TUI Group said that the company would continue to grow its own-brand hotels, after opening new TUI Blue properties in Spain and Turkey.
As TUI was extending its offering, TripAdvisor reported a 5% fall in revenue growth in its hotels segment, but shares rose on confidence for the brand as a whole.
At TUI Group, CEO Fritz Joussen said: “We offer the right products in the market: TUI hotel brands such as RIU, Robinson and TUI Blue … are setting standards around the globe.”
TUI said that it would target investments on its hotel companies: RIU, Robinson, TUI Magic Life and its latest hotel brand, TUI Blue. The group will continue to expand its portfolio of own hotels, which currently comprises more than 380 hotels.
The group has recently opened two new hotels under the TUI Blue brand, in Turkey and Spain and was also looking to growth for its RIU brand, in Europe, the Caribbean and South East Asia.
For the first half of the year, the group’s hotels and resorts division reported a 45.8% increase in underlying Ebita, to EUR179.2m, including an overall increase in average occupancy of its hotels and higher average rates.
This summer it was planning to open five new TUI hotels including Riu Astoria in Bulgaria, a TUI Sensatori hotel in Rhodes and the recently acquired Riu Palace Zanzibar.
The group concluded: “Based on a good H1 performance and strong current trading we are on track to deliver at least 10 % underlying Ebita growth in FY2018.”
At TripAdvisor, the group reported a 2% increase in revenue, with 36% non-hotel segment revenue growth more than offsetting a 5% decline in hotel segment revenue.
The company has pulled back from advertising its hotels business, in favour of selling the brand as a whole. The group said that in the first quarter, it invested USD24m in marketing, including TV advertising, and expected to “ramp this investment over the next couple of quarters and we continue to target a USD100m to USD130m investment this year to amplify our ‘best price’ consumer message”.
The group said that cutting marketing on the hotel segment had led to slower year-over-year hotel shopper growth, which was flat in the first quarter. Click-based and transaction revenue declined by 10%, and revenue per hotel shopper fell by 11%, three percentage points better than the 14% decline in the previous quarter.
CEO Steve Kaufer said: “We had a strong start to 2018; our hotel results were ahead of our expectations, and we delivered accelerated non-hotel revenue growth. Our 2018 focus remains on changing the profit trajectory of our hotel business, and Q1 results showed nice progress. Longer-term, our focus is to get our hotel segment back to sustainable, profitable revenue growth.”
Shares in the company rose by 19% on the news, with Piper Jaffray’s Michael Olson writing in a note: “We continue to have confidence in the company’s ability to better monetise its user base longer-term”.
At Booking Holdings, the company formerly known as The Priceline Group, revenue was up 16% year-on-year on a constant-currency basis, and adjusted Ebotda increased 26%. Worldwide accommodation room nights were up 13% to $USD197m, above the high end of the group’s guidance range.
As at Expedia earlier this month, the company hailed the growth of alternative accommodation. On the flagship booking.com site, the group saw listings up by 28% on the year commenting that they were fully integrated in the marketplace and are instantly bookable with no customer fee.
Glenn Fogel, CEO & president, said: “We remain focused on bringing more alternative accommodation properties on to our platform. Especially single properties, whose owners may not be as aware as professional multi-unit managers are of the strength of our traveller demand. And we believe that this is an attractive opportunity for us.
“I don’t want to think about at the end of the day is it going to be bigger or smaller than traditional or not. I just want everything to get bigger for us.”
Fogel added that the company would increase brand marketing in the coming year, including pointing US consumers to its alternative offering.
Looking to the second quarter, the company forecasting that booked room nights would grow by 7% to 11% and that constant currency accommodation ADRs would be down by approximately 1% on the year. Adjusted Ebitda was expected to range between USD1.09bn and USD1.13bn.
HA Perspective [by Katherine Doggrell]: Being all things to all people is the current vogue strategy, be you tour operator, OTA or hotel operator. Every segment, every style, every method of booking must be possible to lure that fickle consumer and preferably become friends for life.
But, of course, it’s not as simple as that. You must have everything, but that everything must also be unique, as TUI has learned with its own-brand offering – the expansion of which has involved the group’s balance sheet.
Both TripAdvisor and Booking Holdings are finding much to enjoy about a balanced offering, with TripAdvisor enjoying more bonhomie than it has seen in a fair few quarters, but, with the operators also expanding their efforts, they must do more to display what they feel their USPs to be. Google, blockchain, even a return of Amazon all await.