Bloomberg News

TUI Travel Gains Clients With Inclusive Packages, Web Offer

February 07, 2012

(Updates with analyst comment in fourth paragraph, shares in fifth, CEO comment from seventh.)

Feb. 7 (Bloomberg) -- TUI Travel Plc, Europe’s largest tour operator, said it won business from competitors in January as customers booked all-inclusive holidays and specialty packages such as cruises to the Antarctic.

U.K. winter trading improved and booking levels were “flat” during January for summer holidays, the Crawley, England-based company said in a statement. That compares with a 14 percent market decline, as reported by GFK Ascent, TUI said.

TUI was helped by demand for specialty packages, which besides trips to the poles can include yachting holidays and family vacations, it said. The company is expanding its online business and offering more varied vacations to combat weakness in traditional holidays. Internet bookings rose last month.

“This is a robust statement,” Greg Johnson and other analysts at Shore Capital in Liverpool wrote today in an e-mail.

TUI Travel’s shares rose as much as 2 percent to 210.7 pence. They traded down 0.8 percent at 204.9 pence at 9:04 a.m. in London, valuing the company at 2.3 billion pounds.

Like rivals, TUI has suffered from political turmoil in North Africa, which blunted demand for trips there. The company’s underlying operating loss increased to 109 million pounds ($172 million) in the three months through Dec. 31 from 86 million pounds a year earlier. Revenue rose 4.7 percent to 2.85 billion pounds, TUI said in the statement.

No Spending Surprises

In addition to disruption in the Middle East and North Africa, travel companies have been buffeted by a weak economic climate in Europe and rising input costs. Thomas Cook Group Plc, a London-based rival of TUI, is selling assets including office buildings in the Netherlands to cut debt, while scaling back its plane fleet. Its first-quarter results are due tomorrow.

TUI Travel is “clearly a beneficiary of the uncertain environment our competitor is operating in,” Chief Executive Officer Peter Long said today in a conference call, referring to Thomas Cook.

The company said that 55 percent of its bookings for this year so far were for all-inclusive holidays. Its First Choice unit now only offers holidays where food, drink and accommodation are grouped within the price.

“It gives our customers value and certainty” about the amount they will spend on their vacations, Long said.

Adventure Savings

Bookings for so-called differentiated-product holidays, such as cruises, family breaks and yachting vacations, amounted for 64 percent of U.K. summer bookings, according to TUI.

The company is seeking to cut costs by 107 million pounds over the next three years, with savings being identified in the French, German and U.K. businesses, in the adventure-holiday unit and at airlines Jet4you and Corsair, Long said on a conference call in December.

“It is a challenging overall environment,” Long said today. “I’m heartened our demand in the late booking period for winter has been very strong.” The company’s performance remains in line with its forecasts, he said.

The tour operator, which is majority owned by Germany’s TUI AG, reported full-year profit that beat estimates in December. It is “largely hedged” against currency swings and jet fuel price changes for the current financial year, it said today.

--Editors: Marthe Fourcade, Thomas Mulier, Sara Marley.

To contact the reporter on this story: Clementine Fletcher in London at cfletcher5@bloomberg.net

To contact the editor responsible for this story: Sara Marley at smarley1@bloomberg.net


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