Travelers in many parts of the world are used to the online booking of build-your-own vacation packages, and others prefer to walk into a travel agency to plan. After many years, TUI is trying to embrace digital trends, and is modestly executing on a plan to get more online.
Dennis' Online Travel Briefing
Editor’s Note: Every Wednesday, Executive Editor and online travel rockstar Dennis Schaal will bring readers exclusive reporting and insight into the business of online travel and digital booking, and how this sector has an impact across the travel industry.
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The knock on TUI Group has always been that the world’s largest tour operator was largely an offline business, and out of touch with the modern digital, do-it-yourself booker.
But TUI is bent on transforming its business, and turning itself into a digital platform, and the company has made some modest yet notable progress over the past year. It’s all in keeping with digital adoption trends that have been prevalent in a broad expanse of industries, from food delivery to retail, that have been prevalent during the pandemic.
TUI reported Wednesday that 72 percent of its UK bookings were made online in fiscal year 2021, which ended September 30, and that’s up 9 percentage points from the same period in pre-pandemic 2019. The tour operator, of course, eliminated more than 200 travel agency offices in the UK alone over the past year-plus.
TUI increased its online bookings 9 percentage points, as well, in France to 60 percent.
But TUI was especially heartened with digital progress in its home market, Germany, where most of its business is still very much offline. Online bookings in Germany jumped 11 percentage points to 33 percent in the fiscal year that ended September 30 compared to fiscal 2019.
In reviewing fiscal year 2021 financial results, TUI chairman and CEO Friedrich Joussen told financial analysts Wednesday that the increase in online bookings in Germany was “particularly promising.”
It’s all part of TUI’s global realignment program.
In addition to cost-cutting and trying to drive other efficiencies, expanding TUI’s tours and activities business, as well as increased digitization, including turning to more dynamic packaging, are among the key elements of TUI’s goal to “transform TUI into a digital platform.”
TUI’s recently ascending tours and activities brand, Musement, saw sales via its app jump 226 percent in fiscal 2021 versus the same period in 2020, although excursions overall fell 59 percent as Covid-related lockdowns and restrictions took a toll.
“TUI Musement saw a higher number of customers traveling this summer versus prior year as travel restrictions and social distancing requirements eased with much of the volume driven by our market and airline business,” TUI Chief Financial Officer Sebastian Ebel told analysts Wednesday. “This helped to deliver a Q4 underlying EBIT (earnings before interest and taxes) loss of euro 9 million ($10.2 million) and EUR 39 million ($44.2 million) improvement on prior year with more than 1 million excursions sold in the final quarter, reflecting the improved environment for travel and clear benefits of our integrated model.”
TUI is a big company and an important one in Europe, although it notched a $2.26 billion operating loss in fiscal 2021. Its revenue in the September quarter, for example, at $3.85 billion (3.4 billion euros) was lower but within shouting distance of Booking Holdings revenue at $4.7 billion during the same period.
TUI won’t become a digital platform rivaling Booking.com overnight or in the near future, and the two companies are engaged in different business offerings, although there is much overlap. But TUI is showing a greater commitment toward transforming its underlying business with a digital accent than at any time in its recent history.
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