The leisure travel market has consistently outperformed world output growth over the last decade. This market is also projected to remain very attractive in the future. However, the traditional tour operator and package holiday market remains highly competitive. Online Travel Agencies have started to combine hotel and flight offerings by providing customers with dynamic packaging. In ­addition, airline operators now provide holiday accommodation as an add-on to de-risk their own flight capacity, supported by ­increasingly sourcing hotels directly. Meanwhile it is increasingly likely that there will be new market entrants, for example in the form of global tech companies.

Against this background, TUI has strategically moved away from the traditional tour operator model and developed into an integrated provider of Holiday Experiences. We have invested in our own product offerings, enabling us to create unique holidays for our customers, which is a key differentiation factor from our competitors. A TUI customer could be inspired by TUI, and book with TUI, and then experience a TUI flight, TUI transfer in destination, TUI hotel / cruise and TUI activity, as part of our end to end integrated product offering. This means our customers receive a holistic and seamless experience, while TUI receives more accurate information about what our customers truly want, helping our aim to further facilitate individualised offerings. From an end to end customer journey perspective, around 70 % of our underlying EBITA comes from our own and committed differentiated products.

Holiday Experiences

TUI operates 380 hotels and 16 cruise ships globally through ownership, JVs, management contracts, leases or franchise, and maintains a strong position in the growing tours & activities market with our 150 k excursion and activity offerings. Our differentiated hotel and club brand portfolio, our uniquely positioned German and UK cruise brands, and our global tours, activities and services destination business is well diversified to mitigate content cluster risks.

Our strong and in the future fully digitalised risk management tools within distribution and purchasing, allow us to optimise occupancy and yield. 23 m customers come through our Markets & Airlines, including joint ventures in Canada and Russia, complemented by 4 m customers sold either directly by Holiday Experiences, or via third parties. An optimised and in the future fully dynamic allocation of around 100 m bed nights and approx. € 5 bn third party hotel beds purchasing volume globally, will further contribute to our yield maximisation. As part of our divisional strategy, we continue to invest into the growth and diversification of our hotel and cruise portfolio, leading to a more seasonally robust business mix delivering superior margins. Looking ahead, building a new Southeast Asia hotel cluster is a strategic priority. In addition we have a strong pipeline of new ship deliveries in the coming years.

The global and pre-dominantly offline, fast growing tours and activities market, worth over € 170 bn, is highly fragmented with over 350 k providers and therefore offers a strong growth and consolidation opportunity for TUI Group. TUI Musement is a leading Tours & Activities business that combines a scalable digital platform with local service delivery in more than 140 countries worldwide. Available in all major holiday and city destinations to travelers around the world, including the 28 million annual TUI customers, there are currently more than 160,000 ‘things to do’ – including excursions, activities, tickets and transfers. These are distributed through the Musement and TUI websites and apps, and B2B partners, including the world's leading OTAs, tour operators, cruise lines and travel companies.

Markets & Airlines

TUI operates a customer centric and diversified distribution and fulfillment business across Europe. We combine leveraging our strong market and customer knowledge, driving customer satisfaction and retention, with service and fulfillment. Packaging and purchasing is increasingly driven through our digital platforms and our own airlines, supported by third party flights, facilitate the link between customer demand and our own, as well as third party committed and non-committed hotel and cruise offerings.

Enhancing efficiency by harmonising these regional market organisations, which include our airlines as well, is a key strategic priority.

In addition, we intend to diversify our existing market footprint further. Through our fully digital LTE platform, we are pursuing a low risk entry strategy, simultaneously improving our position to yield our Holiday Experiences’ risk capacity through additional new source market demand.

Group Platforms

Our Group platform initiatives, in particular around IT and digitalised customer relationship management, will enable us to enhance our Group yields further. By individualising our offerings and identifying the next best activity for our customers, enabled by our integrated content management and distribution business model, we enhance customer satisfaction and drive our ancillary yields, a win-win ­opportunity. As an example, our select your room initiative, allows our customers to book their preferred and specific hotel room, which moves our offering from room category pricing to individualised room pricing.

It is the integrated and double diversified nature of our business, which sets us apart from the competition. Our integrated business model proves to be robust, offering flexibility to react to external challenges, either in one of our Markets & Airlines or destinations.