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Pricier Packages and Increased Online Bookings Boost TUI Travel’s Q3 Profit

Aug 08, 2014 4:01 pm

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After all the cuts, sell offs and consolidations, Europe’s tour giants are finally seeing good(ish) news.

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Vladimir Yaitskiy  / Flickr

A TUI tour bus in Turkey. Vladimir Yaitskiy / Flickr

TUI Travel Plc, Europe’s largest tour operator, reported higher third-quarter profit as average prices for package tours rose and more clients booked online.

Underlying operating profit was 92 million pounds ($155 million) in the three months through June, Crawley, England- based TUI Travel said in a statement today, 21 percent higher than last year, adjusted for currency swings and the timing of Easter. Sales fell 2 percent to 3.8 billion pounds, as the number of customers in the company’s mainstream business declined in the summer season. Average selling prices in that business climbed by 1 percent.

“As the trading environment in the commodity space has become more competitive and airline capacity continues to increase, our flexible business model enables us to deliver sustainable, profitable growth and outperform the market,” Chief Executive Officer Peter Long said in the statement.

TUI is cutting costs and is increasingly selling vacation packages directly to customers amid weak economic growth in Europe. Unrest in countries including Egypt and Russia contributed to an 2 percent drop in customers at the company’s mainstream business, which excludes adventure and sports excursions.

The proportion of sales generated online rose to 36 percent of the total in the period, compared with 33 percent a year ago. Unique holidays, referring to offerings exclusive to the company, amounted to 71 percent of sales, up from 68 percent last year. The company so far sold 88 percent of its summer offering.

The shares have declined 14 percent this year, compared with a 29 percent drop in Thomas Cook Group Plc.

In June, TUI Travel and parent company TUI AG revived merger talks that broke down last year, aiming for an all-share, nil-premium deal that would create the world’s largest tourism business.

To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net. To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net. 

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