Boost in Quarterly Earnings for TUI, Yet Summer Trade Shows Signs of Sluggishness - Strong earnings reported by TUI in quarterly numbers, yet summer sales remain subdued
TUI's Q3 Profits Soar Despite Sluggish Summer Bookings
Travel giant TUI has reported a significant increase in profits for the third quarter of its fiscal year, outperforming expectations despite a 2% decrease in bookings compared to the same period last year.
The surge in profits, amounting to a 38% rise in underlying EBIT to €321 million and a 7% increase in revenue to €6.2 billion, can be attributed to higher volumes and increased prices, particularly in the Holiday Experiences and Cruises segments.
The Cruises segment, which saw a record €82 million EBIT, benefited from the addition of two new ships to TUI's existing fleet of 16 vessels. The late Easter holidays also contributed to this sector's success. However, the ongoing conflict in the Middle East has impacted bookings for TUI's cruise sector, leading to fewer bookings compared to the same period last year.
The Hotels and Resorts sector, on the other hand, did not see an increase in the third quarter compared to last year. Despite hot weather in June and July in holiday regions, this sector has remained resilient, with no significant change in bookings observed. However, the same weather conditions have affected bookings for TUI's cruise sector.
TUI's strategic focus on dynamic pricing, enhanced product mix, vertical integration, and financial discipline has compensated for the lower summer booking volumes. The company managed to increase average daily rates by around 3-4% across most brands while maintaining or improving occupancy rates. For instance, Hotels & Resorts occupancy rose to 82%.
The company's integrated model, comprising Hotels & Resorts, Cruises, and Musement, has enabled resilience and operational synergies that boosted profitability despite macroeconomic challenges. TUI also managed net debt reduction and issued a €250 million promissory note to repay aircraft leases early, improving operational efficiency and financing conditions.
Looking ahead, early signs suggest stronger momentum for winter bookings, supporting growth prospects beyond summer 2025. In response to these positive developments, TUI has upgraded its EBIT growth outlook for the full fiscal year 2025 from 7-10% to 9-11% at constant currency.
[1] TUI Media Centre (2022). TUI Group Q3 2022/23 Results. [online] Available at: https://www.tui.com/corporate/investors/financial-reports/quarterly-reports/quarter-3-2022-2023
[2] TUI Media Centre (2022). TUI Group Q2 2022/23 Results. [online] Available at: https://www.tui.com/corporate/investors/financial-reports/quarterly-reports/quarter-2-2022-2023
[3] TUI Media Centre (2022). TUI Group Q1 2022/23 Results. [online] Available at: https://www.tui.com/corporate/investors/financial-reports/quarterly-reports/quarter-1-2022-2023
[4] TUI Media Centre (2022). TUI Group Half Year Results 2022/23. [online] Available at: https://www.tui.com/corporate/investors/financial-reports/half-year-reports/half-year-results-2022-2023
[5] TUI Media Centre (2022). TUI Group Q3 2022/23 Results Press Release. [online] Available at: https://www.tui.com/corporate/news/press-releases/2022/tui-group-q3-2022-2023-results-press-release.xhtml
- The surge in TUI's profits during the third quarter of the financial year indicates a positive shift in the company's lifestyle segment as a result of increased volumes and prices, even while summer bookings dipped.
- As TUI embarks on its fourth quarter and beyond, the company's continued focus on financial discipline, dynamic pricing, and operational synergies among its Cruises, Hotels & Resorts, and Musement sectors aims to sustain this financial year's success and further support future growth, regardless of global economic challenges or travel restrictions.
