Tui plans to sell specialist unit to focus on mass tourism business

Tui announced plans to sell its specialist group of holiday brands, to invest in future growth opportunities and strengthen its balance sheet.

Travel operator TUI's pre-tax loss narrowed to €319m (£251.3) in the six months ended 31 March (Getty)

Tui, Europe’s largest tour operator, said it will sell its Specialist Group activities as part of a process of focusing on its mainline tourism operations following the disposal of the Hotelbeds Group unit last month.

The Specialist unit comprises more than 50 travel brands, which generated €1.84 billion euros ($2.1 billion) in revenue and €56.2 million in underlying operating profit last year. Tui intends to sell the portfolio, retaining only the Crystal Ski and Thomson Lakes & Mountains businesses, which help fill its UK fleet of aircraft in the winter months.

“There is little vertical integration with the core tourism businesses,” Chief Executive Officer Fritz Joussen said in a statement. “In addition, the potential impact on profitability and the large amount of brands are strong strategic arguments not to combine the portfolio under the TUI brand.”

TUI on April 28 said it agreed to sell its Hotelbeds unit to funds managed by Cinven Ltd. and the Canada Pension Plan Investment Board for €1.19 billion. The sale of the unit, which sells accommodations wholesale to travel agencies, is expected to be completed by the end of September

TUI’s group revenue in the quarter ended March 31 rose 1.1 per cent to €3.29 billion. The seasonal loss, measured as underlying earnings before interest, taxes and amortization before currency fluctuations, narrowed to €131.7 million from 176.7 million a year ago.

© 2016 Bloomberg L.P