Thomson and First Choice owner Tui Travel reported another year of record results yesterday as its new line of luxury all-inclusive deals kept up demand for package holidays.
Europe’s biggest travel company shrugged off the impact of this summer’s heatwave to post its highest ever earnings across the business and in its UK arm, with underlying pre-tax profits surging 21% to a higher-than-expected £473million in the year to September 30.
But on a bottom-line basis, pre-tax profits fell 10% to £181million as it was hit by write-downs in its embattled French tour operator, which saw annual losses widen to £60million.
Package holiday sales rose 5% in the UK, helped by its focus on more profitable unique holidays targeted at groups, including couples and those looking for luxury resorts, which now account for 83% of all departures.
UK underlying earnings rose by more than a quarter – 27% – to £251million.
Chief executive Peter Long said: “The year has been outstanding and highlights that our strategy of delivering unique holidays sold directly to our customers is the right one.”
Tui said current trading was “robust”, with 60% of its 2013-14 winter holidays already sold, while it added it was pleased with demand for next summer despite strong comparatives.
It has sought to minimise the impact from travel restrictions amid the political unrest in Egypt – traditionally a popular winter destination – by cutting its service to the country, which now accounts for less than 5% of its programme.
Mr Long said holidaymakers were turning increasingly to all-inclusive deals for the “greater certainty” of having everything paid for up front.
The growing popularity of these holidays is also a “win, win” for the firm, he added.
“We are seeing average selling prices increase because they’re spending more of their total spend with us and less in the resort,” he said.
He said Britons were saving up for big annual holidays despite finances remaining stretched, but cautioned over the consumer outlook.
“Clearly the economic recovery is very positive and consumer sentiment has improved. However, we have to be mindful that consumer income is still under pressure,” he said.
The group is expecting first-half losses to widen due to the timing of Easter in 2014, although with this stripped out it expects half-year results to remain in line with a year earlier.