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TUI Eyeing Expansion In Hotels And Cruises

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German travel and tourism group TUI is looking at expanding its hotel and cruise operations as its 'oneTUI' restructuring moves from cost-cutting to growth.

TUI, which owns 55 percent of London-listed TUI Travel, Europe's largest tour operator, aims to generate underlying profits of EUR€1 billion (USD$1.4 billion) in the year ending September 2015, up from EUR€762 million in the 2012/13 year.

Some analysts have cast doubt on the targets recently, but TUI said on Friday the program was on track and the group was now entering the growth phase of the plan.

"I am talking for the first time about growth today," chief executive Friedrich Joussen told reporters after the group reported a smaller-than-expected second quarter loss. "We want more content of our own," he said.

Equinet analyst Jochen Rothenbacher, though, said the sales guidance should not be seen as too negative. "TUI confirmed the rest of the guidance and is now very confident to reach it."

While the sales target may be harder to reach, Joussen said TUI would hit the upper range of its target for underlying core profit growth of between 6 and 12 percent this year.

COSTLY CRUISE SHIPS

TUI operates its own hotels and cruises in addition to the stake in TUI Travel and said it was examining expansion opportunities in these areas.

In its TUI Cruises division it said it was looking at entering new markets, such as Britain, and was considering the possibility of doubling its fleet to between six and eight ships.

However, no decisions have been taken yet. "Every ship is a huge investment and every ship will be very carefully planned," Joussen said.

The cruise market is predicted to grow at between 8 and 10 percent annually until 2018 and is attracting other new investors. British airline and travel business operator Richard Branson is setting up his own EUR€$1.7 billion cruise ship division under his Virgin brand.

In hotels, Joussen said its RIU unit's return on invested capital was due to increase beyond 12 percent, while its Robinson hotels would see the figure rise to more than 9 percent this year from 6 percent last year.

TUI also intends to announce its own new hotel brand later this year and said it wants to have 50 of its own TUI hotels within three to five years.

To achieve this it will both take on new hotels and refit some of its other non-core hotel brands such as Grecotel and Iberotel under the new brand. It also plans to expand the number of Robinson club resorts to around 40 from 24 in the coming years in places such as the Maldives.

Overall in the second quarter its underlying loss before interest, tax and amortization (EBITA) widened to EUR€205.1 million from EUR€197 million in the same period last year.

(Reuters)