TUI Group sets out roadmap for growth – Focus on TUI master brand

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  • Underlying EBITA CAGR is expected to grow by at least 10 per cent over next three years(1)
  • Profitable top line growth of at least 3 per cent per annum over next three years
  • Focus on TUI master brand / Rebranding to be launched in the Netherlands from the autumn of 2015
  • Digitisation: Entry into new markets with innovative IT – first pilot successfully started in Spain
  • Growth drivers Hotels & Resorts to be expanded / Hotel brands to be streamlined with hotel brand TUI Blue
  • Cruises on a successful path – Fleet to be successively expanded in the next few years
  • Other businesses: Hotelbeds Group and Specialist Group to be run independently from Tourism
  • Setting tomorrow’s travel trends as an integrated provider
 Nearly five months after the successful merger between TUI AG and TUI Travel PLC, the TUI Group presented an update about the integration and the Group’s strategy. In the framework of a Capital Markets Day held in London, the Executive Board of the TUI Group presented clear strategic milestones to be achieved by 2018, aimed at increasing the efficiency and agility of the Group and accelerating its profitable growth. The Group is aiming to grow faster than the market. Fritz Joussen and Peter Long, Joint CEOs of the TUI Group: “The integration process is ahead of our original plan. The strategy we have presented will help us strengthen TUI as the world’s leading tourism group. We are in an excellent position: We do not just act as travel agents; TUI actually owns more than 300 hotels, cruises and an aircraft fleet of around 140 planes. This differentiates us from our competition. We will therefore be able to shape market entry into new destinations ourselves, setting travel trends for the future.” TUI has created a new, flat organisational structure introduced a mid-term strategic agenda to investors.

Growth roadmap set until 2018
The TUI Group’s Executive Board has confirmed the goal of ensuring that the Group will achieve profitable growth and grow faster than the market in the next few years. The Group expects to achieve average annual profitable top line growth of at least three per cent* per annum by 2018. Moreover, its underlying operating result is expected to grow by at least ten per cent** per annum within the same period.

In order to achieve these goals, a number of measures will be launched. In the Central Region (Germany, Austria, Switzerland, Poland) and Western Region (Netherlands, Belgium, France), the proportion of online sales is expected to increase substantially, strengthening direct distribution. Moreover, the offering will be expanded in order to win additional customers. At the same time, longhaul flight capacity will also be increased, including third-party flying. Overall, TUI‘s travel offering is to be more tailor-made and offer more flexible durations.

The Group has identified further growth potential through the internationalisation of TUI’s own strong hotel brands and exclusive hotel concepts such as Robinson. In addition, new, exclusive hotel projects are to be developed and operated in prime locations. This approach will also strengthen TUI Group’s crucial competitive advantage: There is no other tourism group in the world that owns a hotel and cruise portfolio of this scope and is capable of designing an end-to-end travel experience for customers based on its own aircraft fleet. Through its investments, TUI shapes the future world of travel and tomorrow’s travel trends.

Online platform in Spain: Successful launch of pilot
Additional turnover growth is also to be achieved by opening up new markets. In February 2015, the TUI Group launched the online platform tui.com/es in Spain for the dynamic packaging of flights, hotels and transfers.

The platform enables the Group to win additional customers and generate further growth – even in markets in which the Group has not established an in-house travel agency and tour operator business. “This is a very innovative and efficient investment in IT. It offers our customers ease of use, individual options for choice and packaging of holidays and constitutes a further step on the way to the online world,” said CEO Joussen. Such platforms are to be rolled out to other countries such as Portugal, Brazil and Turkey.

TUI to be global master brand*** / Rebranding in markets abroad to be launched in the Netherlands in the autumn of 2015  
Fritz Joussen, Joint CEO of the TUI Group: “We seek to use the strength of our TUI brand on a global scale. A global brand experience and a global brand identity offer many advantages for our customers and for our employees. The appeal of TUI and the Smile are extremely high. A strong global presence of the TUI brand will strengthen our Group’s competitiveness in the digital age.” The Group is planning to carry out the brand migration process in two phases. The companies in the Netherlands, France and Belgium are to play a pioneering role in launching the TUI brand in their markets. The Netherlands are to introduce the brand in the autumn of this year. Other markets are to follow suit.

The TUI Group is also planning to use one single branding for its airlines. TUI currently operates around 140 medium- and long-haul aircraft in various markets under different brand names (TUIfly, Thomsonfly, Arkefly, Jetairfly, TUIfly Nordic). A strong one-brand policy will make it considerably easier to use the aircraft of the European fleet and the crews across the individual countries, as demand requires it. The resulting increase in the effectiveness of TUI airlines is to enable TUI to deliver operational efficiency improvements worth 50 million euros per annum by 2018.

Growth drivers Hotels & Resorts to be further expanded / Streamlining of hotel brands with hotel brand TUI Blue
The TUI Group is planning to make further investments in the growth areas Hotels & Resorts and Cruises in the next few years. The hotel portfolio is to be expanded by around 60 new TUI hotels by financial year 2018/19. The core brands will be RIU, Robinson, Magic Life and the new hotel brand TUI Blue. The offering will be rounded off by the three hotel concepts Sensatori, Sensimar and Family Life. The hotel brands and hotel concepts differ in that the brands will be managed by TUI as hotel operator, while the hotel concepts may also be taken over by other hotel operators for their facilities.

Cruises on a successful path  – Fleet to be successively expanded in the next few years
The cruise fleet, which currently comprises 13 ships, will also be expanded in the next few years. Last week, Mein Schiff 4 was delivered for operation by the joint venture TUI Cruises. The new ship will depart on its maiden voyage in June. In the next two years, Mein Schiff 5 and Mein Schiff 6 will follow. The Group also has options for the construction of Mein Schiff 7 and Mein Schiff 8. With the acquisition of the Splendour of the Seas a few weeks ago, the TUI Group also initiated the rejuvenation and modernisation programme for the fleet operated by its UK subsidiary Thomson Cruises. It intends to continue the programme in future.

The team at Hapag-Lloyd Kreuzfahrten has managed to get the economic performance of the company, which operates the world’s two best cruise ships, back on track. The successful realignment was supported through the acquisition of Europa 2. The luxury segment is now excellently positioned in the market. The Executive Board of the TUI Group will also examine in detail where closer cooperation between the three companies can be achieved in the cruise business in order to deliver synergies.

The Executive Board has developed a very clear expansion plan for Hotels & Resorts and Cruises for the next few years in order to significantly increase its profitability.

Other businesses: Hotelbeds Group and Specialist Group continue to be run independently
Following the introduction of a new operational structure with three integrated regions and the decision to give up the designation “Mainstream”, other activities and businesses will no longer be designated as “Non-Mainstream”, either. These businesses, which include the Hotelbeds Group and Specialist Group, will instead be called “Other businesses”.  As already decided in the framework of the merger, these operations are run independently from other activities in order to maximise their value.

* based on constant currency
** CAGR
*** The implementation takes place with respect for all interests of third parties and existing contractual obligations

Hanover/London, 13 May 2015

 

Full integration of tour operating, hotel and cruise ship operations to be implemented: TUI Group will become more agile and competitive

  • Deputy CEO Johan Lundgren will be leaving TUI Group
  • Focus on growing the company
  • Flatter hierarchy, closer to its operational business in the markets
  • Business operations will be grouped into three regions
  • David Burling will join the Executive Board

Following the successful completion of the merger of TUI AG and former TUI Travel PLC integration of the two businesses is progressing faster than originally envisaged. To capitalise on this the Executive Board will be accelerating the creation of a simplified organisational structure reflecting the Group’s focus on an integrated tourism business with clear accountabilities across the Group. The full integration of tour operating and own hotel and cruise ship operations will be implemented, creating a flatter hierarchy and allowing the company to be closer to its operational business in the markets. This new structure will bring the areas of tour operating, hotels and cruises under one organization and result in a number of changes in roles and responsibilities.

Johan Lundgren, Deputy Chief Executive and Managing Director Mainstream Markets, having been fully involved in the design and supportive of the new structure has taken the decision that he does not want to take up a role within it. He believes that now is the appropriate time to step down from the Executive Board and leave the Group, which he will do effective as of 31 May, 2015.

Business operations will be grouped into three regions in future.

Northern Region
David Burling, today Managing Director TUI UK & Ireland and Member of the Group Executive Committee, will join the Executive Board with effect from 1 June, 2015. He will get overall responsibility for the UK & Ireland, Nordics (Sweden, Norway, Finland, Denmark), Canada and Russia, as well as the Group Divisions for Product & Purchasing and Aviation Platforms. Following the promotion of David Burling, Nick Longman, currently Mainstream Distribution & Online Director, is appointed Managing Director TUI UK & Ireland. His current team will move into Group Marketing.

Central Region
Sebastian Ebel’s executive responsibilities will be extended. The management team of the Central Region (TUI Deutschland GmbH) with businesses in Germany, Austria, Switzerland and Poland and the new unit TUI Destination Services based on Mallorca will report into him. As in the past he will also be responsible for Hotels and Resorts, Cruise Ship Companies and IT.

Western Region
Elie Bruyninckx will join the Group Executive Committee as a new member overseeing the Western Region. He will take on additional overall responsibility for France as well as his current responsibility for TUI Benelux with Belgium and the Netherlands.

Prof. Dr. Klaus Mangold, Chairman of the Supervisory Board of TUI Group:
The integration is progressing very well. That’s why we are able to bring these formerly separately managed business areas under one organizational umbrella earlier than envisaged. We’re keeping the promises we made at the time of the merger and we are now implementing them ahead of schedule. TUI is going to be a fully integrated tourism business. The supervisory board hopes that the new organization structure will further strengthen TUI and its international competitiveness. I’d like to thank Johan Lundgren most sincerely for his services to TUI. He made a decisive contribution to the success of the former TUI Travel and he has supported the merger. The TUI supervisory board and I wish him all the best for his personal and professional future.”

Fritz Joussen, Joint-CEO of TUI Group:
TUI is the world’s leading tourism business. On one hand we have global scale in brand, airlines, hotels and cruises on the other hand we hold market leading positions in all of our source markets. Now it will be essential to act on both global scale and local leadership. The new setup will reduce layers and make our company more agile and competitive. This will be the essential to stay ahead. We achieved the implementation of our integrated organization earlier then we had envisaged when we completed the transaction. Now we will focus on growing the company, improving our competitiveness, cost position and profitability. I want to welcome David Burling on the Executive Board and Elie Bruyninckx on the Group Executive Committee and wish them all success. I also want to thank Johan Lundgren for playing a crucial role in setting up the merger in 2014 and for his contribution leading the new TUI Group to a successful start. I wish him all the best.

Peter Long, Joint-CEO of TUI Group and former Chief Executive of TUI Travel:
I am very sad that Johan has decided that he now wishes to leave the business to pursue new challenges outside the Group and I wish him every success for the future. He has been a key executive both within TUI Travel and more recently the TUI Group. With a keen focus on delivering operational effectiveness and consistent profit improvement as a Managing Director for the Mainstream Sector and Deputy Chief Executive of TUI Travel he successfully established a clear strategic framework for the Sector. As a result, between 2011 and 2014, profitability increased by some 48% from £ 370 million to £ 546 million. Johan is one of the most capable tour operators that I have had the pleasure of working with during my long career in leisure travel. He has accumulated close to 30 years of experience in the dynamic industry in which we operate and is truly an international businessman. His understanding of the importance of continuously evolving our product, giving our customers something they can only get from us, putting them at the heart of what we do, embracing technology to help deliver a superior customer experience, very effectively leading his team and delivering increased profitability are all things of which he can be justifiably proud. It is testament to our business that we have the strength and depth in our management team that we can so effectively promote from within to ensure that what we have achieved to date will continue after Johan’s departure.”

Johan Lundgren, Deputy Chief Executive of TUI Group:
I have thoroughly enjoyed my time with TUI and I am very proud of what we have achieved. I have relished the roles I have taken, playing a part in growing the business and delivering value to all stakeholders. This has been a very difficult decision for me to make but I am firmly of the opinion that now is the right time to leave the company and pursue my next opportunity outside the world of TUI. I’d like to thank our chairman Professor Mangold, the members of the supervisory board and my colleagues on the Group Executive Committee for respecting my decision. I wish them all the best.”

Hanover, 12 May 2015

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