Presenting its half-year results and current trading figures yesterday (May 11), Europe’s largest tourism group also announced that it will sell off its Specialist Division and will acquire the French subsidiary of Canada’s Transat Group to become market leader in the country.

TUI’s overall summer 2016 bookings are up by 1% (as of May 1, 2016) while revenues are 2% higher thanks to a slight 1% rise in the average selling price (ASP). In terms of destinations, the German group said that while “customers show restraint in bookings to Turkey, destinations in the Western Mediterranean and long-haul bookings delivered a strong performance”. The drop in Turkey sales was not disclosed but overall bookings excluding Turkey are up 8%.

The company’s summer 2016 sales growth is being driven by the strong UK market where customer numbers and revenues are both up by 7% and 65% of the programme has been sold, with particularly strong demand for Spain, Greece and Cyprus.

In contrast, Germany, where about 60% of the summer programme has been sold, has a 3% drop in customer numbers and a 1% rise in ASP, resulting in an overall 2% fall in revenues for summer 2016. “This is again driven by Turkey, which accounted for nearly 20% of German customers in Summer 2015,” TUI commented in its half-year report. “Bookings to destinations outside Turkey are up 5%, with increased demand for destinations across Spain as well as an increase in long haul package bookings, with Mexico, Dominican Republic and Cuba proving popular. In the wider context, we continue to experience pressure on margins as a result of the continued third party overcapacity to sun and beach destinations.”

Elsewhere, customer numbers are down by 9% in the Nordics, resulting in a 4% drop in revenues, and only 54% of the programme has been sold. Lower Turkey bookings are having a big impact, while excluding Turkey, bookings are up 12%, with growth driven by the Balearics, Canaries, Greece and Cyprus. The Western Region has a slight 1% drop in revenues and flat customer numbers, with a positive performance in the Netherlands but lower sales in Belgium.

TUI also released good results for the six months ending March 31, 2016. The underlying seasonal operating loss was reduced by 16.3% to €236.9 million while turnover increased by 2.7% to €6.8 billion. The Northern Region (UK & Ireland, Nordics, Canada, Russia) had stable seasonal losses of €110 million but losses in the Central Region (Germany, Austria, Switzerland, Poland) deepened to €110 million from €94 million last year due to “very challenging trading conditions” in Germany. The Hotels & Resorts division increased underlying profits to nearly €84 million and the Cruises division more than doubled profits to €40 million.

CEO Fritz Joussen commented: “Undoubtedly, we operated in a challenging market environment in the first half of the year. Nevertheless, we managed to deliver continued turnover and earnings growth. Our integrated business model and the strong focus on our hotel and cruise content have proven to be the right strategy and have made us resilient.” Joussen stressed that TUI remained focused on delivering its growth strategy and alignment as a vertically integrated tourism group.

In France, TUI has agreed to acquire Transat’s French tour operating business to strengthen its market position. By acquiring fourth-placed Transat, TUI will rise from second to first place with 21% of the French market ahead of Fram and Club Med. “Due to the acquisition, TUI France is not only expected to achieve sound profitability but also to become the market leader in France. The combination of wider product choice and higher flexibility will also enhance the customer experience,” the company explained.

Meanwhile, following the €1.2 billion disposal of the Hotelbeds Group, TUI now plans to sell the ‘Specialist Group’, comprising mostly British, American and Australian specialist travel companies. The group will be sold in one transaction except for two brands, Crystal Ski and Thomson Lakes & Mountains, which are important winter air capacity users and will be integrated into the UK & Ireland business.

Joussen explained: “The Specialist Group is a great collection of more than 50 brands and successful companies. However, there is little vertical integration with the core Tourism businesses. In addition, the potential impact on profitability and the large amount of brands are strong strategic arguments not to combine the portfolio under the TUI brand. Therefore, we believe that a disposal of Specialist Group in one transaction is the best way to maximise value from these businesses for TUI’s shareholders. It will also enable us to quickly focus on the strategic imperatives outlined and strengthen TUI and its international competitiveness.”