Tui Travel basks in package holiday glow

Higher demand for package holidays has pushed up profits at Thomson and First Choice owner Tui Travel.

by Elizabeth Anderson

Tui Travel, Europe’s largest tour operator, said the sale of more expensive package holidays helped push full-year profits up 21%.

The British firm, which owns the Thomson and First Choice holiday brands, posted a pre-tax profit of £473m for the year to the end of September on revenue up 4% to £15.1bn.

Peter Long, Tui’s chief executive, said 2013 had been an ‘outstanding year’ for Tui Travel, which was formed in 2007 through a merger between First Choice Holidays and the Thomson tourism unit of German group TUI.

Tui has focused on cutting costs and selling tailored and more profitable holiday packages directly to customers. Package holiday sales rose 5% in the UK, helped by the rising popularity of resorts such as Sensatori and SplashWorld, with ‘unique’ holidays now accounting for 83% of all Tui’s bookings. Unrest in part of North Africa has also impacted on people’s destination choice, with Egypt now accounting for less than 5% of holidays.

Direct sales rose 2%, now accounting for 89% of all the firm’s bookings. Online sales accounted for 47% of all takings, up 3% on the year before, and the firm has recently launched the MyThomson app to drive more mobile sales, receiving 180,000 downloads to date.

However, not all of Europe had that holiday feeling during the peak summer period. The underlying operating loss at Tui’s French division widened 27% to £60m and Tui doesn’t expect the French business to break even until 2015, because of sliding holiday sales.

Tui has also been on a cost saving drive. It wrote off £188m in its specialist and activity division, which offers themed holidays, after a restructuring that involved shutting down unprofitable lines of business, mainly in North Africa.

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