What does the Tui of the future look like?

Tui’s tardiness in offering dynamic packaging in the UK and its use of budget airlines to enable it has been a drag on earnings. Ebel has vowed to fix this by the summer, with talks with more carriers and hotel brands under way.

“We do not have all low-cost carriers in our market, [but] I’m very pleased the gaps we have will all be closed in due course,” he said, adding: “It’s our clear target to link direct to hotels and airlines.”

Tui’s total global dynamic packaging sales reached 2.5 million in its 2022/23 financial year (to 30 September 2023) – an increase from 1.6 million in 2019. And although it provides no UK figure, Ebel’s admission the UK market started "very late" would appear to suggest sales have been limited.

In the same full-year period, Tui carried 19 million passengers across all its source markets, so there is scope to grow both incrementally and by migrating existing package business once more budget airlines sign up. Tui’s app is a cornerstone of this, and Ebel said app sales were “developing outstandingly well”.

There are other key strands to Tui’s evolution. In January, Tui secured a deal which will see its Musement excursion and experiences brand power easyJet’s new tours and activities platform; easyJet holidays, meanwhile, got into bed with Tui and Musement late last year.

It also expects sales of transfers to increase as it seeks more B2B partnerships, while continuing to sell direct to consumers.

Musement is a small part of Tui’s revenue – €195 million in Q1. When it bought Musement in late 2018, Tui pointed out 90% of such providers – in a global market worth €150 billion – generated annual revenues of less than €1 million, so it is already a giant in this field.

And it will only get bigger once fully digitised in the near 50 countries in which Tui operates – and once a new generation of travellers starts pairing Musement product with Ryanair’s route network.

Tui also wants to grow its hotel business “in the mid-term” and will debut a new upmarket brand, Mora, in Zanzibar this spring. The more in-house products it sells, particularly in the premium bracket, the healthier its bottom line.

Back in the UK, Tui admits it has neglected the grassroots – independent agents – to Jet2’s gain. And while Tui has extended an olive branch to them here with a sizeable new-look trade team, it has gone further elsewhere.

In October, it increased its 50% stake in Vienna-based consortium Travelstar to 100%, paying €2.3 million. Travelstar has 275 Austrian agent partners, describing itself as “a strong roof” for independents.

Under its membership, they receive big brand marketing and sales assistance, but “retain their independence and name” – although under 100% Tui ownership, they are arguably less independent now than before.

It’s far-fetched to think a similar thing could happen in the UK, but if you were looking to increase third-party distribution, a partnership of this nature would make sense.

What’s the betting on the agency sector receiving a Ryanair-style invitation from Tui’s boss?

Gary Noakes is TTG’s senior contributor and analyst.