A quick delve into Tui’s 2022 results, issued on Wednesday (14 Decemer), initially makes for alarming reading in the UK, with Tui’s Northern region – which includes the UK, Nordics and joint venture Sunwing in Canada – recording the heaviest losses of any of its divisions.
However, things are not as bad as they seem. The Northern region came in at -€101.6 million, an 89% improvement on 2021’s whopping -€965.8 million. Moreover, Tui can legitimately blame factors outside its control in the UK last summer, with 4% of its UK flights disrupted. “The result was impacted by operational disruptions encountered at airports throughout the summer season," it rightly pointed out.
Tui continued: “The resilience measures introduced as a consequence included, in particular, the cancellation of flying from Manchester during June to help protect the programme and reduce the impact on our customers.”
Rival Jet2.com and Jet2holidays will once again be patting itself on the back for employing its own ground staff, which meant it avoided many of the delays that beset other operators this summer.
Despite the disruption, though, Tui’s northern region passenger numbers soared year-on-year from 826,000 to 6.47 million, “with demand recovering in particular in the UK to near pre-pandemic levels”.
UK cruise brand Marella also gave some encouragement despite being only able to offer a reduced winter programme, with all four ships sailing from Q3. Average daily rate was £164, up 32% on prior year, while occupancy was 70%, against 39% in 2021.
The UK outlook is also promising. Currently, Tui counts a total of 2.7 million bookings for winter 2022/23, with 52% of the programme sold. Bookings are at 84% of winter 2018/19. Tui said the UK “remains the most advanced” market, with bookings up 5% and average prices up 23% compared to winter 2018/19.
New Tui chief executive Sebastian Ebel was upbeat, hailing the group’s €409 million profit (on turnover of €16.55 billion) despite Covid and the war in Ukraine. His optimism is understandable given the €2.08 billion loss in 2021. Ebel can expect a more solid bottom line next year once the Northern region makes its proper contribution once again.
Meanwhile, there is Tui’s change of course away from traditional packaging to steer. “We are entering a new phase for Tui,” he said. “The strategy is in place – and now we are going to implement it. We want to grow profitably again.”
Ebel explained: “The formula is new products, additional customers, increasing market share." Ebel said Tui would move more into dynamic packaging “by combining cheap flights with available hotels, even at short notice”.
“That way we can create new products that people didn’t tend to come to Tui for in the past, like city breaks.
“In addition, we will be offering certain travel products as stand-alones, such as hotel stays, flights, car hire, but also, of course, the activities and experiences provided by Tui Musement. That includes excursions in a holiday destination, but also, for example, tickets for a local museum.”
The pandemic is – fingers crossed – behind us, so watch out for Tui spreading its branding into new areas in the months ahead.
Gary Noakes is senior contributor and analyst at TTG.
