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TUI: Joussen sticks to targets

BUSINESS TOURISM WORLD

TUI will maintain its investment plans and financial targets this year despite the impact of terrorist attacks in holiday destinations, CEO Fritz Joussen declared.

The TUI boss described Tuesday’s terror attack in Istanbul as “critical” for Turkey as a holiday destination following the attacks in Egypt and Tunisia in recent months. “We have a situation at the moment that no one could have foreseen 12 months ago. That doesn’t make it easier for us,” he told journalists in Düsseldorf.

As TUI’s third-largest destination (after Spain and Greece), Turkey is much more important than Egypt or Tunisia, but TUI is in a position to cope with any shifts in demand, Joussen emphasised. After the Sinai travel stop, for example, the group quickly contracted €26 million worth of additional hotel beds in Spain.

The TUI CEO stressed that the group was maintaining its financial target of a 10% profit improvement this year and in the next two years, which would be achieved through revenue growth and cost savings. Hotels and cruises are the two main areas for higher profits.

TUI will invest strongly in hotels, in cooperation with partners such as Spanish hotel group Riu. The Caribbean, for example, is an attractive region for investments as a year-round destination and with room utilisation rates of over 90% and ROI of up to 20%, he pointed out.

Joussen also confirmed that TUI plans to sell the bedbank subsidiary Hotelbeds, noting there is strong interest both from private equity and strategic investors. Hotelbeds has double-digit growth in revenues and profits but is too small to compete with large hotel portals such as Booking.com and Expedia, he explained. Hotelbeds is worth about €750 million according to investment bank Morgan Stanley.

Riu Hotels has confirmed it is withdrawing from Tunisia due to the collapse in demand. It ended the management contracts at its 10 hotels in the country as of January 1.

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