2017 was another very good year for TUI Group. In the period under review, TUI increased its underlying EBITA by 12.0 per cent1, with turnover up 11.7 per cent.
Despite a challenging market environment, TUI again outperformed its guidance of delivering at least ten per cent growth in underlying EBITA. “For the third consecutive year, we have delivered double-digit growth in our operating result. More than half of our earnings are delivered by TUI’s hotel and cruise companies. Our successful strategic realignment is also clearly reflected in our set of results. Thanks to the strong growth of our hotel and cruise brands, TUI now delivers stronger margins and is less seasonal. Our business profile is now much more evenly structured across the entire year. The clear focus on investments in high-margin hotels and ships was the core of the strategy for the new TUI following the merger in 2014,” said TUI CEO Fritz Joussen at the presentation of the results for financial year 2017 (1 October 2016 to 30 September 2017) in London. Customers, shareholders and employees benefit from TUI’s new strategic positioning and financial strength. “We are investing in new hotels and modern cruise ships. And we pay an attractive dividend to our shareholders. We are seeking to continue this path,” said Joussen.
Overview of full year 2017
In the period under review (1 October 2016 to 30 September 2017), TUI Group delivered turnover growth of 11.7 per cent to 19.2 billion euros (previous year: 17.2 billion euros) at constant currency. Including foreign exchange effects, turnover also rose substantially by 8.1 per cent to 18.5 billion euros. Underlying EBITA at constant currency climbed by 12.0 per cent to 1.121 billion euros (previous year 1.001 billion euros). Including foreign exchange effects, it grew by 10.2 per cent to 1.102 billion euros.
Dividend: Executive Board and Supervisory Board propose 0.65 euros per share
The development of TUI Group’s dividend is linked to the group’s underlying EBITA development at constant currency. The strong earnings growth of 12.0 per cent1 in the completed financial year on the base dividend (0.58 euros) results in a dividend of 0.65 euros per share. The Executive Board and Supervisory Board will submit a corresponding proposal to the Annual General Meeting on 13 February 2018.
Further growth and better efficiency thanks to digitalisation
TUI has consistently transformed itself and has become a completely different organisation over the past five years. “TUI 2017 is not comparable with TUI 2012,” said Joussen. “While the Group in essence was a tour operator, TUI is now a developer, investor and operator of hotel and cruise businesses. We will continue to invest in our own hotel and cruise companies to generate further growth.” TUI’s own European tour operators today are strong sales and marketing units providing direct access to the Group’s 20 million customers. The Group uses modern CRM systems to gain a single view of the customer. In order to enhance efficiency and optimise income from managing bed capacity, TUI operates its own yield management system and uses blockchain technology. “At TUI, blockchain is not just a vision, but has been a live reality with an application called ‘bed swap’ since summer 2017,” said Joussen. The Group aims to tap new customer groups in growth regions such as China and South East Asia, based on a fully digital approach and cooperation with local partners. These countries are characterised by the emergence of middle classes that are only starting to discover travel.
Overview of the segments
Hotels & Resorts with strong performance, increase in average revenue per bed
Hotels & Resorts significantly improved its operating result in the full financial year 2017. As before, the growth of TUI’s hotel companies was in particular driven by RIU:
Underlying EBITA: +17.3 per cent to 356.5 million euros (previous year 303.8 million euros)
Underlying EBITA at constant currency: +19.2 per cent to 362.0 million euros
Average revenue per bed: 63 euros (previous year: 60 euros)
Average occupancy: 79 per cent (previous year: 78 per cent)
In 2017, a total of ten new hotels opened under the core brands of TUI Hotels & Resorts, including one RIU in Jamaica, six Blue Diamond hotels in Jamaica and St Lucia as well as three TUI Blue, one each in Croatia, Italy and Tenerife.
Cruises: Growth path successfully continued
Since the first half of financial year 2017, the Cruises segment has comprised the results of all three cruise companies: TUI Cruises, Marella Cruises (formerly Thomson Cruises) and Hapag-Lloyd Cruises. In the period under review, it delivered substantial earnings growth and a significant increase in average rates:
Underlying EBITA: +33.9 per cent to 255.6 million euros (previous year 190.9 million euros)
Underlying EBITA at constant currency: +38.0 per cent to 263.4 million euros
Average rate per passenger per day (previous year figures shown in brackets):
TUI Cruises 173 euros (previous year 171 euros)
Marella Cruises 131 GBP (previous year 121 GBP)
Hapag-Lloyd Cruises 594 euros (previous year 579 euros)
TUI Cruises 101.9 per cent (previous year 102.6 per cent)
Marella Cruises 101.7 per cent (previous year 100.6 per cent)
Hapag-Lloyd Cruises 76.7 per cent (previous year 76.8 per cent)
In June 2017, “Mein Schiff 6” joined TUI Cruises’ fleet. In 2018, the new “Mein Schiff 1” will be launched by TUI Cruises. The Marella Cruises’ fleet has continued with its modernisation: In the period under review, it launched “Marella Discovery 2”. The fleet operated by TUI’s subsidiary Hapag-Lloyd Cruises will also be expanded and modernised in the medium term: In calendar year 2019, the new builds “Hanseatic nature” and “Hanseatic inspiration” will join the fleet as luxury expedition cruise ships.
Sales & Marketing in all regions report growth in customer numbers, strong performance in Germany, the Nordics and Benelux, Northern Region customer numbers up 3.5 per cent
Sales & Marketing in the three source market regions recorded a positive operating performance in 2017, in particular in the Nordics, Germany and Benelux. Customer numbers were up 6.3 per cent to 20.2 million across all regions.
Underlying EBITA at constant currency and excluding one-off effects: +3.0 per cent to 571 million euros (previous year 554 million euros).
Underlying EBITA including the one-off effects: -5.0 per cent to 526.5 million euros
Northern Region (UK & Ireland, Nordics, Canada, Russia) has no longer included Blue Diamond hotels and Marella Cruises (formerly Thomson Cruises) since H1 2017. The UK continued to report strong demand for travel and a strong trading performance. Customer volumes were up 3.5 per cent in the region. The Nordics delivered a very strong performance in the period under review. A positive effect was driven by changes in the product mix, with an expansion in offerings to Spain, Cyprus, Bulgaria and Croatia.
Underlying EBITA Northern Region: -9.7 per cent to 345.8 million euros (previous year: 383.1 million euros)
In Central Region (Germany, Austria, Switzerland, Poland), Germany reported a very strong operating performance. Customer numbers in the region were up 4.7 per cent year-on-year. In aviation, as previously indicated, the sickness incident in TUI fly at the start of the financial year resulted in one-off costs of 24 million euros. The insolvency of Air Berlin and the resulting need to change the wet-lease agreement for aircraft and crews caused further one-off costs of 15 million euros. Excluding the one-offs underlying EBITA of Central Region would have been 26 million euros above the previous year.
Underlying EBITA Central Region: -16 per cent to 71.5 million euros (previous year: 85.1 million euros)
The result generated by Western Region (Belgium, Netherlands, France) was driven by a strong performance in Belgium and the Netherlands. Benelux recorded a strong trading performance, in particular in the second half of the year. Belgium and the Netherlands also benefited from the brand migration to the TUI brand. Only France could not contribute to the overall positive development of the region.
Underlying EBITA Western Region: +26.8 per cent to 109.2 million euros (previous year: 86.1 million euros)
Sound trading performance – current Winter trading continues to match our expectations
Current trading for Winter 2018 (as per 3 December 2017) is good, in line with our expectations, with particularly strong growth in bookings for Thailand, Cape Verde, North Africa and Cyprus and also Turkey picking up again.
Booked source market turnover: +6 per cent1
Customers: +3 per cent