TUI reports growth in a “challenging environment”

Over the last five years, TUI has become an integrated tourism business

TUI reported record results in 2018. We asked Friedrich Joussen, CEO, TUI Group, about its performance over the year and what were the company’s main KPIs

TUI had a good year in 2018, growing in a challenging environment. Turnover was up by 6.3%. For the current year 2019, we expect to repeat our record results from 2018, around €1.2bn underlying EBITA. Our transformation from a traditional tour operator and trader to a developer, investor and operator of hotels and cruise ships is paying off. We are investing in and we are growing with TUI’s high-margin products and services and our businesses are increasingly scaling.

WE HAVE ORDERED TWO ADDITIONAL SHIPS FOR 2024 AND 2026

TUI is increasingly involved in cruising, but you are working on making your fleet more environmentally friendly. Please tell us more.

We are well aware of our corporate responsibility. Apart from greenhouse gas emissions, TUI’s cruise companies also seek to reduce harmful air-borne pollutants such as sulphur oxides, nitrogen oxides and particles. To this end, the cruise companies continually implement both operational and technical measures. In 2018, TUI Cruises launched the new Mein Schiff 1, in February 2019 the new Mein Schiff 2 followed. TUI Cruises has one of the youngest and hence one of the most environmentally friendly cruise vessel fleets. We have ordered two additional ships for 2024 and 2026, which will run entirely on LNG. The ships of Hapag- Lloyd Cruises are also equipped with modern eco-technologies like sea water desalination systems for drinking water, biological sewage treatment, anti-fouling silicone paint and high-tech waste-to- energy plants.

WE ARE GROWING WITH TUI’S HIGH-MARGIN PRODUCTS AND SERVICES

How are new technologies, such as Augmented Reality, coming in to play in your business?

We are building digital platforms and digital platforms scale – faster and better. With data, Artificial Intelligence, algorithms and the knowledge we have about our customers, we are developing new products and services that deliver additional turnover and earnings. We have around 27 million customers, 21 million of which are in our European source markets: implementing state-of-the-art IT and intelligent customer systems for these customers generates considerable potential for new business, higher turnover and better earnings. In Palma de Mallorca we are currently testing the next generation of experiences. The trial uses Augmented Reality on excursions and activities. TUI guests are being equipped with stereoscopic augmented reality glasses which allow them to explore places individually without losing any inside knowledge.

With over 50 years’ history, what does the future have in store for TUI? What does your roadmap look like?

Today’s TUI is not the TUI of five years ago. The group has become an integrated tourism business, delivering considerably higher margins and being less seasonal with earnings spread evenly across the entire year. We have three growth segments which account for 70% of the Group’s underlying EBITA: Hotels & Resorts, Cruises and Destination Experiences. However, the transformation continues with future growth being created through further investments in hotels and cruise ships, but also through digitalisation. The next step will transform TUI into a digital and platform organisation: the global strength of the TUI brand, modern IT and our 27 million customers form a perfect basis for additional business and new growth. We also use Blockchain technology to manage our own hotel capacity. That optimises occupancy and improves pro tability through our own yield management system.

How important is ITB Berlin for TUI, and why?

ITB Berlin is a very important event in particular in the calendar of TUI. With 27 million guests in more than 100 countries each year, TUI is a strong and reliable partner for destinations. We view ourselves as partners of the destinations in order to remain economically successful. ITB Berlin is the ideal place to build, maintain and foster our relationships with these destinations. We meet and talk with ministers and tourism authority representatives during the trade show. In addition, we also maintain dialogue with various other stakeholders, from media to politics.


Photo: Friedrich Joussen CEO, TUI Group