Strategy & Forecast
Group Strategy
Becoming a growing, scalable, and global tourism business with ambitious profitability targets by unlocking significant value through the roll-out of the global customer platform and thus capturing the customer lifetime value.
Strategic Priorities
Our business model is focused on integration and differentiation, and we are committed to delivering profitable growth. Our strategy is defined across both our Holiday Experiences and Markets + Airline business divisions. It is embedded onto one central customer ecosystem, underpinned by our Sustainability Agenda and by our people. As well as growing customer volumes, our marketing and distribution strategy focuses on maximising customer life-time value, leveraging the synergies between both of our business divisions, and lowering our cost of distribution. As the basis for this, we will continue to strengthen and leverage the TUI brand in existing and untapped customer segments and broaden our brand image for our growth products (such as cities, tours, accommodation only and experiences). We continue to enhance our app with a focus on native bookflows, targeting further growth in the proportion of digital sales made in-app.
Our Holiday Experiences (Hotels & Resorts, Cruises, TUI Musement) strategy focusses on asset-right, profitable growth in differentiated content, serving global demand. In Hotels & Resorts, product growth is delivered by expanding our portfolio in new and existing destinations. Product growth in Cruises is driven by investment into new-build ships by our TUI Cruises JV, with the launch of Mein Schiff 7 in 2024 and two further launches over the next two years. Further product features have also been added to our Marella Cruises fleet, including new restaurant concepts and cabin refurbishments, and we continue to invest in and execute ESG initiatives in all three fleets in order to deliver our sustainability goals. We believe our differentiation in Cruises is a strong driver of our high rates of customer satisfaction and NPS. We are also continuing to enhance our distribution platform for both TUI Cruises and Marella Cruises. In TUI Musement, we are progressing the platforming and commercialisation of Experiences, Tours, and Transfers. We have a common platform strategy for all three businesses, focused on scalability, digitalisation and dynamic production, enabling profitable growth and global expansion. Own products are a key differentiator and driver of profitable growth.
Our Markets + Airline transformation strategy is focused on strengthening and leveraging our capabilities (including brand and distribution, differentiated and exclusive product, quality, and service) and market positions, with growth delivered from new products and new customers, based on scaleable common platforms. Product growth is based on an expanded offer of accommodation only, flight only and ancillaries, as well as increasing the volume and proportion of dynamic packaging and supply, to deliver choice, flexibility and hence growth, without increasing risk capacity. Customer growth is driven by the increase in choice and flexibility, as we enlarge our appeal across more customer segments, supported by our brand and marketing strategy. In September 2024 we announced the acceleration of our Markets + Airline transformation, to ensure that we deliver our growth targets, through the implementation of a new set-up. This consists of three main focus areas made up of a new operating model for the tour operator, a separate unit for Expansion Businesses and an enlarged commercial function for TUI Airline.
Our employees make a key contribution to TUI’s success. The vision outlined in our People Strategy is to be Digital, Engaging, and Inclusive, creating a framework that enables our employees to deliver their best performance and work together successfully as a team. Our TUI Spirit is driving engagement. This was reflected in our annual global employee engagement survey TUIgether+ this year, which significantly increased by +8 points to a score of 80 out of 100, 6 points higher than the global Glint benchmark. Our commitment to innovation remains strong. We have embraced the use of Artificial Intelligence (AI) within TUI, to foster a culture of growth and development. In FY24 around 30,000 of our employees received Generative AI training empowering them with future-ready skills. We continue to enhance our employer branding initiatives. Our efforts in this field have been recognised through awards in various countries, including the European Excellence Award 2023 in the Employer Branding and Recruiting category. In total, these achievements demonstrate our commitment to ensuring TUI remains an employer of choice and continues to drive innovation.
FY25 Guidance¹
We remain focused on operational excellence, execution, and transformation, and are committed to delivering profitable growth. Our strategic roadmap, the strong operational improvement to date and the measures taken to strengthen our balance sheet, lay the foundations to deliver our targets. Our guidance is based on delivering further sustainable growth in Holiday Experiences and transforming the Markets + Airline business and is supported by our current positive booking momentum. On this basis we are pleased to provide the following guidance for FY25:
- We expect revenue to increase by 5%-10% year-on-year
- We expect underlying EBIT to increase by 7%-10% year-on-year driven in particular by expectations for Summer 2025
Mid-Term Ambitions
We have a clear strategy to accelerate profitable growth by maximising the customer lifetime value and leveraging the synergies between both our business divisions. We are focused on creating a business which is more agile, more cost-efficient and achieving a higher speed to market with the aim to create additional shareholder value. We re-affirm our mid-term ambitions as follows:
- Generate underlying EBIT growth of c. 7-10% CAGR
- Target net leverage2 strongly below 1.0x
- Return to a credit rating territory in line with our pre-pandemic rating BB/Ba (S&P/Moody’s)
Sustainability as opportunity
As an industry leading Group, we want to set the standard for sustainability in the market. We believe that sustainable transformation should not be viewed solely as a cost factor, but that sustainability pays off – for society, for the environment, and for economic development. Our strategy is therefore underpinned by clear science-based goals and targets on sustainability. TUI’s Sustainability Agenda consists of three building blocks ‒ People, Planet and Progress.
We already operate one of Europe’s most carbon-efficient airlines and we aim to continuously improve our environmental performance. We have near-term targets set for airline, cruises, and hotels that are in line with the Paris Agreement goals. These targets were recognised by and developed together with the Science Based Targets initiative (SBTi) and we are committed to implementing these in line with the latest climate science findings. Our ambition is to achieve net-zero emissions across our operations and supply chain by 2050 at the latest and thereby change the way we use natural resources becoming a circular business. Our targets are:
- Reduction of airline CO2e per revenue passenger kilometer by 24% by 20303
- Reduction of absolute CO2e from our own cruise operations by 27.5% by 20303
- Reduction of absolute CO2e from TUI Hotels & Resorts own operations by 46.2% by 20304
2 Net Leverage ratio defined as net debt (financial liabilities plus lease liabilities less cash & cash equivalents less other current financial assets) divided by Underlying EBITDA
3 Baseline 2019. Level of ambition well below 2oC. CO2e = CO2 equivalents. Apart from carbon dioxide (CO2), they include the other five greenhouse gases impacting the climate as listed in the Kyoto Protocol: methane (CH4), nitrous oxide (N2O), hydro-fluorocarbons (HFCs), perfluorocarbons (PFCs) and Sulphur hexafluoride (SF6)
4 Baseline 2019. Level of ambition 1.5oC