Speaking during the European travel giant's first quarter results call on Tuesday (10 February), chief executive Sebastian Ebel hailed the group's "very strong" performance in the "four or five-star" market.

However, he admitted an area of weakness for the company is in the "lower end", adding: "To move into the budget segment and to get a decent return is more challenging."

"If we want to be successful we need a different cost structure, less complex product and so on," he said. "We will bring a new product into Europe. It will be in the very near future.

"It will be very much based on dynamic package. But of course, like others do in this lower end segment, you can also go for some contractual agreements with a fluid pricing, so it will be something in between."

Ebel said Tui's budget share is "significantly below" the market share it has in the upper sector which he called "stable and resilient". He added: "We need to go for margin."

On Tui-owned tours and activities platform Musement's recent partnership deal with Jet2.com and Jet2holidays, Ebel said the group felt "very honoured to get this trust".

"This [Jet2 deal] comes after the deals that we did with EasyJet Holidays, Lastminute.com and Booking.com," he said.

"In this area, it is an even bigger responsibility to deliver great product and great prices to these customers. We feel very honoured to get this trust. This is why we feel we have to work even harder to repay the trust these customers have shown in us.

"We're very grateful to Jet2 for choosing Tui Musement. It's a big move for us. This is another big step for Musement."

Going forward, Ebel predicted "single digit growth" for Musement in the financial year ahead.

While on the group's turn-of-year performance, Ebel said it was "weaker than anticipated".

"There was so much snow which meant that people were not going into the retail outlets," he said.

Ebel later added: "The footfall has been lower than normal in Germany and the UK. We're still seeing snow in Hanover but it's starting to melt. Retail is very important to us in the UK. We're doing our upmost to grow this channel."

Despite plans to launch a new European budget brand, Ebel said the group is seeing "growing business" for the Middle East and Asia. 

At Tuesday's Annual General Meeting, a dividend of €0.10 per share is to be approved for the first time after a long break due to positive 2025 performance.

Tui Group's underlying earnings before interest and taxes rose to €77.1 million (around £67.2 million) – up from €50.9 million (around £44.3 million) year on year. Revenue remains stable at €4.9 billion (around £4.27 billion).