Tourism - Tui wants to earn more: Announces end to price jumps
The return of the desire to travel after the coronavirus pandemic has brought the world's largest travel group Tui record sales in the past financial year and put it back in the black. At the presentation of the balance sheet in London on Wednesday, CEO Sebastian Ebel was confident about the coming year: Tui wants to continue to grow in terms of revenue, profit and customer numbers. However, he gave the all-clear for the recent significant rise in travel prices: "We have left the time of the big price jumps behind us."
In view of the easing inflation, travel costs are returning to normal, according to Ebel. In the coming summer season, customers from Germany can therefore expect an average price increase of three percent. However, there are noticeable differences depending on the destination, added Ebel. In some regions, it could even be four or five percent more. In Greece, for example, inflation is significantly higher than in Germany.
In the financial year ending at the end of September, Tui also posted record sales thanks to higher prices. At 20.7 billion euros, the Group exceeded the 20 billion euro mark for the first time since the sale of the container shipping company Hapag-Lloyd. Compared to the previous year, it increased by a quarter. This was due to the fact that Tui earned an average of five percent more per trip. In the hotel sector, average revenue per bed and night rose by 13 percent year-on-year to an average of 87 euros.
All in all, the Group managed to return to the black: A surplus of 306 million euros was attributable to shareholders in the twelve months to the end of September, following a loss of 277 million a year earlier. Operating earnings before interest and taxes, adjusted for special items, shot up from 409 million to 977 million euros compared to the previous year.
The Management Board expects further significant growth for the new financial year until the end of September 2024. Although revenue reached a record level last year, Tui had 19.1 million customers, around 2 million fewer than before the pandemic. In the current financial year, the number of customers is now expected to climb back to the 2019 level.
This is also expected to increase revenue by at least ten percent. Adjusted operating profit is even expected to increase by at least a quarter, exceeding the 1.2 billion euro mark. That would be more than Tui would have earned in the 2018/19 financial year without the one-off impact of the Boeing 737 Max. At that time, the flight ban for the medium-haul jet had impacted earnings by around 300 million euros. The Boeing model was banned from taking off worldwide for more than a year and a half from March 2019 following two fatal crashes. Tui also had to ground its aircraft of this type and use older and more fuel-efficient jets instead.
According to Ebel, around half of revenue growth in 2024 will come from new customers. He sees the greatest growth potential outside Germany. The Tui CEO said that the company had not yet noticed any reluctance on the part of customers due to higher prices. "We have not seen that customers are booking fewer nights as a result." The consumer restraint is more noticeable in the lower price segment. "The market has become more difficult there." However, Tui mainly offers hotels with four and five stars.
Ebel was satisfied with the current winter business. 56 percent of the winter program has already been sold. The Gaza war only slowed things down briefly. After the Hamas terrorist attack on Israel on October 7, 2023, there was initially a noticeable reluctance to travel to Middle Eastern destinations. And Egypt in particular is an important travel destination in winter.
However, the slump in booking figures was overcome more quickly than expected, added Ebel. "It was a dip for six to eight weeks." The booking situation is now returning to normal. Ebel was confident: "Business in Egypt should be back to normal by Christmas at the latest.
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- Despite the recent inflation easing, Greece still experiences significantly higher inflation compared to Germany, which could lead to a price increase of up to 5% for customers in some regions during the summer season.
- Hapag-Lloyd, the container shipping company previously owned by Tui, helped the travel group surpass the 20 billion euro sales mark for the first time in the financial year ending September 2022, thanks to higher ticket prices and improved earnings per trip.
- In the financial year, Tui reported a surplus of 306 million euros, marking a significant improvement from the previous year's loss of 277 million euros. This positive result was driven by a 13% increase in average revenue per bed and night in the hotel sector and higher prices across all Tui's offerings.
- Looking forward to the new financial year, Tui expects to increase revenue by at least 10% and operating profit by at least 25%, potentially surpassing the 1.2 billion euros earned during the 2018/19 financial year.
- Around half of the expected revenue growth in 2024 will come from new customers, with Tui expecting to regain its pre-pandemic customer base of 21.1 million by the end of the financial year.
- TUI's CEO, Sebastian Ebel, noted that while some customers in the lower-price segment may be more reluctant to travel due to higher prices, the company primarily offers high-quality four and five-star hotels, which have not seen a significant decrease in bookings.
- Despite some initial reluctance to travel to Middle Eastern destinations following a Hamas terror attack in October 2023, TUI was able to quickly regain normal booking figures, and business in Egypt should be back to normal by Christmas 2023.
Source: www.stern.de
