Tuesday, February 13, 2024
December 2023, the company welcomed 3.5 million travelers for vacations, leading to a 15% boost in revenue, totaling 4.3 billion euros, up from 3.8 billion euros in the same period the previous year. This quarter marks a historic achievement for TUI, as it reported a positive underlying EBIT of six million euros for the first time, a notable improvement given the quarter’s typical seasonal downturn. Despite ongoing market challenges, TUI has capitalized on continuous travel demand, benefiting from elevated prices and rates. TUI CEO Sebastian Ebel: “We remain on course, transforming the Group and growing. The measures we have introduced are taking effect. We are accelerating our transformation quarter by quarter. Operational excellence, agile and flexible actioning and the consistent implementation of our programs are important. In addition, people’s willingness to travel is still high, despite a market environment that remains challenging. We are thus creating the basis for TUI’s future profitable growth. And it confirms our expectations for the year as a whole: We want to increase revenue by at least 10 percent and operating earnings by at least 25 percent.”
IMPROVEMENT OF THE FIRST FINANCIAL QUARTER 2024
In the first quarter of the financial year 2024, TUI saw a significant uptick in its operations, welcoming 3.5 million guests, which is a 6% increase (200,000 more guests) compared to the 3.3 million guests in the same period last year. The load factor reached 87%, marking a 1% improvement from the previous year. This growth is attributed to a strong desire for travel, alongside higher prices and rates, leading to a notable improvement in the underlying operating result. For the first time, the result turned positive at six million euros, a substantial rise from the previous year’s loss of 153 million euros. Typically, the industry experiences negative results in the first half of the financial year (October to March) due to seasonal trends. Additionally, revenue saw a significant increase of 15%, reaching 4.3 billion euros compared to 3.8 billion euros in the previous year.
In the Holiday Experiences segment, the Hotels & Resorts division reported a 26.6% increase in underlying EBIT to 90.7 million euros for October to December 2023, continuing its streak of successful quarters with earnings surpassing pre-crisis levels. Hotel occupancy rose by 3 percentage points to 78%, and the average bed rate increased by 4.9% year-on-year to 90 euros.
The Cruises segment also experienced robust growth in the first quarter of 2024, with a significant improvement in underlying EBIT from 0.2 million euros the previous year to 34.5 million euros. This success is due to expanded capacities and considerably higher average rates, which surged by 17.0% to 204 euros from 175 euros the previous year. Despite a slight decrease in passenger days from 2.379 million to 2.336 million, the segment showed positive outcomes.
TUI Musement saw a 16% increase in the number of experiences sold, reaching 2.0 million (up from 1.7 million), and a 9% rise in the number of transfers to 5.4 million (up from 5.0 million) in the period reviewed. The underlying result for this segment improved to -10.7 million euros from -13.5 million euros in the previous year.
The Markets & Airlines segment also witnessed improvement in underlying earnings, with the seasonal loss being halved to -95.7 million euros from -194.6 million euros. This was fueled by higher average prices, enhanced operating performance, and a return to normal hedging lines. The Northern Region (UK, Ireland, and Nordic countries) significantly boosted its underlying earnings from -122.0 million euros to -50.4 million euros in Q1 2024. The Central Region, covering tour operators in Germany, Austria, Switzerland, and Poland, reported positive underlying earnings of 1.3 million euros for the period, compared to a loss of -29.0 million euros the previous year. While the underlying EBIT for the Western Region (France, Belgium, Netherlands) was 6.6% lower than the previous year at -46.6 million euros, this was due to one-off effects, with the operational result showing improvement compared to the previous year.
The positive trend in bookings continues to flourish, with an 8 percent increase in bookings for both the 2023/24 Winter season and Summer 2024, compared to the same periods last year. TUI has achieved a remarkable total of 9.4 million bookings for the combined Winter 2023/24 and Summer 2024 seasons, up from 8.7 million in the previous year.
For the Winter 2023/24 season, average prices have risen by 4 percent over last year’s figures. The enthusiasm for short and medium-haul trips remains strong, with the Canary Islands, Egypt, and Cape Verde leading as favored destinations. Similarly, the average prices for Summer 2024 are showing a 4 percent increase from the previous year, with a noticeable rise in demand for key destinations such as Spain, Greece, and Turkey, making them the top choices for TUI guests for Summer 2024.
This upbeat booking trend extends into the Holiday Experiences sector as well. The Hotels & Resorts segment reports a one percentage point increase in occupancy rates for the first half of 2024 (October 2023 to March 2024) over the previous year, along with a 12 percent increase in average daily rates for the same period. The Cruise segment is experiencing a significant 13 percent boost in occupancy rates compared to last year, although this is anticipated to stabilize as the season progresses. Despite a 9 percent increase in available passenger cruise days for the first half of 2024, average rates have slightly dipped by 2 percent compared to the previous year. Meanwhile, TUI Musement has seen a robust double-digit percentage growth in the number of experiences sold year-on-year, with the number of transfers aligning with the operational trends in the Markets & Airlines segment.
Overall, this sustained positive momentum in bookings, coupled with higher average prices, solidifies the expectations for achieving full-year targets.
2024 Full Year Outlook
The foundation for future profitable expansion is set by strong operational growth coupled with the effective execution of strategic initiatives. The forecast for the 2024 financial year takes into account existing macroeconomic challenges and geopolitical uncertainties, with a specific focus on the Middle East region. Despite these challenges, the performance in the first quarter of 2024, along with positive trends in bookings and the normalization of hedging strategies, support our expectations for the year. TUI is therefore reaffirming its outlook for the 2024 fiscal year:
MID-TERM GOALS
TUI has developed a strategic plan that lays the foundation for sustainable profitability in the future. By expanding its product range and diversifying its offerings, TUI seeks to enhance the lifetime value of its customers while also attracting new clientele. For the mid-term, TUI’s objectives include:
FINAL GENERAL MEETING DECIDES ON FUTURE LISTING STRUCTURE OF TUI AG
During Annual General Meeting in Hanover, TUI AG’s shareholders will deliberate on the proposal to cease the Group’s listing on the London Stock Exchange. This comes after proposals from TUI investors to abandon the current dual listing in favor of a more streamlined listing process and to include the company in Frankfurt’s MDAX. Over the years, the bulk of TUI’s share liquidity has migrated to Germany, with approximately 77% of share dealings now conducted through the German share register and under a quarter of TUI’s share trading taking the form of UK depositary interests. Ending the London listing could bring clear benefits for both investors and the company, including simplified corporate structures, enhanced liquidity and index inclusion, and bolstered support for EU airline ownership compliance. Following thorough deliberation and in-depth analysis, TUI’s Executive and Supervisory Boards are endorsing this move, urging shareholders at today’s meeting to vote in favor of the proposal. The approval requires a 75% majority vote.
Tuesday, February 13, 2024
Tuesday, February 13, 2024
