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TUI pushes forward with direct sales
TUI has firmly outlined its strategy of selling direct and cutting out third party distribution.
Unveiling its preliminary year-end results today, the travel giant said direct distribution channels are ‘central’ to its strategy.
"By increasing the direct distribution of our holidays we lower distribution costs, reduce the reliance on third party distributors and can build on our customer relationships," it said.
It claims its direct distribution mix improved by two percentage points over the year to 68% of mainstream sales.
"The improvement in direct distribution was driven by the online channel which also increased by three percentage points in 2014 to 38% of mainstream sales," it said.
"During the year, we generated £4.1bn of revenue online within our mainstream business, reflecting 6% growth in online package bookings."
Meanwhile, TUI confirmed plans to open more ‘next generation’ stores in ‘high footfall’ sites.
It currently has 23 of the more high tech stores in the UK.
The strategy update was given as TUI reported its last set of annual results before it merges with its German parent TUI AG.
TUI’s profits rose 11%, better than forecasted, with underlying operating profit for the year ended September at £654 million on a constant currency basis.
TUI, which owns the Thomson and First Choice brands, had forecast that operating profit would rise by at least 9%.
"This demonstrates the strength and resilience of our business model in what has been a competitive trading environment for many tour operators and airlines," said chief executive Peter Long.
"The combination of our market leadership position, scale, focus on unique holidays distributed increasingly online and our relationship with the customer throughout their whole holiday experience continues to provide a strong basis for sustainable, profitable growth.
"The merger with TUI AG will strengthen and future-proof our combined group. It will also enhance the certainty of long-term unique holiday growth and reinforce our clear competitive advantage through further control over the end-to-end customer experience.
"This will mark the start of an exciting new phase of growth, delivering significant opportunities and value to customers, employees and shareholders."
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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