TUI Travel tilts away from travel agents with strong online sales
TUI Travel offers packaged tours to Vietnam, and the company is reporting strong sales companywide for the summer. / TUI Travel
The world’s largest tour operator is pushing an online strategy and establishing direct relationships with consumers, meaning traditional travel agents are increasingly getting cut out of the picture. TUI Travel’s online business now stands at 40% in the UK, and the company hopes to achieve that mark globally.
Bookings for summer holidays are up 9pc as Britons look to escape the extended cold spell, according to Tui Travel.
The world’s biggest tour operator, which owns Thomson Holidays, said it had continued to see “very strong” trading momentum in the UK as holidaymakers also sought to avoid another wash out, with last summer one of the wettest on record.
In an upbeat trading update, Tui said it was confident of hitting the top end of its profit guidance for this year after a strong finish to winter trading and rising summer bookings.
Strong sales in the UK and Nordic region helped its core business increase summer bookings by 2pc as austerity-hit consumers escape th gloom with fixed-price getaways., offsetting weaker performances in France and Germany.
Although total bookings dropped 4pc, that was offset by selling holidays at better average prices, with a 4pc rise in the average cost of a summer holiday.
The group, which also owns brands including First Choice and LateRooms.com, said demand was driven by its online business and direct distribution, with online accounting for 40pc of its sales in the UK.
The company said: “This is against a backdrop of uncertainty in the eurozone, highlighting that demand for the annual holiday remains resilient against a weak macro-economic environment.”
The company said it expected 7-10pc growth in its underlying annual operating profit.
Analysts at Numis were pleased by the update. They said: “The poor weather across much of Europe is clearly providing a helpful tailwind but we believe it is also increasingly apparent that TUI’s strategy of focusing on Differentiated and Exclusive product is paying dividends.”
“We expect some consensus upgrades and we have moved our target price from 310p to 350p and our recommendation to Add from Hold,” the broker added.
Shares in the tour operator gained 6pc in early trading on Wednesday to 320.1p as the strong trading defied a bleak outlook for the eurozone.