• TUI looks to unique products

TUI Group said that it would continue to expand its hotel products and was looking towards the BRIC countries for future growth.

The group is developing its unique hotel products and holidays as it moves towards becoming a focused travel group, selling along the way its holding in shipping container group Hapag-Lloyd.

The comments came as TUI reported total revenue of Eu16.4bn, down 1.5%, of which London-listed subsidiary TUI Travel contributed Eu15.7bn and separate companies TUI Hotels and Resorts and TUI Cruises Eu559m.

For the group as a whole profits were down 45% to Eu114m, with underlying profit from operations up 25% year on year to Eu589m. The group was hit by the impact of the Icelandic ash cloud in April, in addition to the effects of the downturn.

TUI chief executive Michael Frenzel was confident looking forward, commenting: "Trading for the current winter season is up year-on-year in all European source markets, with some markets reporting substantial growth."

TUI Hotels and Resorts, the group's hotel division, has a portfolio of 261 hotels with 170,000 beds, with Dr Michael Frenzel, CEO, describing it as "one of the world's largest providers of holiday hotels and Europe's largest holiday hotelier".

He added: "Our positioning focuses on the high-margin four- and five-star hotel segment, accounting for almost 90% of our hotels. As before, we are looking back upon a successful year in this very stable business area in 2009/10."

The hotel business, which includes brands such as Riu, Grecotel, Grupotel, Iberotel, Dorfhotel, Magic Life and Robinson, reported turnover of Eu380m, with operating earnings of around Eu127m, up 14.6%.

Speaking at TUI Travel's results presentation, Peter Long, CEO, said that the division was looking to expand the group's differentiated products – holidays available only through TUI. Bookings for the products were up 26% in summer 2011, leading to a 7% rise in total UK summer bookings.

Long said: "This highlights the need to accelerate mix shift to differentiated product, growing more unique holiday experiences. We've invested in this since the merger and we're starting to see the benefit. We've got a stream of unique product coming into the market.

"It's around developing hotel concepts which are clubs – segregating families and couples. It's about having a lot of entertainment for children and adults and about having a broad range of restaurants."

Long said that they were seeing higher levels of repeat business at the new offerings, as well as higher margins. "If we offer the same as everyone else, we are in a commoditised world, but we can offer more value-added propositions. You will see margin erosion if you don't have this unique product," he added.

In addition to the development of these unique concepts, the company is continuing with efforts to focus on its travel business, with the sale of its 49.8% stake in container shipper Hapag-Lloyd expected in 2011. An IPO is thought to be the most likely route. "We currently see a favourable time window for exiting our Hapag-Lloyd position. Container shipping is healthy and on an upwards trend," Frenzel said.

Looking further, TUI plans to expand its business in Russia, where it aims to become a market leader in the "medium term," Frenzel said. Expansion is also planned in India, China and Brazil.

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