2018. Overall, bookings are up by 5% and source market revenue is 7% higher (as of April 29). “Demand for Spain remains strong. Particularly strong growth in bookings is recorded for Turkey, North Africa and Greece. Destinations such as Cyprus, Croatia or Bulgaria also report a sound increase in bookings,” the group commented.

TUI’s source markets increased customer numbers by 5.5% and turnover by 7.8% to €5.76 billion in the winter half-year, driven particularly by the Nordic countries and Benelux. The seasonal loss decreased by 3.1% to €371.9 million.

The Central Region (Germany, Austria, Switzerland, Poland) increased customer numbers very strongly by over 12.7% to 2.42 million. Germany recorded strong demand for holidays, with volumes up 10%. The regional loss was reduced slightly by 1.5% to €145.8 million. The Northern Region (UK & Ireland, Nordics, Canada, Russia) reduced losses significantly by 12.7% to €120.5 million on a strong trading performance and other measures.

In the Western Region (Belgium, Netherlands, France), the Benelux markets performed well in the half-year but the situation in France “remains challenging”, partly due to full consolidation of loss-making Transat which was acquired in October 2016. The regional loss fell by 3.3% to €105.6 million.

The seasonal losses from source markets were compensated to a large extent by higher profits from the hotels and cruise divisions.

The Hotels & Resorts division improved operating profits by 45.9% to €179.2 million thanks to higher occupancy rates and average revenue per bed. The portfolio was streamlined with the sale of three RIU hotels which generated a gain of €38 million.

TUI will continue to invest in and expand its main hotel brands RIU, Robinson, TUI Magic Life and TUI Blue, which currently have more than 380 hotels in total. Two new TUI Blue hotels were opened in Marmaris, Turkey and in Mallorca last week, giving the brand 10 properties so far. For summer 2018, the group is planning to open five new TUI hotels including RIU Astoria in Bulgaria, a TUI Sensatori hotel in Rhodes and the recently acquired RIU Palace Zanzibar. RIU, with high occupancy and profitability levels, remains a key earnings and growth driver, and is growing with new hotel projects in Europe, the Caribbean and South East Asia.

The Cruises segment continued its growth path with a 23.2% rise in operating profits to €92.4 million powered by higher average daily rates. Average occupancy dropped slightly at TUI Cruises, was stable at British brand Marella Cruises and increased at Hapag-Lloyd Cruises.

On the outlook for cruises, Joussen said: “Forecasts for cruising are excellent. German and European holidaymakers are beginning to embrace this way to travel. Due to demographic change, traditional target groups are growing. At the same time, sea voyages are becoming increasingly popular among families and younger people. The convergence of these two very promising trends will further accelerate growth over the next five to ten years. And we are only at the beginning of this trend.”

Additional new vessels will be delivered to TUI Group’s cruise subsidiaries in 2018, 2019 and 2023 in order to further expand their market position. Moreover, TUI Group’s Supervisory and Executive Boards gave the green light for the construction of a third expedition cruise ship for Hapag-Lloyd Cruises on Tuesday. Hapag-Lloyd Cruises will shortly launch the planning and negotiation process for a further Hanseatic class ship.

“This market is growing strongly. Thanks to its experience, competence and high quality standards, Hapag-Lloyd Cruises offers great potential to attract new international customer groups and deliver stronger growth in the expedition cruise segment,” said Joussen.

Finally, the expanding TUI Destination Experiences segment delivered a good operating performance in the period under review with a 5% rise in customer arrivals.

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