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Home Banking TUI – consumers continue to prioritise travel

TUI – consumers continue to prioritise travel

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  • TUI’s first quarter revenue rose 15% to €4.3bn
  • Forward bookings strong, full year guidance in tact, including underlying operating profit growth of 25%
  • Efforts to expand upper-market hotel brands underway

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown:

“TUI has reported record sales as resilient consumers take to the air. Cost of living pressures and economic uncertainty aren’t stopping us from making our sunny getaways. A lot of the operational work TUI has done means it’s in a better position to capture this demand. Efforts to expand higher-end offerings in its hotel portfolio is a shrewd move and could help it remain competitive if lower earners start to pull back on booking holidays. 

TUI operates a hefty cruise business too, and the cash flow dynamics of operating enormous ships makes it more exposed if and when holiday spending starts to wane. So while the group’s done pretty much everything it can within its control, there remains an element of uncertainty. Unlike airlines with short-haul focus, a lot of TUI’s routes fall into the more expensive medium-haul bucket, further increasing risk.

There are questions swirling about TUI’s potential decision to drop its London listing. The added complexity and cost of maintaining dual listings since Brexit has seen others decide to go down a similar route. While it does little to change the business case, the optics for London are less than ideal.”

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