TUI Focusing on Flexible Tour Packages to Help Reverse Losses

25.08.2023 - 14:09 / skift.com / Sebastian Ebel / Selene Brophy

TUI’s winter bookings might have been lackluster, but early summer bookings for the world’s largest tour operator have picked up, as the company plans to focus on giving more flexibility to travelers in booking flights, hotels and activities individually, in addition to its wholesale packaged tours, to grow its customer base in underrepresented markets. 

This is according to Sebastian Ebel, chairman and CEO of the TUI Group executive board, who delivered the company’s 2023 first quarter interim results update on Tuesday. 

The first quarter saw 3.3 million customers, compared with 2.3 million in the previous 2022 period, while early bookings for 2023 winter and summer seasons sit at 8.7 million. Ebel said this shows its customer base’s appetite remains largely unaffected by the global inflationary conditions. 

The company is seeing a 6 percent increase in pricing for its summer offerings, considerably lower than the 29 percent seen in its winter offering.  

“The 6 percent would not be enough to cover the price increases,” Ebel said, “but they would be very close to it. And what we have seen in the last weeks gives us the confidence that prices have become even stronger than they had been before.” 

TUI is still showing losses. But Ebel detailed how the group had managed to half its earnings before interest, taxes, depreciation, and amortization losses compared to the previous year, from $294 million to $164 million.

The company reportedly lost market share as the leading U.K. tour operator and needs to repay a mountain of state debt to the re-estimated tune of $966 million, yet remains cautiously optimistic about the year ahead.

Full-year market expectations are for $1 billion underlying EBIT. Mathias Kiep, TUI’s chief financial officer, declined to comment on this forecast just ahead of the company’s annual general meeting on Tuesday that follows the earnings presentation. 

Ebel admitted the company needed to focus on flexibility in booking components like flights, hotels and activitiesin its underrepresented markets to remain competitive. TUI recently launched dynamic packaging in Germany, which allows booking components to be unbundled. This is in addition to a new tours platform in Belgium, with more rollouts of flexible product options in other markets expected to continue throughout 2023. 

“We are now bringing recommendation-only products to the market, flight-only products to the market, and of course, everything around Musement with the activity and transfer business. So overall, by enlarging the product portfolio, we can bring more customers, more products to our existing customers, but we are also targeting to getting new customers,” he added. 

 Musement and its tour operators’ customer base