TUI Travel profits rise driven by all-inclusive package holidays

Leisure giant TUI Travel, owner of the Thomson and First Choice holiday brands, posted record profits last year as more Brits opted for its all-inclusive package holidays. (GETTY IMAGES)

Leisure giant TUI Travel, owner of the Thomson and First Choice holiday brands, posted record profits last year as more Brits opted for its all-inclusive package holidays.

“We are very mindful of the pressure that consumers are under under at the moment, especially when it comes to discretionary spending,” said chief executive Peter Long.

“But with a customer base of more than 20 million we can negotiate deals which mean we can offer great value. Particularly popular are all-inclusive deals where people know that they have nothing extra to spend once they get on the plane.”

Long also said the unusually warm summer in Britain had not hit TUI’s sales, with 94 per cent of Thomson customers now opting for “unique” holidays not sold by its rivals.

Around half of those are in its luxury resort villages like Sensatori and SplashWorld.

TUI’s pre-tax profits for the year to September jumped 21 per cent to £473 million on revenues up by 4 per cent at £15 billion. The dividend for the year goes up 15 per cent to 13.5p a share.

Bookings for this winter have been knocked by continuing political unrest in Egypt even though the main Red Sea resorts are unaffected.

Overall customer numbers are down 8 per cent and even excluding Egypt they are 4 per cent lower.

Early signs for summer 2014 are fairly good. TUI is holding capacity at 2103 levels but said it would have the flexibility to increase that if demand was stronger.

TUI was the first tour operator to take delivery of Boeing Dreamliners, pictured, for its fleet and now flies them to the Caribbean, Mexico, Florida and Thailand.

Long said: “We are really pleased.We have had no operational issues. Customer satisfaction is fantastic because they get off the plane with less jet-lag. And we are seeing 20 per cent savings on our fuel bills.”

TUI shares fell 4p to 380p on profit taking. Broker Panmure Gordon, which has a 475p target price, says the shares could be rerated given the company looks like making double-digit returns going forward.