TUI's ability to move beyond its safe middle-market playground through an expanded luxury offering came under the spotlight at the Skift Future of Lodging Forum. Ultimately, a brand's market share is way more than customer segments — it's really rooted in experience and value.
TUI’s hotels and resorts brands appear to delight in the Goldilocks realm of just right, even if it is looking to stretch itself beyond its known middle-market appeal.
The company is planning to launch two new brands, and an extended focus on its unique experiences as well as dynamic tours geared for the luxury segment.
And while most consumers recognize TUI as a tour operator, half of its earnings does in fact come from its hotel businesses, which with 400-plus hotels across the brands continues to grow quickly, Erik Friemuth, chief marketing officer and managing director for hotels and resorts at TUI, told Skift executive editor Dennis Schaal in a discussion Wednesday at Skift’s Future of Lodging Forum in London.
He shared how with 10 hotel brands, add to this a couple of new brand launches and a brand refresh, he believed 12 brands was exactly the right number for the group known as the world’s largest tour operator.
The TUI executive confirmed the company would be relaunching Suneo.
“It’s a sun-and-beach clubby brand. It’s not a core club brand, but it has, club elements built into it. We are looking into it, making it broader and allowing more customers to enjoy it,” said Friemuth.
He was short on details of the new brands expected to launch, but Schaal pressed in on TUI’s ability to own its space in the luxury market, noting it was prone to appeal to the comfortable, middle market.
Friemuth said it depended on the definition of luxury noting the difference between ultra-luxury and lower luxury, as TUI looked to “focus at the edges, meaning value and meaning luxury.”
“We are targeting both at the moment, but we have experience in running luxury.”
Friemuth referenced Hapag-Lloyd cruise line as part of the company’s existing luxury offering along with five-start resorts in Tuscany. He used these examples of TUI’s luxury approach as the company looks to launch new brands later in 2023.
In a continued discussion around TUI hotel brand positioning, Schaal asked about TUI’s reported intention to go beyond its traditional core package holiday customers to capture more “travelistas” and “energised adventurers” in 2023.
The conversation quickly turned to the meaning of these TUI’s customer segments, including a snap poll at the Future of Lodging event, with Schaal pointing out that perhaps results showed the middle ground was TUI’s safe playground.
Travelistas are said to be younger, independent and adventurous travellers, with the confidence to travel more frequently, even if they are spending less. At the alternative end of the customer segment spectrum, energized adventurers are affluent individuals nearing retirement or already retired, who spend more on a holiday.
Friemuth indicated that these target market customer segments made up “37 percent of the travel market,” adding that, “theoretically speaking, we could double our business if we are successful by targeting those target groups.”
TUI would do this through a more diverse marketing message emphasizing its product and the ability to package all-inclusive experiences. It would be a modular approach, hinged on more attractive tours and experiences through its Musement brand.
Friemuth said the company was adding further momentum to enhance its appeal to new customer segments, while growing in underserved markets such as the Middle East, Africa and Southeast Asia through its dynamic package tours offering.
It has soft-launched in Belgium, and allows operators and independent travelers to mix and match TUI accommodation, flight, car hire and tours and experiences in unique packages giving the company a bigger share of brand in the overall customer journey. There is a planned wider international roll-out during 2023 and 2024.
*CORRECTION: A previous version of this article referenced Hapag-Lloyd cruise line and resorts in Tuscany as future TUI luxury offerings. These are part of existing product offerings within the TUI group.
Tags: future of lodging, skift future of lodging forum, tours and activities, Travel Experiences, tui group