Travel firm TUI has said UK demand for holidays has been ‘resilient’ despite hiking prices 8 per cent over the winter to make up for the weak pound.
UK bookings for summer 2018 have started well, the firm said, as Brits plan ahead for their sunny getaways with performance ‘broadly in line’ with last year as average selling prices rose 3 per cent and overall bookings fell just 1 per cent.
While winter bookings were down 3 per cent in the UK, the firm said this was due to very strong figures a year earlier of 12 per cent which made straight comparisons difficult.
Performance in the first quarter of its year was ‘broadly in line’ with last year
TUI, formerly branded as Thomson in the UK market, employs around 55,000 workers.
Chief executive Fritz Joussen said TUI is still on track to see underlying operating earnings rise at least 10 per cent for the full year, as its hotels and cruise operations continue to grow.
‘Our strategy is successful,’ he said. ‘Our focus is on hotels and cruises. While we used to be a trading company, we have now become developers, investors, and operators.
‘This makes TUI more profitable, and we now generate our earnings more evenly across 12 months’ .
The FTSE 100-listed firm logged an 8.1 per cent rise in revenues to £3.1 billion, up from just shy of £2.9 billion a year earlier.
When stripped of currency effects, turnover climbed 9.1 per cent.
Pre-tax losses narrowed from £91.8 million to £64.4 million as underlying earnings in its holiday and resorts business nearly doubled.
Earnings in the resorts business rose 91.9 per cent to £83.9 million in the first quarter to December 31, compared with £43.7 million a year earlier.
Package holiday: TUI is turning attention to its destination services business – pooling transfers, activities and excursions into one bundle for customers – identifying it as a ‘strategic growth area’
The operations helped make up for a drop in its sales and marketing division – which saw losses widen to £118.6 million from £115 million a year earlier – as well as all other segments which logged a 110 per cent slump in underlying earnings.
Mr Fritz said TUI was turning attention to its destination services business – which has been identified as one of its ‘strategic growth areas’.
The business pools all services including transfers, activities and excursions during customer holidays.
‘Here, we see great potential to grow through the strength and comprehensive presence of the TUI brand. We know our customers. Our customers know us, and they trust the TUI brand.
‘This should help us develop more and better service offerings and generate additional turnover,’ Mr Joussen said.
TUI said it expected to see earnings grow 10 per cent in 2018 and sent its share price up 5.55 per cent on Tuesday morning to 1,683p.