A strong booking trend and a significantly improved second financial quarter underline TUI’s positive expectations: the tourism group expects a strong Summer in 2023 and a significant year-on-year increase in operating profit for the full year. Revenue climbed by around one billion euros year-on-year to 3.2 billion euros in Q2 2023 (January to March).
Underlying Group EBIT improved significantly by 88 million euros to -242 million euros in the seasonally weaker second financial quarter. The number of customers travelling with TUI in the period under review rose to 2.4 million. Sebastian Ebel, CEO of TUI Group: “We have significantly increased our results in the second quarter, the completed winter season has developed in line with our expectations with good prices. The strong booking trend, especially in the last six weeks, and the significantly improved quarterly figures confirm our expectations: We expect a strong Summer and a good 2023 financial year with significantly higher operating profit. Our strategic initiatives are taking effect, we have repaid the WSF aid and are gearing everything towards profitable growth. We want to return to our former strength. That is our ambition and our promise to customers, employees, partners and shareholders that made the successful capital increase possible.”
WSF Corona aid repaid and KfW credit line reduced after successful capital increase – Including proceeds of capital increase pro forma net debt reduces to 3.1 billion euros
As announced, TUI AG has swiftly repaid the Corona aid provided by the state. The roadmap which was agreed with the Economic Stabilisation Fund (WSF) and announced in December 2022 for the full repayment of the stabilisation aid received from the WSF, was already initiated in the period under review. To finance the repayments, a capital increase with subscription rights was successfully completed in April. The gross proceeds amounted to approximately 1.8 billion euros. The proceeds were used to fully repay the remaining WSF stabilisation measures and significantly reduce the KfW credit line. Including the proceeds from the capital increase, pro forma net debt is significantly reduced to 3.1 billion euros. TUI has kept its promise to repay the state aid as quickly as possible.
Overview Q2 2023: 2.4 million guests travel with TUI in the reporting period – Group revenue and underlying EBIT significantly improved – Hotels & Resorts underlying EBIT above pre-crisis level for the fourth consecutive quarter – Cruises positive operating result for the fourth consecutive quarter
In the Holiday Experiences segment which includes hotels, cruises and the tours and activities business, Hotels & Resorts achieved an operating profit above the 2019 level for the fourth quarter in a row. Underlying EBIT improved significantly in the second financial quarter to 78.0 million euros (previous year: 23.7 million euros). Riu in particular contributed to this positive development, with the Caribbean, Canary Islands and Cape Verde being the most important destinations. Overall occupancy in Hotels & Resorts rose by 18 percentage points year-on-year to 83 per cent. Hotels in the Caribbean achieved an average occupancy rate of 92 per cent, with Mexico the most popular destination at 93 per cent in the second quarter. Hotels in the Canary Islands were also in high demand this Winter, achieving an average occupancy of 86 per cent. Other key destinations this quarter were Egypt and Cape Verde. In the second quarter of 2023, the average room rate rose by 16 per cent year-on-year to 100 euros.
Cruises comprises the joint venture TUI Cruises in Germany, which operates cruise ships under the Mein Schiff and Hapag-Lloyd Cruises brands, and Marella Cruises in the UK. In Q2 2023, the full fleet of 16 ships was in operation, while operations were limited in Q2 2022 and only gradually ramped up as COVID 19 restrictions were relaxed. The division’s underlying EBIT improved significantly to 14.8 million euros from a loss in the previous year (Q2 2022: -73.5 million euros). Occupancy of the ships of the three brands ranged between 67 and 95 per cent, available passenger days rose by 47 per cent to 2.4 million.
The cruise business continues to recover and achieved its fourth consecutive positive quarter in terms of earnings, with TUI Cruises generating after-tax earnings of 18 million euros for TUI Group in the period under review. For the second half of financial year 2023, the average daily rate for TUI Cruises is currently 1 per cent up year-on-year, with occupancy 23 percentage points higher than in the same period last year.
TUI Musement offering tours and activities, reduced its underlying EBIT loss to -12.7 million euros in the period under review, compared to -18.2 million euros in the prior year. The improvement reflects the benefit of our integrated model and the growth of third-party distribution via the TUI Musement platform. In the quarter under review, TUI Musement benefited from an increase in guest transfers, with a total of 3.4 million transfers in destinations (previous year: 2.5 million). In addition, around 1.3 million experiences were sold, around 0.7 million more than in the prior-year quarter (Q2 2022: 0.7 million). As a result, the number of excursion and activity bookings has almost doubled.
In the Markets & Airlines segment, the underlying EBIT loss of -308.5 million euros in Q2 2023 was higher than in the previous year (Q2 2022: -262.2 million euros) and almost at the same level as in 2019. The same quarter of the previous year included a gain of 43 million euros from the revaluation and unwinding of ineffective hedge positions as well as around 50 million euros in state compensation in the Central Region for loss of business in the course of the pandemic. Excluding these effects, the result for the reporting period increased by 47 million euros compared to the previous year. Traditional short- and medium-haul destinations such as the Canaries and Egypt were again popular destinations for TUI guests, but long-haul destinations such as Mexico and the Dominican Republic were also in demand. Overall, however, the segment continued to be impacted by inflationary pressures, in particular in energy costs, as well as exchange rate fluctuations. In Q2 2023, a total of 2.4 million customers travelled with TUI, an increase of 0.6 million compared to Q2 2022.
Northern Region (UK, Ireland, Nordics, Canada) reported an underlying EBIT loss of -147.5 million euros Q2 2023, improving earnings by 33.4 million year-on-year (Q2 2022: -180.9 million euros). Q2 2022 included an exceptional effect of 16 million euros from the revaluation and reversal of ineffective hedge positions. On a comparable basis, the segment result increased significantly by 50 million euros.
The underlying EBIT of the Central Region (Germany, Austria, Switzerland, Poland) of -102.1 million euros was -77.9 million euros lower than in the previous year (Q2 2022: -24.2 million euros). However, the result of the same quarter of the previous year included a gain of 30 million euros from the revaluation and reversal of ineffective hedge positions as well as a compensation payment of around 50 million euros from the German government for business losses in the course of the pandemic. Excluding these effects, the result for the reporting period was 3 million euros above the previous year’s value.
With an underlying EBIT of -59.2 million euros, the Western Region (Netherlands, Belgium, France) reported a slightly higher loss compared to the previous year (Q2 2022: -57.0 million euros). Despite a year-on-year improvement in volumes in the region, the segment’s results were slightly down due to higher airline operating costs and the ongoing impact of flight disruptions at Schiphol Airport.
Outlook Bookings: Winter travel in line with expectations – Summer 2023 +13 per cent year-on-year and at 96 per cent of Summer 2019, average prices significantly higher TUI has taken 12.9 million bookings across Winter 2022/23 and Summer 2023, with approximately 4.2 million bookings added since the Q1 2023 interim report as the strong booking momentum continues. Summer 2023 bookings have remained strong and are up by 6 per cent on 2019 levels in the last six weeks, accompanied by higher average prices.
For Winter 2022/23, 4.7 million bookings were taken. Since the last announcement in the first business quarter, 0.6 million bookings have been added. This means that total bookings for the 2022/23 Winter programme are up at 133 per cent on the previous year and 88 per cent of the pre-crisis Winter of 2018/19. Average prices are 10 per cent higher than in the previous Winter season. Compared to Winter 2018/19, average prices increased by 29 per cent. In the UK, Winter bookings returned to 2018/19 levels with significantly higher average prices compared to the pre-crisis Winter.
Summer 2023 booking trends remain strong with 8.3 million bookings to date. Since the last update as part of the Q1 2023 figures, 3.6 million bookings have been added. Currently, 55 per cent of the Summer programme has been sold, which is 2 percentage points higher than at the same point in time for Summer 2022 and broadly in line with Summer 2019. Overall, bookings for summer 2023 are 13 per cent higher than last year and at 96 per cent of pre- pandemic levels. Booking momentum has remained strong in the last six weeks and is 6 per cent higher than Summer 2019.
Average prices for Summer 2023 have increased since the last update and are now 5 per cent above last year. On a like-for-like basis, average prices are 8 per cent higher, excluding rebookings for Summer 2022 from previous seasons. Compared to Summer 2019, average prices are 26 per cent higher. The most popular destinations for TUI guests include Spain, Greece and Turkey.
The UK market continues to be the most advanced market with 64 per cent of the programme sold. Bookings are in line with the previous season and are 10 per cent above pre-pandemic levels with higher average prices.
Given recent positive booking trends, we are confident for our assumption that capacity for Summer 2023 will be close to normalised Summer 2019 levels.
Guidance for the 2023 financial year
For the current financial year 2023, the Group expects a strong increase in revenue and significantly higher positive earnings.
