The first step on a journey is likely to begin with TUI Travel. The group is the #1 or #2 source for leisure tour and travel services in many markets, as well as Europe's largest provider of online package holidays. It also distributes accommodations through international online wholesalers and its online travel agent in the UK, and increasingly Asia and Australia. TUI Travel runs some 3,500 retail travel stores across Europe, and operates with a fleet of 145 airplanes. In all, the group does business under some 200 name brands serving millions of consumers worldwide. TUI Travel formed from the 2007 merger of TUI AG's travel business with Britain's First Choice Holidays. TUI AG controls about 55% of TUI Travel.
The group operates through four business segments. Mainstream holidays, the largest segment, comprise tours and airline flights based in three regions: "Northern" (the UK, Ireland, Nordic countries, and Canada), Central Europe, and Western Europe. TUI Travel's Specialist and Activity travel segment steers adventure, education, and marine activities, along with a North American specialist, sport, and holiday group. An Accommodation and Destinations segment serves tour operators and travel agents, corporate clients, and individual travelers through four services: accommodation wholesale, accommodation online travel agent, destination services, and cruise handling. Recently launched, an Emerging Markets segment combines travel services with a presence in Russia and the Ukraine, and increasingly Brazil, India, and China.
TUI Travel's operations are located in 31 national markets. It sells name brand services established across 180 countries. Europe generates about 95% of sales, of which the UK accounts for nearly one-third.
Along with the rest of the tourism industry, TUI Travel has faced a difficult few years as the geopolitical and economic landscape crumbled. The group managed in 2011 to regain profitability and approach its 2006 earnings record following three years of operating in the red. Underlying operating profit jumped 18% in 2011 over the prior year and cash generated from operations gained momentum. Results reflect a modest increase in sales, led by the UK, after a two-year slump. Several national markets, the UK and Nordic region, Belgium, the Netherlands, Austria, and Canada, reached record profits, buoyed by cost cuts and streamlined operations. Growth was offset by weak to late consumer spending, but most especially by a crisis in North Africa; TUI Travel was forced to move travel to Egypt and Tunisia -- destinations that its French tour operators depend upon -- to other locations, such as Spain, Greece, and Turkey. The group also took a financial hit from such disasters as the earthquake and tsunami in Japan (2011), and volcanic ash clouds that closed much of European airspace for a period in 2010. The ensuing costs widened with merger related expenses attributable to the UK businesses and former TUI businesses based in Europe, charged off as separately disclosed items in 2010 and less so in 2011.
TUI Travel's plans for growth focus on expanding its portfolio of diverse and exclusive travel offerings in multiple market segments. Its strategy includes tightening control of distribution with a concentration online, a course intended to improve customer access and shave distribution costs. It is further developing its numerous existing brands: TUI (German tour operator), Moorings (yacht business), and Quark (cruises to the Polar Regions). Acquisitions are on its strategic map, too. TUI Travel in mid-2011 acquired six operating companies that lease and manage more than a dozen Magic Life holiday clubs in Turkey, Tunisia, Egypt, Greece, and Spain, from TUI AG for a nominal sum, as the clubs are operating at a loss. The all-inclusive, mid-priced Magic Life clubs cater to the Austrian and German markets, which generate more than one-quarter of the group's sales. – less