European tour operator TUI Group has reported on the results of the first quarter of 2021 (ended in January), according to a press release from the company.
With a swift coronavirus vaccination campaign in the UK and Germany, the travel group hopes for a quick recovery after the pandemic ends.
In addition, it is already clear that the holding’s losses turned out to be lower than the forecast due to the revival of the early booking campaign. TUI also attributed this to the rapid spread of the vaccine.
According to the data presented, the volume of bookings for the summer season has already reached 2.8 million customers. This is 44% lower than the volume of 2019, but the dynamics of sales over the past two months instills greater confidence in the TO management. In particular, the number of bookings in January was 70% higher than in December 2020.
Revenue in three months decreased by 88% compared to the same period in 2020 and amounted to 468 million euros, while hotel losses amounted to 96 million euros, cruises – 98 million euros, and Musement, which specializes in the sale of excursions and entertainment in vacation spots – 33 million euros.
Overall, TUI had an EBIT loss of 699 million euros and a total loss of 813 million euros. For comparison, the operator closed the first quarter of 2020 with a profit of 190 million euros.
The TUI Group confirmed once again that the package of financial assistance, which was received under the guarantees of the German government, will help maintain the liquidity of the holding until the start of the summer season.
As of February 3, the cash reserve in the company’s accounts was just over 2 billion euros.
At the same time, TUI has high hopes for the transformation program, which is being implemented from the summer of 2020. According to the company’s plans, all major steps will be completed by 2023, and this will allow the company to reduce costs by 400 million euros per year.
The main volume of activities is aimed at reducing its own retail network, which will save up to 30% of the declared amount. At the moment, it has been possible to cut 5 thousand jobs out of 8 thousand planned. Musement plans to cut staff by 25%
Group CEO Fritz Jussen said that at the moment more than half of the program has been implemented and this year the holding will be able to save about 250 million euros.
Digitally, the company has rolled out various features in the Musement app in recent months, such as geolocation and dynamic merchandising, with plans to add order management as well as ratings and reviews. There are also plans to update the main TUI app with hotel check-in and real-time flight times.
“The effect that we expect will continue to a certain extent after the crisis. The share of unpaid traffic has also grown significantly, which made us believe that the cost of distribution in the future could be much lower, ”said Sebastian Ebel, CFO at TUI.
TUI has so far refrained from forecasts for a recovery, however, according to Fritz Hussen, all indications are that tourism will soon return. At least, the normalization of work in the company is expected in the third quarter of the financial year, that is, from May 2021.
At the same time, TUI Group’s plans to transform are strongly opposed by independent retailers in Europe. In this environment, there are more and more statements that the travel holding has chosen the wrong path, switching to full digitalization, and the rejection of offline channels will not give the company the necessary stability.
This opinion was voiced Chairman of the Association of Independent Travel Agencies in Germany (VUSA) Maria Linnhoff. According to her, close cooperation with travel agents is an important support for the tour operator.
“TUI will not go into the future alone. And the money they have is customer money, taxpayer money. So every taxpayer helps TUI get out of the crisis, ”she said during her podcast, stressing that financial assistance from the budget imposes a number of moral obligations on the tour operator.
According to her, tour operators and travel agents are still interested in cooperation, and if a large holding continues to invest in the development of online channels, agents may completely stop cooperation with it, reorienting to the proposals of other players.
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