25% profit rise? Tui can play at that game

To add insult to Thomas Cook's recent injuries, its greatest rival's fortunes have been significantly better. Although it still hasn't been easy.

by Emma Haslett
Last Updated: 31 May 2013
2011 has been the year of political unrest, unreliable weather and the ‘squeezed middle’ – not, then, the ideal time to be in the travel industry. But that hasn’t stopped holiday firm Tui, which says its pre-tax profits rose by a quarter in the year to the end of September, from enjoying itself. Mind you, that’s sure to come as a bit of a blow to rival Thomas Cook, which was forced to close 125 of its stores last month after it admitted to serious cashflow problems. Although, to be fair, it doesn’t sound as though Tui’s year has been all plain sailing, either.

To wit: back in September, the company, which owns Thomson and First Choice, announced an 11% year-on-year fall in bookings, after unrest in Egypt and Tunisia (understandably) suddenly made the idea of a blustery fortnight in Cornwall positively enticing. But it looks like the rest of the year more than made up for that: profits for the year to the end of September were £360m from sales of £14.7m, which more than satisfied analysts’ expectations.

So what’s gone right? While bookings for areas in North Africa and the Middle East were still down, things in the UK, Scandinavia, Belgium, the Netherlands, Canada and Austria are going great guns – despite squeezed consumer spending. In fact, Tui’s UK businesses outdid themselves, with a 17% year-on-year increase to £149m, while its hotels arm made £13m – a 160% increase on this time last year.

This all sounds very encouraging – but Tui said it was remaining cautious, not least because UK bookings until the end of November (its current trading period) have dropped off by 12%, in part thanks to those ongoing troubles in North Africa and the Middle East. The company added that it’s ‘experiencing a later booking profile’ – consumers are increasingly leaving it until the last minute (ie. when they know whether or not they’re getting a bonus payment this year/whether the Government of their destination of choice will still be in situ) before they book. Not ideal trading conditions, but it could be worse – at least people are still buying holidays…

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