TUI doing well despite winter holiday price rises

TRAVEL giant TUI has said there is “resilient” demand for its holidays from UK customers, despite having hiked winter travel prices 8% to make up for the weak pound.

UK bookings over winter 2017-18 were down 3% when accounting for its cruise business, but the company said that was due to very strong comparative figures a year earlier when bookings jumped 12%.

Regional demand was also cheered in light of the 8% rise in average selling prices for the winter period, which TUI said reflected the “ongoing impact of the weaker pound sterling” and resulted in “more normalised trading margins”.

The company said overall bookings for summer 2018 have started well, with the UK “broadly in line” with the prior year – down 1% – and average selling prices up 3%.

The FTSE 100-listed firm logged an 8.1% rise in revenues to £3.1bn, up from just shy of £2.9bn a year earlier. When stripped of currency effects, turnover climbed 9.1%. Pre-tax losses, meanwhile, narrowed from £91.8m to £64.4m for the period.

Chief executive Fritz Joussen said TUI was still on track to see underlying operating earnings rise at least 10% for the full year, as its hotels and cruise operations continue to grow.

“Our strategy is successful. Our focus is on hotels and cruises. While we used to be a trading company, we have now become developers, investors and operators.

“This makes TUI more profitable, and we now generate our earnings more evenly across 12 months,” he said.

As a whole, underlying earnings for its holidays and resorts business nearly doubled, rising 91.9% to £83.9m in the first quarter to December 31, compared with £43.7m a year earlier.

Its holiday experiences and cruise businesses saw underlying earnings rise 64% and 33%, respectively

Together, those operations helped make up for a a drop in its sales and marketing division – which saw losses widen to £118.6m from £115m a year earlier – as well as all other segments, which logged a 110.9% slump in underlying earnings.