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New TUI Group focuses on five areas for profitable growth

  • Published by Ozgur Tore

tui agm2015New TUI Group after the merger between TUI AG and TUI Travel PLC last December, made a good start with a considerably improved operating result in Q1 2014/15. In the period under review, underlying EBITA improved by 24 per cent to a typical seasonal loss of 107.9 million euros (previous year -141.1 million euros). This positive development was driven, in particular, by the Hotels & Resorts and Cruises Sectors, which achieved a significant increase in their profitability.

At the same time, turnover by the TUI Group grew by 5.4 per cent to 3.54 billion euros (previous year 3.36 billion euros). On the basis of the very strong results for the quarter, the Group has confirmed its outlook for the full year 2014/15: The operating result (underlying EBITA) is to grow by 10 to 15 per cent versus the prior year.

Fritz Joussen and Peter Long, Joint CEOs of the TUI Group said, “Our new financial year is off to a strong start. We will now have to preserve this momentum and our positive performance in order to maintain our profitable growth in future, too. To this end, we have launched various measures including the identification of areas, which we will define in greater detail in the next few months. Our goal is to improve our excellent prior-year operating result by a further 10 to 15 per cent by the end of the current financial year.” In his AGM speech Fritz Joussen stated, “We have also defined our overarching goal: We want to take the Group from good to great.”

Focus on five areas for profitable growth

The Mainstream business, which comprises the packaged holiday business, is to achieve profitable turnover growth and gain new market shares in future. Joussen: “In order to achieve that goal, we will need to offer unique products and services and strengthen our marketing activities. Excellent marketing is also a key prerequisite for a successful online business.“

In the Cruises Sector, TUI Cruises is to continue its strong growth. The second new build of the fleet, “Mein Schiff 4”, will be commissioned in June. It has been announced that Hapag-Lloyd Kreuzfahrten is expected to break even in the current financial year 2014/15. The Group expects to be able to operate Hapag-Lloyd at a very attractive earnings level in the long term, too. Contributing to this will be the acquisition of “Europa 2” in January and the corresponding termination of the charter contract. The five ships of the Thomson Cruises fleet, operating in the British market, are to be completely modernized in the next few years. At the same time, Thomson Cruises is to cooperate more closely with TUI Cruises. The goal is to expand TUI’s cruise activities so as to become a leading cruise operator in Europe in the foreseeable future.

The TUI Group’s Airline business currently comprises 140 medium- and long-haul aircraft in six companies. In order to remain competitive in the long run and deliver economies of scale across national borders, the structure of the Airline business will have to be rendered more efficient. Corresponding plans and measures will be developed in the course of the year.

With regards to its IT operations, the Group will focus on key strategic projects in future. A few weeks ago, the TUI Group launched a booking platform for the dynamic packaging of holidays in Spain for the Spanish market. The platform has been designed so as to be operable in different markets in the future. When being successful, it will enable TUI to enter markets in which the Company is not yet operating as a traditional integrated tour operator in the next few years. The Group is thus driving the change towards digitised business models and the integration of online and retail distribution further ahead while securing new turnover sources for the TUI Group. The Group is also pooling its IT competence in one platform for state-of-the-art customer relationship management (CRM) technology. The platform is to enable the Group to create a single view of the customer across the entire customer cycle. The more than 30 Group-wide computer centres operated to date will also be pooled, combining them to two powerful centres located at the Group’s head office in Hanover. The TUI Group is thus also strengthening Hanover as a business location in this field.

The newly created Non-Mainstream Sector, which entails the Hotelbeds-Group and the Specialist tour operators globally, will be led by Will Waggott. Both, the Hotelbeds-Group as well as some of the Specialist tour operators are growing strongly. In the coming weeks and months a strategy will developed aiming at growth and increased value for the whole Sector.

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