TUI avoided heatwave meltdown, sales continued to rise

TUI Group has experienced its fourth consecutive year of double digit growth, chief executive Friedrich Joussen announced in a trading update this morning.

He said holiday sales during the 12 months to the end of September had grown in all its major markets, despite the summer heatwave in northern Europe, which hit rival Thomas Cook’s profits.

"This demonstrates the strength and resilience of demand for our holiday experiences, although as previously stated the hot weather has limited our ability to outperform," said Joussen.

"Whilst at an early stage, trading for future seasons is overall in line with our expectations. Our strong positioning as a leading holiday product provider with own distribution, as well as our balanced portfolio of destinations and markets, mean that we are well positioned to continue to deliver against our growth strategy."

The Group has reiterated its guidance of ‘at least 10%’ underlying pre-tax profit for the 12 months to the end of September. The results will be announced on December 13.

Sales for summer 2018 were up 4%, which was partly due to increased capacity in Turkey, Greece and North Africa as well as smaller destinations such as Bulgaria, and an increase in the volume of customers staying in TUI’s own hotels. Next year, it is planning to add around 60 additional hotels, some in year-round destinations such as Cape Verde, Mexico, the Caribbean and the Maldives.

Volumes to Spain have ‘normalised’compared with the very high growth seen in recent years, said the operator.

"As noted in our Q3 update, there are a number of external factors which have made operations more challenging, including the unusually hot summer in Northern Europe and higher than normal level of airline operational disruption.

"Despite this, we have continued to grow our customer base, demonstrating once again the strength of the TUI brand and product offer, coupled with further growth in the proportion of direct and online distribution," added TUI.

It said the launch of its new cruise ship Marella Explorer this summer had ‘gone very well’, while yield was strong across all three of its fleets. Next year will see the launch of Marella Explorer 2.

One third of its winter 2018/19 programme is sold and customer volumes are up 2%, although average selling prices are down 1%. TUI said this reflected a remix of capacity, adding more holidays to North Africa and Turkey while reducing capacity to the more expensive Canaries, where demand is ‘normalising’.

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