TUI sells specialist brands

LONDON/FRANKFURT: European travel group TUI is to sell its specialist adventure and education holiday brands to focus on its main mass market tourism business and plans to use proceeds from disposals for future growth.

TUI said yesterday that the specialist brands did not fit with its main holiday and cruise group, which in its 2014-15 financial year accounted for almost 85% of revenues.

This follows the sale last month of TUI’s Hotelbeds business for around €1.2 billion ($1.4 billion).

These M&A deals are the latest step by TUI management to reshape the tourism group which was created in 2014 by the merger of London-listed TUI Travel and German majority owner TUI AG.

TUI also owns a little more than 12% of shipping group Hapag-Lloyd, which it plans to sell, although it has said is under no time pressure to do so.

Selling the specialist group, which comprises more than 50 brands and had sales of €1.8 billion last year, would be the best way to maximise value for TUI’s shareholders, the company said.

As with the Hotelbeds disposal, the company said it planned to use the proceeds to invest in future growth opportunities and strengthen its balance sheet.

Chief executive Fritz Joussen defended the company’s plan.

“Our aim is to grow, and growing earnings by 10% a year is not possible unless you invest,” he told reporters.

Bookings for the summer were 1% ahead of last year and demand for holidays was strong, it said. That contrasted with warnings from airlines that attacks in Paris in November and in Brussels in March has hit demand for flights.

But TUI said customers continued to shift away from Turkey to other destinations due to security concerns,

Separately, the group said it would expand its main holiday and cruise group in France through a deal to buy Transat A.T. Inc’s French tour operating unit for €55 million.