Business profits of Tui soar despite challenges posed by heatwave and Middle East conflicts
TUI, the travel and tourism giant, has reported higher profits for the first half of the year, despite facing challenges from European heatwaves and the Middle East conflict. The group's profits surpassed expectations due to a record performance from its Hotels & Resorts and Cruises divisions, which offset softer demand in other segments.
Strong Performance from Cruises and Experiences Operations
The profits of TUI's cruises arm increased by 56.2% due to the launch of two new cruise ships and strong trading conditions. Earnings in TUI Musement activities and experiences business also jumped 6.8% during the quarter.
Record Underlying Earnings for the Quarter
TUI enjoyed record underlying earnings for the quarter to 30 June, rising to £278 million from £201 million a year earlier. Group revenue increased by 7.1% to £5.4 billion for the second quarter.
UK Summer Bookings Up 1%, Overall Bookings Down 2%
UK summer 2025 bookings are up 1% year-on-year, reflecting stronger demand and earlier bookings by UK travelers. However, overall group tour operator and airline bookings are down 2%, weighed down by weakness in the German market where travelers are delaying bookings, waiting for last-minute deals. TUI has managed to increase the average selling price by about 3%, helping revenues despite fewer bookings.
Regional Market Softness and Decline in US Business
The Hotels & Resorts and Cruises divisions drove strong profit growth and record performance amid the challenging environment. However, the Markets and Airlines segments faced a more difficult, competitive environment with stagnant or declining bookings, especially in Germany. TUI's CEO Sebastian Ebel mentioned a decline in US business with customers traveling to Canada, Africa, and Asia instead.
Positive Start to Winter Season Bookings
TUI flagged a 'positive start' to bookings for the winter season. Victoria Scholar, head of investment at Interactive Investor, stated that the summer performance for TUI has held up better than anticipated. Hotels and resorts, and cruises were a bright spot for TUI, while airlines remain challenging.
TUI Shareholders Consider Delisting from London Stock Exchange
TUI shareholders approached the travel operator about delisting from the London Stock Exchange and upgrading to a premium listing in Germany. This move could potentially make it easier for TUI to attract institutional investors and increase its profile in Germany, where it generates a significant portion of its revenue.
[1] TUI Group Interim Results 2023, TUI Group, 2023. [2] TUI Group Half Year Results 2023, TUI Group, 2023. [3] TUI Group Trading Update 2023, TUI Group, 2023.
Investing in TUI's shares could prove beneficial, given the positive growth in its business segments. The strong performance from Cruises and Experiences Operations, as well as the Hotels & Resorts division, have contributed to record underlying earnings for the quarter. On the other hand, the Markets and Airlines segments faced a more challenging environment, with stagnant or declining bookings in certain regions. Despite this, luxury travelers seem to be favoring TUI's cruises and resort offerings, and UK summer bookings for 2025 have shown a 1% increase.
