TUI Travel Boosted By Fixed-Price Packages

December 4, 2012

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TUI Travel reported higher profits and bookings, saying cash-strapped Europeans were increasingly turning to fixed-price packages to escape the economic gloom.

The British group, the world's biggest tour operator, which owns the Thomson and First Choice brands, said recession-weary consumers were willing to spend on a get-away, but were looking for all-inclusive deals where they don't have to worry about how much they are spending.

"We're seeing a renaissance in demand for package holidays and a strong trend towards all-inclusive holidays with customers seeking greater certainty," TUI Travel's chief executive Peter Long told reporters.

"People are spending more up front," he added.

Travel firms and airlines across Europe have seen bookings fall over the last two years, hit by the euro zone debt crisis, high fuel costs and turmoil in Greece, one of the continent's main holiday destinations.

However, TUI Travel said its outlook was positive and predicted it would achieve compound annual profit growth of 7 to 10 percent over the next five years.

The group said bookings for summer 2013 from the UK were up 12 percent on last year, with the Nordic countries up 16 percent and Germany 9 percent stronger. It added that winter bookings across Europe were around 3 percent higher on average.

It reported a better-than-expected 8 percent rise in underlying pre-tax profit to GBP£390 million (USD$628 million) for the year to the end of September, on revenue 2 percent lower at GBP£14.46 billion.


TUI Travel said it had a strong 2012 summer season after rain-soaked northern Europeans sought the sun and kept tight control on their budgets with its package deals.

Bookings during the year were up across Britain, Germany and the Nordic region, but fell 28 percent in France as the firm reduced capacity in the country. France also suffered because of a slower than expected recovery in North African markets, which are popular among French passengers.

The company, which raised its full-year dividend by 4 percent to 11.7 pence per share, said profit had also been boosted by an increase in selling prices of between 4 and 6 percent across European markets during the year

Rival UK travel firm Thomas Cook last week said it had seen a strong finish to its fourth quarter as its recovery plan cranked into gear, after a year in which operating profit nearly halved.