Skift Take
TUI is known for its sun-and-beach holiday packages. However, its digital approach is now more attuned to independent, do-it-yourself travelers looking for flexibility.
TUI Group wants to shift more than 50% of its bookings to its TUI App, an ambitious long-term goal for Europe’s largest holiday package tour operator, given that app bookings account for less than 10% of its sales in key markets like the UK and Germany.
TUI Group CEO Sebastian Ebel shared the target and the company’s recent return to profitability earlier in August. With more than 21 million customers annually, the company is focused on a digital shift in addition to its traditional brick-and-mortar travel agencies with 3,500 agents.
Ebel wants to transform the TUI app into a one-stop shop for travel. The goal is to reduce the high costs associated with performance marketing channels like Google and improve TUI’s repeat bookings through loyal customers.
Peter Ulwahn, CEO of TUI Musement, the group’s tours and activities division, and Jessica Enbacka, Nordics market managing director, joined Skift in an exclusive interview to discuss the strategic shift.
“In terms of digital transformation, we were offline before. Now we are transforming the company, and we really want to compete with the other OTA players in the space when it comes to technology,” said Ulwahn.
Headquartered in Germany, TUI’s global travel operations include more than 400 hotels, 16 cruise ships, five airlines with 130 aircraft, more than 88,000 tour and activity experiences, and approximately 1,200 travel agencies.
TUI Musement also has business-to-business partnerships that account for 50% of its revenue, including with Expedia and Booking.com. Most recently, TUI added Holiday Check and Juniper Travel as distribution partners.
While TUI is traditionally known for booking holiday packages that include flights, accommodation, and experiences, the company has started selling standalone accommodation, and tours and activities on new TUI platforms. Over the past six months, TUI launched:
The unbundling of its traditional offering in this way created the opportunity to upgrade the TUI app, according to Ulwahn. The TUI app, also known as the TUI Digital Assistant, initially launched as a communication tool to its customers in 2014. The app’s direct, integrated booking with all TUI’s products, including flights, accommodation, experiences, and holiday packages, is now a central point for travelers to search, plan, and book all aspects of their holiday, explained Ulwahn.
When asked if the group would continue offering its branded hotels app, called TUI Blue, and whether that could dilute the focus and confuse customers, Ulwahn said, “All products will be available via the TUI app. On the other side, there is still a need for some separate apps – like TUI Blue or Robinson – which our guests use to interact with their hotel room or check daily menus or club-specific sports programs.”
Ulwahn further noted that 80% of TUI package holiday guests download and use its main TUI app.
Unbundling to Grow
TUI Nordics managing director Jessica Enbacka, who oversaw the launch of TUI’s accommodation-only booking offering in the Nordics market, pointed out that the strategy has challenges, especially in maintaining the quality of the customer experience.
The Nordic market, including Denmark, Finland, Norway, and Sweden, has led TUI’s digital journey, with almost all sales taking place online, according to Enbacka.
The growth was coming from the “do-it-yourself” product, she said, as 80% of standalone accommodation bookings in the Nordics are from customers who haven’t traveled with TUI yet. Additionally, local travelers made up 20% of overall bookings for standalone accommodations, a segment TUI had not previously focused on.
Enbacka has observed distinct trends in the Nordics market, including a strong focus on “togetherness,” influencing interactive and communal spaces within TUI’s hotels. Add to this, activity-based experiences and sports activities that allow for interactive family engagement were a noticeable shift as TUI looked to tailor its product offerings in the region to meet the interests of Nordic travelers.
“We’re finding those spots to give something of a new flavor every year in our hotels,” said Enbacka.
Beyond Sun and Beach Packages
In Europe, TUI is known for its Sun-and-Beach offering. Allowing travelers to pick and choose the elements they want to include in their holiday experience has meant evolving beyond this niche.
“We’ve been optimizing the sun and beach destinations for the last 50 years. We’re now looking into new areas like cities,” Ulwahn said. Enbacka added that expanding into urban experiences was complementary to the standalone accommodation offered in the Nordics and similar city destinations.
City destination experiences such as shore excursions have also seen increased demand with the cruise sector revival. Occupancy rates surged to 95% from April to June, up from 69% for TUI’s cruises product the previous year.
The top three city destinations include Barcelona, Rome, and Milan, with the booking of TUI Collections in city destinations seeing a 90% increase year-on-year. From October 2022 to date, TUI Musement has facilitated over 1 million direct bookings, added Ulwahn.
TUI Musement is also investing heavily in its branded experiences, known as TUI Collections, to have “better control over quality and delivery,” according to Ulwahn, and it now accounts for 60% of all the experience-based products it sells. An example of a TUI Collections experience is a full-day Majorca tour in Spain, including a vintage train ride and catamaran cruise to Sa Calobra beach, guided by TUI staff, including TUI transfers.
TUI’s own experiences product is further enhanced by partnerships such as the National Geographic Day Tours, initially offered as a cruise-only product.
“I am an old guide myself, and I wish I could have done some of these experiences then because they are truly fantastic,” said Ulwahn. For example, guests can secure exclusive access to the catacombs and restoration rooms at the National Museum Catalunya in Barcelona.
TUI’s National Geographic tours will be rolled out across the group later this year in November.
*This article has been updated to reflect TUI’s defined Nordic markets and TUI Musement’s business to business partnerships with Expedia and Booking.com.
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Tags: cruises, experiences, package holidays, tours and activities, tui, tui group
Photo credit: TUI wants more than 50% of its overall bookings to come from its App, in the next three years. TUI Group / TUI Group