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Wednesday 18 September 2019

Tui hails ‘great potential’ of cruises as younger travellers find their sea legs

A 24% jump in cruise earnings helped Tui narrow seasonal half-year underlying losses to 158.6 million euros (£138.9 million).

A cruise liner
A cruise liner

By Holly Williams, Press Association Deputy City Editor

Surging popularity for cruise holidays has helped boost half-year earnings at travel giant Tui as families and young people take to the seas.

Chief executive Fritz Joussen hailed an “excellent” market outlook for cruises – once the preserve of older travellers, but now becoming the trip of choice for younger holidaymakers as well.

The group is planning to further expand its cruise offering, with its board giving the green light to build another ship for its Hapag-Lloyd brand.

It comes after a solid first half for the cruises business, with a 24% jump in underlying earnings to 93 million euros (£81.4 million) for the six months to the end of March.

Forecasts for cruising are excellent. German and European holidaymakers are beginning to embrace this way to travel CEO Fritz Joussen

The performance helped the wider business get off to a strong start for the financial year, with a 26% improvement in its seasonal underlying loss to 158.6 million euros (£138.9 million) in the half-year, or a 29.8% improvement with currency effects stripped out, on revenues up 7.2%.

Mr Joussen said the cruise ship market has “great future potential”, with German and European holidaymakers “beginning to embrace this way to travel”.

He added: “Due to demographic change, traditional target groups are growing.

“At the same time, sea voyages are becoming increasingly popular among families and younger people.

“The convergence of these two very promising trends will further accelerate growth over the next five to 10 years. And we are only at the beginning of this trend.”

First-half results showed Tui’s seasonal pre-tax loss for the first half – covering the traditionally quieter winter months – narrowed to 247.2 million euros (£216.4 million) from 310.8 million euros (£272.1 million) a year earlier.

Tui added it was seeing a “very good trading performance” for summer 2018 with bookings up 5%.

For the northern region including the UK, its underlying seasonal loss narrowed to 120.5 million euros (£105.5 million), from 138 million euros (£120.9 million) the previous year.

It took a 20 million euro (£17.5 million) hit in the division from its programme to rebrand from Thomson to Tui, which completed in the UK during the half-year, but benefited from a 15 million euro (£13.1 million) boost from the timing of Easter.

Tui said demand remained “strong” in the UK.

Overall demand across the group has been particularly solid for destinations such as Turkey, North Africa and Greece, while Cyprus, Croatia and Bulgaria also saw robust bookings, Tui said.

Mr Joussen said: “We continue to deliver growth, all trends remain intact, and our very good trading performance for summer 2018 fully matches our expectations.”

But Tui shares slipped 2% despite the bullish update.

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