Group morphs from tour operator to investor and developer and into big sustainable profits
So TUI has proved that it can do it sustainably. Nowadays as all the big movers and shakers are going the asset-light route to big short term bucks (think Airbnb, Priceline, Uber massive valuations) TUI is going in the other direction.
Whereas the web gang are all flim-flam & algorithm, TUI’s assets are rock-solid.
But why would a tour operator bother with assets? Because TUI has found another, more sustainable way. Whilst they actually own assets like hotels and cruise ships and combine them with their own professional experience-creators, they can guarantee a quality of experience to their clients that no-one else can. And they can move quickly as soon as they see an opportunity.
It’s risky to own things and it’s tough to manage them, but I’ve known TUI since Captain Langton and Universal Sky Tours in 1953 – so they’ve got a bit of experience.
And it’s experience and power you need to create great holiday experiences. So far, for TUI it’s paying off and if the industry is to be sustainable this needs to work.
For anyone interested in the future of tourism, the group’s statement is worth a read:
“Owing to the strategic transformation from a traditional tour operator and trader to a developer, investor and operator of hotel and cruise companies initiated in 2014, TUI’s business delivers considerably higher margins and is less seasonal, reducing its dependence on the summer months. Earnings are generated more evenly across the entire year.
TUI’s Hotels & Resorts, Cruises and Destination Experiences segments now account for 70 per cent of the Group’s underlying EBITA. The transformation is continued, future growth will be created through further investments in hotels and cruise ships, but also through digitalisation.
The expansion of the global One CRM (Customer Relationship Management) platform and the use of state-of-the-art technologies enable TUI to provide better and more tailored offerings to its customers.
In order to accelerate the transformation, TUI has also invested in the expansion of its TUI Destination Experiences segment, which provides services and activities in the destinations. TUI’s Spanish subsidiary has increased its footprint to 49 countries around the world.
Moreover, due to the acquisition of the Italian technology company Musement, TUI Group now includes a highly attractive platform bringing activities, excursions and services in the destinations together with guests and their wishes. TUI has also started to use blockchain technology to manage its own hotel capacity so as to achieve optimum occupancy and improve profitability through its own yield management system. Modern IT, Artificial Intelligence and algorithms shall help to further increase the Group’s operating result in future. “The international strength of the TUI brand, modern IT and more than 20 million customers form a perfect basis for additional business and new growth. This knowledge enables us to bring customer wishes together with offerings and increase turnover and earnings in this segment without having to make any major investments,” said Joussen.
This enables us to clearly differentiate ourselves from the competition. With more than 20 million customers, use of state-of-the-art IT and intelligent customer systems, we have considerable potential for new business, turnover and earnings. We will continue our successful transformation: The next step will transform TUI into a digital and platform organisation.” For financial year 2019, the TUI Executive Board expects to deliver growth in underlying earnings of at least 10 per cent1 in a challenging market environment.
Global responsibility for sustainable economic, ecological and social activity is a key feature of our corporate culture. TUI Care Foundation was founded in 2015 and supports the positive impacts of tourism, learning and education and strengthening of environmental and social standards. It contributes to the development of holiday destinations. Today, the TUI Care Foundation is active in more than 20 countries worldwide and initiates projects creating opportunities for the next generation.
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