Tui Travel profits rise as package holidays make a comeback

Europe’s largest tour operator says Britons are unwilling to give up their holidays despite straitened times

Package holidays are “back in vogue” according to Tui Travel as strong demand boosted underlying profits to record levels.

The company behind the Thomson and First Choice brands said Britons were unwilling to give up their holidays despite straitened times, driving a 21% increase in underlying pre-tax profits to £473m in the year to 30 September. Pre-tax profit fell 9.9% to £181m.

Europe’s largest tour operator said it was benefiting from a focus on its “unique holiday” offers, with value added services and improved flight experience. Demand for such holidays was particularly strong in the UK, where underlying operating profits improved by £54m to £251m, boosting margins by 1.1 percentage points to 6.5%.

Chief executive Peter Long said it had been an “outstanding” year for the group, and told BBC Radio 4’s Today programme it was a sign that package holidays are “back in vogue”.

Tui said winter 2013/14 bookings were in line with expectations, with 60% of the programme sold.

Following unrest in Egypt, the company reduced the number of holidays it offered in the country in response to falling demand. Turkish destinations now account for less than 5% of winter 2013/14 holidays.

The travel company said it was “pleased” with summer 2014 trading despite strong comparatives from the previous year, with around 13% of the programme sold.

Underlying operating profit jumped 20% to a record £589m and the company said it was confident of delivering its target of underlying operating profit growth of between 7% and 10% over the next five years.

Revenue increased by 4% to £15bn over the full year, and the board recommended a dividend of 9.75p a share, taking the total dividend for the year to 13.5p a share, up 15%.

Long said there was “huge demand” for tablet-enabled services from customers. Its digital app was launched during the year in the UK and Germany, receiving almost 200,000 downloads to date.

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