Tui on course for full year as cruise boom continues

Anglo-German tour operator Tui cruised to a narrower first-half loss as demand for ocean holidays booms and European trends move away from Spain towards Greece, Turkey and North Africa.

Turnover of €6.8bn was up 7.2% for the six months to 31 March, with adjusted EBITDA losses improved by €55m to €159m thanks to a €28m contribution from cruises and a €11m from hotels.

Stronger sales and profits were partly offset by the phasing of some sales and marketing charges towards the second half, plus extended maintenance and revaluation of share based payments. Reported results were aided by the timing of Easter and disposals.

Looking to the full year outlook, management reiterates guidance for EBITA growth “of at least 10%” and the medium term target of “doubling of profit between 2014 and 2020”.

After winter season closed in line with expectations, with bookings up 3% and revenue up 5% as capacity growth and higher yields accompanied demand for holidays in North Africa, Cape Verde, Thailand and Turkey, with stable demand for Spain.

Bookings for the summer season were going well too, with summer customer numbers up 5%, as of the end of April, with 59% of the summer programme sold at average selling prices up 2%.

Due to continued strong demand for cruises and higher yields for summer bookings year-on-year in all three brands, TUI Cruises, Marella Cruises and Hapag-Lloyd Cruises, new launches are scheduled for the trio in 2018, 2019, 2021 and 2023. Demand for our cruises remains strong, . In Marella, Majesty exited the fleet in November 2017 and Spirit will exit in November 2018, and from Summer 2019 the entire fleet will be fully all-inclusive.

Leading this growth was the central region, where customer numbers were up 8% and ASP up 3%, boosted by efforts to grow market share in Poland and with bookings from Germany up 4% amid a significant increase in holidays to Turkey, North Africa and Greece, as well as the continued popularity of Spain.

Just 1% growth from the UK, with margins continuing to rebalance from the sterling swing and Spanish hotel inflation, offseting stronger growth from the Nordics in the Northern region, while a fall in tour bookings from France amid the rebranding to Tui held back the Western region, where Belgium and Netherlands were up 6%.