TUI Germany

Massive hotel expansion and cheaper prices for next summer

TUI Germany CEO Sebastian Ebel
TUI Group
TUI Germany CEO Sebastian Ebel

TUI is embarking on its new strategy of winning back German market share with a massive expansion of its hotel programme and price reductions for next summer.

Under new Germany chief Sebastian Ebel, the market leader aims to increase its market share, which has declined in recent years, by about five percentage points to 25% by 2020 as well as to increase revenues, improve profits and raise customer satisfaction. This week he kicked off the new strategy by unveiling the summer 2016 programme with a range of measures, including a major expansion of hotel capacity, selected price reductions and a more focused flight schedule for TUIfly.

TUI has added 3,500 new hotels for summer 2016 both in short/medium-haul and long-haul destinations. There are 1,400 new hotels on offer in the Mediterranean and on the Canary Islands, which is a 24% rise in the total number, and 1,700 more hotels in overseas destinations, which is 20% more than this summer. In addition, there is a 10% increase in the number of hotels in self-drive destinations such as Italy and Croatia while the number of city hotels will triple to 10,000 by using third-party bed-banks. The number of adults-only hotels has been increased to 250 properties in major destinations.

One key move is to expand the number of non-exclusive hotels that competitors also offer in order to win back customers who prefer to book the same hotel rather than stay loyal to TUI with a different hotel. “We listen very carefully to our customers and their wishes, and are restoring popular and strongly demanded hotels to our programme,” Ebel explained. TUI had dropped many such hotels under the former strategy of focusing more strongly on exclusive hotels.

At the same time, TUI is continuing to expand its range of own-brand hotels. There will be 34 more exclusive hotels, including 16 more Sensimar properties for couples and three modernised Riu hotels. The new international ‘Family Life’ concept hotels will launch with nine properties (Balearics, Canaries, Greece) and the first two TUI Blue lifestyle hotels will open in Turkey.

In addition, TUI is returning to various small destinations. In Greece, where overall capacity is up by 30%, the tour operator is offering Samos, Karpathos and Zakynthos once again. Capacity will also be expanded significantly for the Canary Islands. For long-haul destinations, TUI will continue its partnerships with Eurowings and Emirates.

Budget brand 1-2-Fly is also expanding its portfolio substantially with 1,100 more hotels, including several Suneo Clubs, while premium brand Airtours has 100 new hotels.

TUI’s prices will drop by about 2-3% on average, although this figure includes early booking discounts. Describing the pricing as ‘market-oriented’, Ebel said the reduction resulted from ‘flight over-capacity’ and lower jet fuel costs. Majorca, the Canary Islands and Turkey will be slightly cheaper while Greece prices will remain stable despite the VAT increase for holiday islands. Some long-haul destinations will be more expensive due to the strong US dollar.

However, TUI made only general comments about current booking trends, saying that most destinations are selling well with the exception of Tunisia where bookings have slumped. Premium brand Airtours has a double-digit rise in winter bookings after “good growth” in 2014/15.

Meanwhile, in-house carrier TUIfly will operate from fewer airports next summer to improve efficiency and reduce costs. The base airports, where 22 of the 27 planes are stationed, are Hanover, Frankfurt, Stuttgart, Munich and Düsseldorf, while there will also be flights from secondary airports Basel, Karlsruhe, Cologne and Saarbrücken. TUIfly will drop flights from Hamburg and also downscale at Berlin-Tegel, Nuremberg and Vienna.