Tui Travel’s third quarter trading update this week underlined its clear determination to build on its already strong position in the online travel space in the UK.
As well as reporting that a focus on driving sales for its traditional tour operation online had enabled it to forecast full year results ahead of expectations, it was also bullish about its OTA operation.
Group chief executive Peter Long told investors that he was particularly pleased with Tui’s hotel sales online performance both business to business and business to consumer.
He said the group’s bed bank HotelBeds was now a global platform and was forging Tui’s presence into emerging markets in Asia and South America.
“It is an important profit contributor as we go forward,” he said.
Chief financial officer Will Waggott reported £2 million had been invested in growing its AsiaBeds business.
Long said there were two aspects to Tui’s online performance: “One is business to business, which is performing very strongly driven by demand that we are seeing in emerging markets like south America and Asia where we have seen an overall increase of 11%.
“In the OTA growth has been slightly weaker in the UK which we anticipated. What we are seeing is good growth with Asia but it’s a very small proportion of our business.
“We are not exposed to continental Europe in terms of the OTA model because it is focused on the UK where we have a very strong position and we are a very strong number two and we are building our position in Asia.
“I think the strength of the position of the brand Laterooms in the UK will help this business operate in a more difficult environment.Long referred to this week’s Priceline trading statement which said trading was slowing down to illustrate his point about how tough the market is.
“They [Priceline] are still performing very strongly, but it is going to get tougher for some of the small players.”
Long said the position with the OTA justified a decision taken by him and Waggott nine months ago to focus it on the UK.
Waggott admitted that demand through the OTA in the UK had been weaker than anticipated due to the Olympics but that he expected this to come back.
“A big chunk of the OTA business is in to London and people racked up prices above the roof and no leisure people came here at all. I expect that to come back after the Olympics.”