TUI Extends Profit Streak and Issues 25% Growth Forecast

TUI, Europe’s largest tour package holiday operator, said Wednesday it saw strength in all its core business segments: hotels, cruises and experiences. And it’s benefiting from last years’ shift to consolidation of its products onto one global platform.

The result: CEO Sebastian Ebel forecast a 25% increase in operating profit for 2024.

A year ago, TUI began changing its process of selling fixed holiday packages consisting of a flight, hotel, and transfer, sold on different websites specific for each of its markets in Germany, Belgium, and Sweden. It is moving to one consolidated platform, with an emphasis on mobile and selling through the TUI App.

Markets and Airlines Turns Profitable

TUI’s Markets and Airlines segment, for the first time, turned profitable. Ebel said the segment bounced back from a loss of $64 million (59 million euros) last year, with earnings before interest and tax of $260 million (241 million euros). 

Cruise Recovery

TUI’s cruise segment saw a notable improvement in its operating performance over the previous year. The occupancy rates for TUI Cruises, Hapag-Lloyd Cruises, and Marella Cruises increased to a range of 72% to 96%, up from 58% to 70%. Additionally, the total passenger days available across these brands grew by 15%, reaching 9.5 million compared to 8.2 million in the prior year.

Ebel further forecasts pricing increases for TUI products between 3% and 5%, depending on the country and the product. However, he remained confident the TUI demographic could absorb this, stating, “In our segment, we have a lot of people for whom travel is very, very important, and they spend a significant amount of money for it.” 

Financial Highlights:

• 2024 Financial Guidance: TUI forecasts a minimum of 25% growth in underlying EBIT and at least 10% revenue growth for 2024.
• Delisting London Stock Exchange : TUI’s shareholder board is expected to vote in February on delisting from the London Stock Exchange. The company said 75% of its shares are already listed in Germany.
• Winter Momentum: Bookings and average prices for winter 2023/24 show significant growth, indicating continued demand momentum. 
• Segment Performance: The Holiday Experiences segment, including hotels, cruises, and activities, reported a strong operating performance with an underlying EBIT of $886 million (822 million euros), up from $544 million (505 million euros).
• Global Conflict: TUI saw a temporary dip in demand for trips to Egypt over a period of 6 to 8 weeks, attributed to the conflict between Israel and Hamas.
• Debt Reduction: TUI significantly reduced its net debt by $1.4 billion (1.3 billion euros), with a net debt position of 2.1 billion euros as of September 30, 2023.

Cruise and Tours Sector Stock Index Performance Year-to-Date

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