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TUI Group: Strong turnover growth and higher earnings in H1 2016/17

Transformation of the Group progresses quickly. Own cruise and hotel brands drive growth. Earnings contribution of both segments totalling 50 per cent based on full year.

HANOVER – In H1 2016/17, TUI Group continued to deliver its transformation as an integrated tourism business focussed on own hotel and cruise brands. Overall, the Group delivered strong turnover growth and an improved operating result in H1 2016/17. Fritz Joussen, CEO TUI Group, said: “Our transformation to an integrated tourism business is on track. We are delivering strong growth in our hotel and cruise brands. These two segments contribute half of our operating result on a full year basis.  The TUI Group is changing quickly – our guidance remains unchanged despite a challenging environment. We reiterate our guidance to deliver at least 10 per cent1 growth in underlying EBITA this year.”

In order to provide clearer reporting and to emphasise the value of TUI Group’s hotel and cruise business, the result for Blue Diamond Hotels, which forms part of the Canadian joint venture Sunwing, is now reported within the Hotels & Resorts segment, while the result for Thomson Cruises is now reported within the Cruise segment. The results of the two entities had formerly been reported within the Northern Region. This integrated reporting model underlines the importance of hotels and cruises as growth drivers: taken together, the two segments generate half of the Group’s operating result on a full year basis.

In the first six months of financial year 2016/17, TUI Group reported strong growth in turnover of 8.2 per cent1 to 6.69 billion euros (previous year 6.18 billion euros) – including exchange rate effects, the growth amounted to 3.3 per cent to 6.38 billion euros. At constant currency rates and on a like-for-like basis excluding the late timing impact of Easter 2017, underlying EBITA improved by 6.3 per cent to a seasonal loss of 193.3m euros (previous year -206.4 million euros).  Including foreign exchange translation and the Easter timing impact, it declined by 3.8 per cent to -214.4 million euros.

Hotels & Resorts: Growth in average revenue per bed at RIU and Robinson
Alongside the core brands RIU, Robinson, TUI Blue and TUI Magic Life and other hotel investments, the Hotels & Resorts segment now comprises Blue Diamond Hotels of the Canadian Sunwing Group, in which TUI holds a 49 per cent stake. Hotels & Resorts delivered substantial growth in its operating result in H1 2016/17. Underlying EBITA rose to 122.8 million euros (previous year 96.0 million euros), up 27.9 per cent. RIU increased the occupancy rate of its own hotels by one percentage point, while average revenue per bed grew by seven per cent. Robinson also increased average revenue per bed by three per cent on slightly lower occupancy (minus one percentage point). Following the opening of TUI Blue Selection in Tuscany end of March, further new hotels will be opened under the core brands of TUI Hotels & Resorts in the course of the year: a TUI Blue hotel in Croatia, two Robinson Clubs in the Maldives and Thailand, and a RIU hotel in Mexico towards the end of the year.  

Cruises: Growth path successfully continued
Reporting for TUI Group’s Cruises segment is also expanded to include the result delivered by Thomson Cruises. The results now include all three cruise lines: TUI Cruises, Thomson Cruises and Hapag-Lloyd Cruises. In the first half of the financial year, the sector continued its growth path and achieved a substantial improvement in its operating result. Underlying EBITA climbed to 75 million euros (previous year 49.3 million euros), up 52.1 per cent. Strong growth was delivered both by TUI Cruises and Thomson Cruises due to the successful expansion of their fleets in summer 2016 with “Mein Schiff 5” and “TUI Discovery”, respectively.  In the period under review, the average rate per passenger per day was flat year-on-year at 147 euros (previous year 147 euros) with occupancy remaining high at 100 per cent. TUI Cruises will continue its growth path in the premium cruise market segment this year. “Mein Schiff 6” will be launched in June. In 2018 and 2019, TUI Cruises will launch two further new builds of its “Mein Schiff” fleet.

Thomson Cruises also continues to grow: last week, “TUI Discovery 2” was launched in Malaga in Spain. In 2018, “TUI Explorer” (currently operating as “Mein Schiff 1”) will join the fleet, and in 2019 “Mein Schiff 2” will be transferred to Thomson Cruises’ fleet to continue its programme of modernisation.

Hapag-Lloyd Cruises also showed a positive performance in the period under review. Occupancy of its luxury and expedition cruise ships was almost flat year-on-year at 74 per cent (previous year 75 per cent). The average rate per passenger per day was up 6 per cent year-on-year to 595 euros. Hapag-Lloyd Cruises will also expand and modernise its fleet in the medium term: In 2019, the two new luxury and expedition cruise ships “Hanseatic nature” and “Hanseatic inspiration” will join the fleet.

Regions: Source Market performance influenced by one-off effects, Easter timing and sickness levels in TUI fly Germany

On a constant currency basis and excluding the phasing impact from the later timing of Easter, the seasonal loss of the tour operating business in the three Source Market Regions totalled -378.9 million euros (previous year -307.2 million euros). Excluding the two effects, the loss amounted to -384.0 million euros. Earnings were additionally impacted by the higher than normal levels of sickness in TUI fly Germany in early October 2016 (-24 million euros).  At 5.37 billion euros, total turnover by the Regions was up 2.2 per cent year-on-year (5.26 billion euros).

The Source Markets in the Northern Region (UK & Ireland, Nordic countries, Canada, Russia) delivered overall growth of 5 per cent in customer volumes. However, besides the Easter timing effect the operating result was impacted by a number of one-offs including an increase in maintenance reserves for aircraft and high pension service costs in the UK. The result in the Nordics was also impacted by marketing costs for the TUI rebrand and lower demand for Turkey and Egypt.  Blue Diamond Hotels and Thomson Cruises will no longer be reported within the Northern Region.

Central Region (Germany, Austria, Switzerland, Poland) was impacted by the higher than usual sickness levels in TUI fly Germany. Germany delivered an improvement in its trading performance, while the result from aviation was impacted by additional aircraft repair costs as well as the timing of Easter. Central Region increased its share of bookings via direct and online channels.

The result of the Western Region (Belgium, Netherlands, France) not only reflected the Easter timing effect but also the first-time inclusion of Transat’s seasonal EBITA loss. Besides, the result was impacted by marketing costs for the TUI rebrand in Belgium and night slot restrictions at Schiphol Airport in the Netherlands. In the period under review, the Region reported growth in direct and online distribution. 

Current trading meets expectations 
Current trading for Summer 2017 is in line with expectations.  Trading revenue is 8 per cent ahead of prior year. Customer numbers have also grown, up 4 per cent year-on-year.  Lower demand for Turkey and Egypt is offset by greater demand for Greece, Spain, Cape Verde, Cyprus and long haul destinations such as the Caribbean.    

Further synergies delivered
In the period under review, a further 10 million euros worth of synergies, announced at the merger between TUI AG and TUI Travel in 2014, were delivered with savings mainly achieved from corporate streamlining.  

1 At constant currency rates 
2 At constant currency rates and excluding the timing impact of Easter

News Editor - TravelDailyNews Media Network

Angelos is the news editor for TravelDailyNews Media Network (, and His role includes to monitor the hundrends of news sources of TravelDailyNews Media Network and skim the most important according to our strategy.

He currently studies Communication, Media & Culture in Panteion University of Political & Social Studies of Athens.