Tui reduces losses and grows share in Q1

Posted on 7 February, 2013 by Spacejunkie2

Tui reduces losses and grows share in Q1

By Phil Davies

Tui Travel’s underlying operating loss was cut by 15% in the three months to December as the group’s ‘unique’ holidays continue to drive increases in UK market share.The operating loss reduced by £16 million to £93 million to give an underlying first quarter operating loss of £116 million.Issuing first quarter results for the period ending December 31, Tui Travel reported “significant” continued growth in UK cumulative market share with summer 2013 up 4% and the key January booking period up 2%, gaining on the 7% increase in the same period last year.

Unique holiday bookings in the UK, Nordics and Germany increased by 15%, 10% and 6% year-on-year respectively for summer 2013.

Direct distribution sales in the UK for summer 2013 grew to 90% from 89% with online sales accounting for 37%, up by 1% over the same period a year earlier.

Tui claims its accommodation wholesaler business “continues to build a global leadership position” with total transaction value up by 9% for this summer, driven by Latin America and Asia where TTV is up by 23%.

The group reported strong current trading with winter 2012/13 83% sold with higher margins and average selling prices in key source markets.

Summer 2013 bookings in the UK and Nordics are up 9% and 10% respectively with margins ahead of the prior year in key source markets.

Chief executive Peter Long said: “We are pleased to report that our strong trading momentum has continued with particularly encouraging growth in the UK and Nordics.

“Our leading position in the UK has further benefited from increased market share as a result of higher demand for our unique holidays. Across all our key markets demand for the overseas holiday remains strong, despite the overall economic environment.

“We are confident that our customer focused strategy is driving performance and based on current trading we expect to be towards the top end of our roadmap guidance of 7 to 10% underlying operating profit growth for the 2013 financial year.”

Tui said: “Positive trading momentum continues for summer, with a third of mainstream summer holidays sold to date.

“Customer demand for our unique holidays has allowed us to increase capacity in the UK, Nordics and Germany. In the UK we have again increased our market share year on year as a result of increased demand for our unique holidays.”

Tui Travel will issue a pre-close trading update on March 27.

Transformation plan starting to have impact, says Cook

Posted on 7 February, 2013 by Spacejunkie2

Transformation plan starting to have impact, says Cook

By Lee Hayhurst

Thomas Cook said its business transformation plans were starting to have an impact as it announced higher margins in its first quarter to December.

The travel operator and retailer saw revenues of £1,724 million in the three months to the end of December. And it achieved gross margin of 21.9%, up 1.3 percentage points over the comparable period last year, it said in a trading update.

The group said plans to achieve annual savings of £100 million over the next two years to 2015 were on track and a further £60 million of savings had been identifed.

Harriet Green, group chief executive, said she was particularly pleased with Cook’s UK performance.

“As we continue to strengthen Thomas Cook and determine our profitable growth strategy for the future, the power of our brand remains key to the transformation.

“We have seen stronger operating performances in our major markets – the UK, Germany and the Nordics. I am particularly pleased with the improved performance in the UK as the benefits of the turnaround plan are reflected in its operating results.

“Our business transformation is firmly on track. We have further strengthened our leadership team and the pace at which we are driving change gives me confidence that together we will achieve our near term objectives and much more.

“The business has generated higher gross margins than we did last year and this will remain an area of focus for us through the financial year.

“Our cost-out initiatives and improved cash management will be important contributing factors to the Group’s future performance and continue to receive strong focus in all parts of the business.

“Although global economic conditions and consumer confidence remain challenged, our business transformation is firmly on track.”

Cook said its Business Transformation programme was “firmly on track” to deliver on its three key elements:

• building an effective organisation: high quality executives, bringing a wealth of experience, appointed to the Thomas Cook leadership team;
• addressing costs and cash management: on track to execute announced £100m of cost reductions with a further £60m identified;
• profitable growth strategy: undertaken rigorous, and independently verified, market and customer research, to ensure strategy and future resource allocation is based on extensive and fact based information.

Cook said higher gross margins and lower overhead costs were reflected in the Group’s improved underlying operating which saw losses of £70 million compared to £93 million in 2012

It reported lower net debt of £1,559m, which had been reduced by £86m year on year and higher liquidity headroom of £290m, up £72m over the prior year due to improved cash management disciplines

In a statement it said: “Winter and Summer bookings are robust, in-line with expectations as our strategy of improved capacity management results in higher sale prices and improved margins.”

Cook also revealed the completion of the first phase of “one of the largest customer surveys undertaken in the sector” involving nearly 18,000 consumers from the UK, Sweden and Germany. The survey results have been combined with in-house data from Cook’s 23 million annual customers.

“The results, along with a profitability analysis of the industry by internal and external experts, will be used to shape our business model and future strategy, as well as accelerating our web transformation to create a web centre of excellence with channel ownership in each of our market segments,” the group said.

The task of expanding cruising globally

Posted on 6 February, 2013 by Spacejunkie2

The task of expanding cruising globally

By Tom Stieghorst

*Insight The biggest challenge for the cruise industry over the next decade may be the cultural one.

As cruise lines peer into the future, their prospects more than ever depend on countries where cruising is unfamiliar as a vacation option. The good news is that few people outside of North America have been on a cruise, meaning there’s plenty of potential for growth. But in many countries it’s still too early to tell if cruising is going to be a long-term hit with vacationers.

Cruising is largely an Anglo-American vacation. When the number of people who have cruised is measured against total population in various countries, the top four markets are the U.S., the United Kingdom, Australia and Canada. In all of these countries, more than 2% of the population has cruised.

*TomStieghorst Germans also appear to love to cruise. Some of Carnival Corp.’s best performing ships sail for German brands. The number of cruisers from Germany could overtake the total from the U.K. within five years, CLIA President Christine Duffy recently forecast.

Next comes Italy, home to Costa Cruises and MSC Cruises, but it produces only 4% of the world’s passengers, notes a report from Stivel Nicholas analyst Steven Wieczynski. By comparison, according to Stivel Nicholas, Germany accounts for 6% of global passengers, and North America accounts for 75%.

“While passenger counts from the other major European markets, including Italy, Spain and France, continue to grow, overall market penetration remains subdued,” he wrote in a recent report.

In Asia, many Japanese travel abroad, but relatively few go cruising. Although Princess Cruises is taking another stab at developing the market in Japan, some cruise executives say the idea of a cruise hasn’t taken root in that country.At a recent cruise conference in Hong Kong, Carnival Asia CEO Pier Luigi Foschi said the penetration rate for cruises in Japan is 0.08%, compared with about 3.4% in the U.S. In China, it is even lower, at 0.04%.

To their credit, Carnival and other cruise companies are investing significant sums to experiment in Asia to figure out what kind of cruise might appeal to residents there.

The potential for gaining even a small part of the 80 million Chinese who traveled abroad last year is too tempting for the cruise lines to pass up. The challenge will be creating a cruise for the non-Anglo world that translates well into the local vacation culture.