Tui looks to boost online bookings to reduce cost base

Tui Travel is to drive more bookings online in a bid to gain greater control of distribution and cut costs.


Chief executive Peter Long spelt out the plans this morning as Europe’s largest travel group revealed that bookings for this summer were up by between 8% and 16% depending on source market.


Strong demand for “differentiated holidays” – product exclusive to Tui – has seen bookings rise by 26% in the UK, the company said in a trading update ahead of a City investor day.


However, Tui Travel said it remained “cautious given the uncertain economic and geopolitical environment”.


The group revealed plans to make £100 million a year through cost cuts over the next three years, including £40 million from the UK by replacing core reservations systems and simplifying back office processing.


Speaking ahead of quarterly results to the end of December being released on February 3, Long said: “There is a clear trend for our customer to book their holiday online.


“We currently have a leading online presence and plan to expand this highly efficient channel to drive greater control of distribution and reduce costs in our mainstream businesses.”


The company admitted that the snow disruption in December hit winter bookings with reduced footfall in agencies although online sales benefitted from the adverse weather.


Despite this and the cancellation of flights to Tunisia since January 15, cumulative UK winter bookings are up by 3% year on year.


Bookings for this summer are up by 8% from the UK, with those opting for differentiated holidays up by 26%. Differentiated breaks are expected to make up half of all summer holidays sold.


The load factor for summer 2011 is up one percentage point over this time last year to 27% with margins described as being ahead of last year.


“We have increased the flexibility in holiday durations significantly and have experienced strong demand for non-seven and 14-night durations,” the company said.


 

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