TUI Gains from Experience Sales and FTI Collapse

14.08.2024 - 17:29 / skift.com / Jesse ChaseLubitz

When Sebastian Ebel became CEO of TUI Group in late 2022, the company needed a nearly $5 billion loan to survive the pandemic. But for two years straight, TUI has reported steadily increasing profits.

Ebel said TUI Group is focusing on selling products where there is a “very good margin,” such as TUI-produced experiences products. 

TUI-owned experiences sales rose 14%. For example, TUI runs guided tours of Tulum, a historical site in Mexico, and lagoon boat trips in Sian Ka’an, a natural park. These are created by TUI, where local guides are trained to TUI’s standards and TUI controls the sale, and fall under one the TUI Collection Experiences.

Musement, TUI’s experiences arm, collects, curates, and resells tours, activities, and attractions like museums for resale. Its sales rose 2% to 2.8 million sold.

Ebel highlighted Musement’s recent partnership between TUI and Lastminute.com as a driver of future growth. He said it illustrated the company’s focus on developing strong partnerships.

In the latest quarter, TUI gained market share by adding customers after the third-largest tour operator in Europe, FTI, went into insolvency in June. More than 260,000 vacation packages were canceled, DPA reported.

Ebel said FTI was focused on the lower end of the market and that TUI was able to pick up business there, especially in Germany. He also said TUI could see further gains once FTI customers are fully refunded for canceled trips.

TUI benefited from a 7% increase in hotel daily rates and an expansion of its hotel offerings globally. 

Ebel said that TUI is making an effort to increase its hotel business outside of Europe, specifically in the Caribbean, West Africa, East Africa, the Middle East, and the Far East. 

“All of this leads to benefiting from strong demand and price patterns in the markets,” he said.

The company has focused on enhancing its dynamic packaging capabilities, which allows for more flexible and tailored travel offerings.

Executives cited a partnership earlier this year with Ryanair in Germany, which they said would enable TUI to offer more customized travel packages. The deal lets TUI customers book Ryanair flights, seats, and bags as part of their holiday package involving a stay at a TUI hotel (rather than being confined to TUI’s own airline options) with a comparable experience to booking with Ryanair directly.

“We’ll bring more and more into this system,” Ebel said about the Ryanair partnership, referring to customers.

TUI anticipates further growth despite the war in the Middle East and between Russia and Ukraine.

Although the cost of flying around Russia has increased, Ebel said that over the past two years, the cost has somewhat stabilized. Business in Israel, Lebanon, and Jordan “has