Tui share price edges up as it prepares to hit financial targets, but demand to Turkey and Egypt stays lower

Courtney Goldsmith
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Summer Holiday Season Begins And Tourists Flock To The Beaches In Spain
Bookings to Spain helped offset declines to terror-hit regions like Turkey (Source: Getty)

Tui is on track to hit its financial targets, but the tour provider said bookings to terror-hit areas like Turkey and Egypt are still showing lower demand.

The figures

In a trading update for the six months to the end of March, Tui said total revenue increased nine per cent across all of its markets while the number of customers increased five per cent.

In the UK, revenue jumped 20 per cent year-on-year and total customers grew 12 per cent.

Tui said the later timing of Easter this year will hit second quarter results by €30m (£26m) to €35m, but this will reverse in the third quarter.

For the summer period, results so far are in line with expectations. Excluding Turkey, bookings are up seven per cent overall. UK revenue increased 11 per cent while the number of British customers rose three per cent year-on-year.

The group anticipates growth of at least 10 per cent to earnings before interest, tax and amortisation (Ebita).

Shares in the FTSE 100 firm edged up 0.18 per cent at 1,137p in morning trading.

Why it's interesting

Unlike Thomas Cook, Tui noted continued lower demand for holidays in Turkey and North Africa.

Revenue growth over the winter period, especially in the UK, reflects growth in long haul and UK cruises, and demand for the Canaries, mainland Spain and Cape Verde offset the downturn in Turkey and Egypt.

The tour provider is in the process of reorganising the business to grow its hotel and cruise brands, which have strong growth and margin potential.

This, along with the firm's balanced portfolio of markets and destinations, has placed Tui in a strong position despite macroeconomic and geopolitical challenges.

What Tui said

Chief executive Friedrich Joussen said winter is closing out as expected while summer remains in line with expectations.

We are progressing our transformation as the world's leading integrated tourism business focused on own hotel and cruise brands, financed by our strong cash flows and proceeds from the disposals of Hotelbeds Group and Travelopia, creating a more competitive and less seasonal business for the long term.

What analysts said

Greg Johnson, analyst at Shore Capital, said: "Both hotels and resorts and cruise divisions continue to perform well, with the former benefiting from a good performance from the RIU and Robinson brands offsetting the impact of lower demand from Turkey and the Middle East, whilst cruise is seeing good yields and load factors and the first winter operations Mein Schiff 5, with Mein Schiff 6 launching in June 2017."

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