As Tui Travel releases results with growth of 11%, which is bigger than its targets, it has claimed the merger with Tui AG will “strengthen and future-proof” its business.
The vertically integrated operator has reported an 11% increase in underlying profit at constant currency rates to £654 million with underlying operating profit up to £612 million for the year ending September 30, 2014.
The increase came about despite a 3% drop in revenue to £14.6 billion and was driven by strong performances in the UK, Germany and the Netherlands, while French tour operator losses have been halved.
Chief executive Peter Long said: “We have delivered another year of out-performance against our growth roadmap, achieving an underlying operating profit growth of 11% at constant currency rates.
“This demonstrates the strength and resilience of our business model in what has been a competitive trading environment for many tour operators and airlines.
“The combination of our market leadership position, scale, focus on unique holidays distributed increasingly online and our relationship with the customer throughout their whole holiday experience continues to provide a strong basis for sustainable, profitable growth.
“The merger with Tui AG will strengthen and future-proof our combined group.
“It will also enhance the certainty of long-term unique holiday growth and reinforce our clear competitive advantage through further control over the end-to-end customer experience.
“This will mark the start of an exciting new phase of growth, delivering significant opportunities and value to customers, employees and shareholders.”
Unique product
Long added that much of the commercial success was as a result of the operator’s reliance on unique holidays, which he described as the “backbone” of the mainstream business.
In particular the higher margin sales performed strongly, growing by three percentage points and accounting for 71% of all mainstream holidays sold.
Mobile traffic is also growing well and accounts for 36% of all visits in 2014, up from 25% the previous year. In the UK conversion rates on smartphones have grown by just under 50%.
Long added current trading is also proving strong, with 63% of its winter 2014-15 programme sold, while overall bookings and average selling prices are up 1%.
Despite the UK being behind the curve with 53% of the programme sold, its average selling price is up by 2%, customers up by 4% and total sales up by 7%.
In particular in the UK overall long-haul bookings are up by 13% thanks largely to Tui’s expanded 787 fleet.
Online bookings in the UK have also grown by two percentage points and now account for more than half – 51% – of all bookings.
Summer 2015 is also positive in the UK with bookings up by 9%, while the average selling price is up by 2%. Sales of unique holidays are up by 7%, accounting for 84% of all product sold.
A total of 22% of the UK programme has been sold.
Long said: “We are delighted to have delivered another year of out-performance against the growth roadmap set out in December 2012.
“This demonstrates the strength and resilience of our business model in what has been a competitive trading environment for many tour operators and airlines.
“Our UK business is going from strength to strength, delivering a 6.9% underlying operating profit margin this year, as we continue to build on our strong market-leading position.
“We are pleased with the progress in winter 2014-15 trading and the strong start to summer 2015 trading in the UK continues.
“The combination of our market leadership position, scale, focus on unique holidays distributed increasingly online and our relationship with the customer throughout their whole holiday experience continues to provide a strong basis for sustainable, profitable growth.”
