TUI AG has announced its Q1 2024 Interim Report for 1 October 2023 – 31 December 2023.
Interim Management Report
Summary
Record Q1 performance in 2024, delivering highest ever revenues of €4.3bn and positive Q1 underlying EBIT of €6.0m for the first time1. As a result and based on current booking trends, we reconfirm our FY 2024 guidance to increase our underlying EBIT by at least 25%.
- In Q1 2024 we recorded a record Group revenue of €4.3bn1, which was up strongly across all our segments increasing by a total of 15% against the prior year (Q1 2023: €3.8bn). This was driven by higher demand at improved prices and rates.
- We achieved a positive Q1 Group underlying EBIT of €6.0m for the first time1. This was an improvement of €159.0m (Q1 2023: €-153.0m ), highlighting the significant progress we have made across the business and underlining the strategic development of the Group.
- Hotels & Resorts improved on an already strong operational performance in the prior year supported by higher occupancies and increased rates.
- In Cruises, the strong trading environment coupled with the quality of product we offer, drove an increase in occupancy at higher rates, with all three of our cruise brands contributing to the upside.
- With the further expansion of our own differentiated product offering and continued development of the digital platform in TUI Musement, the segment recorded higher year-on-year results for the period.
- Our Markets & Airlines delivered a significantly improved underlying EBIT with Central Region posting a positive first quarter result for the first time1. The segment benefitted from stronger demand at increased prices. In addition, the ability to return to our normal hedging lines provided, as expected, significant upside to the results across the markets.
- During the quarter we welcomed 3.5m customers, 6% more than in the prior year. Average load factor of 86% for Q1 2024 was 1%pt higher than in the prior year.
- We saw a reduction in our net debt year-on-year by €1.3bn to €4.0bn at 31 December 2023 from €5.3bn in the prior year. This improvement was driven by net proceeds (following repayment of the final WSF obligations) from our capital increase in April 2023 and a positive cash flow from operations and lower net investments.
- We saw a further upgrade in our credit rating to B+ with positive outlook by S&P and we have a clear pathway to a rating target of BB/Ba territory.
- In Markets & Airlines the positive booking2 momentum continues for both the Winter 2023/24 and Summer 2024 season on an expanded programme. Average selling price (ASP) continues to hold up well, highlighting the strong demand for our products and the consumers continued willingness to prioritise spend on travel and holidays. Our hedging levels for the coming Summer and Winter seasons are in line with our normal hedging policy.
- Winter 2023/24 bookings continue to be well ahead at +8% against the prior season with ASP higher across our key markets and up +4% overall. To date 87% of the Winter season has been sold which is in line with the prior Winter season. Bookings for Summer 2024 continue to be promising with the usual 32% of the programme sold at the point in time. Bookings are ahead across all our markets and overall, at +8% supported by stronger ASP at +4% against Summer 2023.
- Holiday Experiences trading3 remains well on track to deliver in line with expectations, with bookings in all segments ahead of prior year.
FY 2024 guidance4
Our focus is on operational excellence and execution. Our strategic roadmap, the strong operational recovery and the measures taken to strengthen our balance sheet, lay the foundations for future profitable growth. Our guidance for FY 2024 is provided within the framework of the current macroeconomic as well as geopolitical uncertainties especially in the Middle East. It is based on the strong performance in Q1 and the current positive booking momentum across both seasons, as well as a return to a normal hedging policy. Against this background, we reconfirm our guidance for FY 2024 published in our Annual Report 2023:
- We expect revenue to increase by at least 10% year-on-year
- We expect underlying EBIT to increase by at least 25% year-on-year
Mid-Term Ambitions
We have a clear strategy to accelerate profitable growth by increasing the customer lifetime value, creating a business which is more agile, more cost-efficient and achieving a higher speed to market with the aim to create additional shareholder value. Our mid-term ambitions are as follows:
- Generate underlying EBIT growth of c. 7-10% CAGR
- Target net leverage5 strongly below 1.0x
- Return to a credit rating territory in line with our pre-pandemic rating BB/Ba (S&P/Moody’s)
1 Since the merger of TUI AG and TUI Travel PLC in 2014
2 Bookings up to 4 February 2024 relate to all customers whether risk or non-risk and includes amendments and voucher re-bookings
3 FY 2024 trading data (excluding Blue Diamond in Hotels & Resorts) as of 4 February 2024 compared to 2023 trading data
4 Based on constant currency and within the framework of the macroeconomic and geopolitical uncertainties currently known, including
developments in the Middle East
5 Net leverage ratio defined as net debt (Financial liabilities plus lease liabilities less cash & cash equivalents less other current financial assets)
divided by underlying EBITDA
Sustainability (ESG) as an opportunity1
- As an industry leader, we want to set the standard for sustainability in the market. We believe that sustainable transformation should not be viewed solely as a cost factor, but that sustainability pays off – for society, for the environment, and for economic development.
- We continue to make progress to reduce relative emissions across our business and to achieve our targets. One focus in TUI’s sustainability journey is the measurement of its IT footprint. In January 2024, we announced the measures we are taking to mitigate our tech carbon footprint across our technology infrastructure. We have clear targets to reduce emissions throughout the business from our data centres and the cloud to the environmental footprint of mobiles or electronic screens. To ensure the approach is in line with industry best practices and international standards, an external agency has been commissioned to create a robust methodology. The work we are doing in this area was recognised in January when we were awarded the European SustainableIT Impact Award 2024 as the category winner of ‘Governance’.
1 Further details on our Sustainability Agenda are published in our Annual Report 2023 and also on our website under
www.tuigroup.com/en-en/sustainability (not subject of an auditor’s review)
| TUI Group – financial highlights | |||||||||
| € million | Q1 2024 | Q1 2023 adjusted | Var. % | Var. % at constant currency | |||||
| Revenue | 4,302.5 | 3,750.5 | + 14.7 | + 14.8 | |||||
| Underlying EBIT1 | |||||||||
| Hotels & Resorts | 90.7 | 71.6 | + 26.6 | + 31.7 | |||||
| Cruises | 34.5 | 0.2 | n. a. | n. a. | |||||
| TUI Musement | – 10.7 | – 13.5 | + 20.9 | + 34.1 | |||||
| Holiday Experiences | 114.5 | 58.3 | + 96.3 | + 105.5 | |||||
| Northern Region | – 50.4 | – 122.0 | + 58.6 | + 59.8 | |||||
| Central Region | 1.3 | – 29.0 | n. a. | n. a. | |||||
| Western Region | – 46.6 | – 43.7 | – 6.6 | – 5.1 | |||||
| Markets & Airlines | – 95.7 | – 194.6 | + 50.8 | + 52.2 | |||||
| All other segments | – 12.8 | – 16.7 | + 23.1 | + 22.5 | |||||
| Underlying EBIT1 TUI Group | 6.0 | – 153.0 | n. a. | n. a. | |||||
| TUI Group (at constant currency) | 14.0 | – 153.0 | n. a. | ||||||
| EBIT1 | 0.2 | – 158.7 | n. a. | ||||||
| Underlying EBITDA | 208.5 | 58.3 | + 258.0 | ||||||
| EBITDA2 | 208.0 | 58.0 | + 258.5 | ||||||
| Group loss | – 83.5 | – 231.8 | + 64.0 | ||||||
| Earnings per share3 | € | – 0.24 | – 0.89 | + 73.0 | |||||
| Net capex and investment | 43.9 | 149.0 | – 70.6 | ||||||
| Equity ratio (31 Mar)4 | % | 9.0 | 0.7 | + 8.3 | |||||
| Net debt (31 Dec) | 3,983.3 | 5,259.9 | – 24.3 | ||||||
| Employee (31 Dec) | 52,661 | 49,979 | + 5.4 | ||||||
Due to rounding, some of the figures may not add up precisely to the stated totals, and percentages may not precisely reflect the absolute figures. All change figures refer to the previous year, unless otherwise stated.
1 We define the EBIT in underlying EBIT as earnings before interest, income taxes and result of the measurement of the Group’s interest hedges. For further details please see page 17.
2 EBITDA is defined as earnings before interest, income taxes, goodwill impairment and amortisation and write-ups of other intangible assets, depreciation and write-ups of property, plant and equipment, investments and current assets.
3 Earnings per share were adjusted for the impact of the 10-for-1 reverse stock split in February 2023 as well as the impact of the subscription rights issued in the capital increase on 24 April 2023.
4 Equity divided by balance sheet total in %, variance is given in percentage points.
The present Q1 Interim Financial Report 2024 is based on TUI Group’s reporting structure set out in the Consolidated Financial Statements of TUI AG as at 30 September 2023. See TUI Group Annual Report 2023 from page 28.
Due to the re-segmentation of Future Markets from All other segments to Hotels & Resorts, TUI Musement and Central Region as at 31 March 2023 previous year’s figures have been adjusted.
Trading update Markets & Airlines1 – Positive booking momentum continues for both Winter and Summer seasons with higher ASP highlighting the strong consumer demand for our travel products. Volumes expected to recover to pre-pandemic levels
| Winter 2023/24 vs. Winter 2022/23 | ||
| Variation in % | ||
| Bookings | + 8 | |
| ASP | + 4 | |
- 4.4m bookings have been taken to date, an increase of +8% against the prior Winter season with 1.4m bookings added since our last trading update published on 6 December 2023 on the FY 2023 full-year announcement. As a result, 87% of the overall season has been sold which is in line with prior season.
- ASP is at +4% versus Winter 2022/23 highlighting the resilience of demand for our travel products.
- Short- and medium haul destinations continue to drive bookings, with popular destinations once again proving to be the Canaries, Egypt and Cape Verde.
- Booking across all markets and in particular in our key markets, continue to be well ahead of prior year. With the majority of the Winter season sold across the key markets, bookings in UK are up +10% against Winter 2022/23 with 84% of booking already taken. In Germany, following a strong start to the season, volumes continue to be well ahead +8% against the prior season with 87% of the season sold.
| Summer 2024 vs. Summer 2023 | ||
| Variation in % | ||
| Bookings | + 8 | |
| ASP | + 4 | |
- Current indications for Summer 20242 continue to be promising, with 32% of the programme sold, which is essentially in line with the prior year.
- 5.0m bookings have been taken to date, up +8% on Summer 2023 with all markets ahead of prior year.
- Summer 2024 ASP is +4% ahead, maintaining the level reported in December 2023.
- We have seen stronger demand year-on-year across all our key medium- and short-haul destinations with Spain, Greece and Turkey again proving to be most popular for the summer season.
- In UK, which has been on sale for the longest period, bookings are up +3%, with 41% of the programme sold. In Germany, 32% of the season has been sold. Here, the season has started strongly, with bookings +15% against Summer 2023.
- We continue to monitor developments both in the Middle East and around the Arabian Peninsula. We will retain the option to flexibly adjust capacity from the eastern to western Mediterranean should there be a further escalation of the conflict in this region which has a significant and prolonged effect on customer demand.
1 Bookings up to 4 February 2024 relate to all customers whether risk or non-risk and include amendments and voucher re-bookings.
2 Depending on the source market, Summer season starts in April or May and ends in September, October or November.
Trading update Holiday Experiences1 – Trading remains well on track to deliver in line with expectations
| Trading | Q2 2024 | H2 2024 | ||
| Variation in % versus | ||||
| Hotels & Resorts | ||||
| Available bed nights | + 7 | + 1 | ||
| Occupancy | – 1 | + 1 | ||
| Average daily rate | + 13 | + 12 | ||
| Cruises | ||||
| Available passenger cruise days | 0 | + 9 | ||
| Occupancy | + 5 | + 13 | ||
| Average daily rate | + 18 | – 2 | ||
| TUI Musement | ||||
| Experiences sold | + 12 | + low-double digit | ||
| Transfers | in line with operations and capacity operated by Markets & Airlines | |||
- Hotels & Resorts – Number of available bed nights2 are higher, with Q2 up +7% against the prior year driven by an earlier start to the season. H2 is 1% ahead, in particular for Riu. Booked occupancy3 to date is slightly below prior year for Q2 and ahead for H2 at +1%, underlining the strong demand for our hotel portfolio already witnessed last year. Average daily rates4 are up strongly across our key brands, with overall rates up +13% for Q2 and up +12% for H2. We expect key destinations to be the Canaries, Mexico, the Caribbean and Cape Verde in Q2 with Spain, Greece and Turkey anticipated to be popular for the summer half-year.
- Cruises – Our three brands are set to operate a full fleet of sixteen ships, with Mein Schiff 7 complimenting the TUI Cruises fleet for the Summer season. As a result, available passenger cruise days5 in Q2 2024 are in line with Q2 2023 whilst the additional ship is the key driver of the +9% increased capacity for H2. Booked occupancy6 is up +5% for Q2 and well ahead for H2 at +13%, generated by a more advanced booking curve than at the same stage last year. We expect occupancy levels to normalise over the financial year to levels more in line with pre-pandemic levels. Booked ticket rates7 in Q2 are +18% ahead of Q2 2023, where trading was still recovering post-pandemic. Rates for H2 at -2% are slightly lower in particular due to the changed brand mix, with TUI Cruises adding a new ship to the fleet in June 2024. For the summer season, Mein Schiff, with its fleet of seven ships, will offer itineraries to the Mediterranean, Northern Europe, Baltic Sea and North America, with Hapag-Lloyd’s programme focusing on Europe, North America, Asia as well as voyages to the Artic, based on a fleet of five vessels. Marella, with its fleet of five ships will operate itineraries across the Mediterranean and the Caribbean.
- TUI Musement – In our Tours and Activity business, we will expand our B2C experiences offering as well as B2B business with partners and anticipate a higher volume of transfers and experiences sales driven by our Markets & Airlines business. Bookings continue their positive development, with sales to date for our experiences business, providing excursions, activities and tickets, +12% ahead for Q2 and anticipated to increase lower-double digit in H2 2024. The provision of transfer services and support to our customers in the destination, is projected to develop in line with operations and capacity operated by Markets & Airlines over the remaining booking period.
1 FY 2024 trading data (excluding Blue Diamond in Hotels & Resorts) as of 4 February 2024 compared to 2023 trading data
2 Number of hotel days open multiplied by beds available in the hotel (Group owned and leased hotels)
3 Occupied beds divided by available beds (Group owned and lease hotels)
4 Board and lodging revenue divided by occupied bed nights (Group owned and leased hotels)
5 Number of operating days multiplied by berths available on the operated ships
6 Achieved passenger cruise days divided by available passenger cruise days
7 TUI Cruises: Ticket revenue divided by achieved passenger cruise days. Marella Cruises: Revenue (stay on ship inclusive of transfers, flights and
hotels due to the integrated nature of Marella Cruises) divided by achieved passenger cruise days
Strategic priorities
The TUI Group’s strategy outlined in the Annual Report 20231 will be driven forward in the current financial year.
During the quarter we have made further progress in achieving our strategic transformation. The initiatives include the following:
- We have a strong pipeline of hotels as we aim to grow our hotel portfolio in the mid-term. As part of this growth, we announced in the quarter the first hotel of the fund on Zanzibar under the new brand “The Mora”. The brand adds a new upper market brand to the hotel portfolio by offering laid-back luxury combined with exceptional service. “The Mora Zanzibar” will begin operating from this Spring.
- TUI Musement is one of the largest digital providers of experiences (including excursions, activities and tickets) transfers and multi-day tours. In January 2024, the business announced the expansion of its partnership with easyJet, by making the TUI Musement portfolio of experiences available to customers of easyJet airline. In addition, the business has also relaunched the TUI Musement App, which further enhances the customer experience as well as cross- and upselling.
We also aim to further improve our net leverage, focusing on optimising working capital and cash from operations and maintaining disciplined capital expenditure through asset right and joint venture growth. This will support improving the structure of our balance sheet with the target to bring our net leverage2 down below 1.0x. In this context we will also look to return and debt-finance the remaining KfW Revolving Credit Facility (RCF) in due course.
1 Details on our strategy see TUI Group Annual Report 2023 from page 24
2 Net leverage ratio defined as net debt (Financial liabilities plus lease liabilities less cash & cash equivalents less other current financial assets)
divided by underlying EBITDA
Report on changes in expected development
TUI AG re-confirm all expectations for financial year 2024 set out in the Annual Report 2023.
