Quarterly results

TUI delivers higher profits and summer bookings despite heatwave

Europe’s biggest tourism group has kept cool amid this year’s record summer temperatures, checking in more customers and generating higher profits.

August 09, 2018
TUI CEO Fritz Joussen presented higher profits and bookings.
Photo: TUI AG / Christian Wyrwa

TUI Group increased turnover by 5% to just over €5 billion in the April – June third quarter and improved underlying operating profits (EBITA) by 2.4% to €227 million (excluding currency effects and the impact of this year’s Easter timing). Over the first nine months of the business year, turnover was up by 6.3% to €11.83 billion while underlying EBITA improved by €57.7 million year-on-year to €65 million euros.

More importantly, prospects for the July – September quarter, when tourism companies make most of their money, look good so far.

The group’s summer bookings have held up well during May, June and July despite the heatwave and in contrast to rival Thomas Cook, whose sales slipped significantly over the last three months. TUI’s summer bookings are up by 4% and source market turnover by 5%, as of July 29, compared with 5% and 7% increases respectively as of April 29.

“The high level of early bookings helps to offset the impact of the sustained good weather in our key markets this summer. Spain remains the top destination. Turkey has caught up strongly and continues to record strong growth in bookings, along with North Africa and Greece. Destinations such as Cyprus, Croatia or Bulgaria also report good growth in bookings,” the group commented. In addition, the hotels and cruises businesses are continuing to perform well, with high hotel capacity utilisation and better cruise rates despite capacity growth, TUI underlined. Figures for individual source markets were not disclosed.

CEO Fritz Joussen said: “Our sector earns its profits in the fourth quarter. We have delivered a profitable operating result already after nine months for the second year in a row. For the full year, we expect to deliver double-digit earnings growth for the fourth consecutive time. We have considerably reduced our seasonality and thus our susceptibility to external challenges through the Group’s transformation focussing on hotels and cruises. TUI is in good health, we are flexible, deliver a strong operational performance and invest in our growth segments while maintaining our cost discipline.”

The detailed Q3 results underlined the importance of the high-margin hotel and cruise businesses for the group. TUI Hotels & Resorts improved underlying EBITA (at constant currency) by 10.7% to €86 million, as average bed occupancy and stable rates generated a 6.4% rise in turnover to €161 million.

The cruises division sailed on with a 36% rise in underlying EBITA (at constant currency) to €91.3 million thanks to higher average daily rates per passenger at the three operating companies (TUI Cruises, Marella Cruises, and Hapag-Lloyd Cruises) and stable overall occupancy levels.

The source markets division (tour operators and airlines) increased customer numbers by 4.4% and turnover by 4.7% to €4.4 billion across all regions in the April – June quarter but underlying EBITA at constant currency fell by 56% to €40.8 million. The Central Region (Germany, Austria, Switzerland, Poland), the Nordic countries, Belgium and the Netherlands all performed well but UK margins were affected by the weaker pound and other effects.

The Central Region delivered 5% growth in customer volumes, including a “very good” performance by Germany, and regional profits improved by 44.5% to €35.4 million. Northern Region (UK & Ireland, Nordics, Canada, Russia) profits dropped 80% to just €16 million as UK earnings were affected by the weaker pound sterling, airline disruption in Europe and the negative Easter effect. The Western Region (Belgium, the Netherlands, France) reduced losses by 25% to €8.9 million thanks to growth in Belgium and the Netherlands and amid challenging conditions in France.

Finally, the TUI Destination Experiences division increased Q3 customer numbers (arrival guests) by 8% and turnover by 19% to €66 million, and improved profits by 14% to €15 million. The division will expand considerably with the now-completed takeover of the Hotelbeds Group’s Destination Management business.

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