TUI: Germans are travelling once again / Five-percent growth expected TUI continues to pursue its price strategy in the summer: holidays will be 8.5 percent less expensive / Quality campaign announced / Moderate reductions in capacity

Hanover/Novo Sancti Petri, November 6, 2003

The Germans seem to have rediscovered their keenness to go on holiday. TUI, Germany's No. 1 tour operator, has gone into the 2003/2004 winter season with considerable increase in the number of guests as well as booked turnover. And the market leader from Hannover is expecting further growth for the 2004 summer season. “With the new price strategy we launched in the winter, we were right on target with what the holidaymakers want and were able to motivate many Germans to book their holidays early,” said Dr Volker Böttcher, chairman of the TUI Deutschland GmbH Board during the presentation of the TUI summer brochures for the 2004 season in Novo Sancti Petri on the Costa de la Luz. The number of guests travelling with TUI's German tour operator brands is currently 15 percent above last year's figures; sales have risen by five percent. Bookings for the winter season have also got off to a good start in the other European source markets of the TUI Group. In the TUI Group as a whole, sales are currently 5.6 percent above last year with number of guests up 6.2 percent against last year.

Price reductions and capacity cuts in the summer of 2004
TUI announced a further drop in holiday prices for the upcoming summer season. Böttcher commented: “We are consistently pursuing our price strategy of lowering brochure prices and early-booking rewards for all sun-and-beach holidays.” According to this plan, TUI holidays in the summer of 2004 will cost an average of 8.5 percent less across all the offers compared to last summer. If we look at the individual holiday destinations, travelling gets even more attractive. Prices in Egypt, for example, will sink by 13 percent, in Mexico by 14 percent and in Thailand by twelve percent. On Majorca, holidays will be ten percent cheaper on average, seven percent less expensive on the Canary Islands and down six percent on Cyprus and in the Dominican Republic. Prices for holidays in boom destination Bulgaria will remain stable. Car trips to Austria and in Germany will increase in price in line with the rate of inflation. According to the information provided by the head of TUI Deutschland, these price reductions do not mean that the profit margins will decrease for the tour operators. The drop in prices will become possible as a result of internal cost-savings measures, prices concessions made by hotel managers and advantages stemming from foreign currency exchange rates. With this strategy, which TUI already introduced in the winter season, the company hopes to curb the trend towards short-term booking. “We won't be able to convince customers to book early unless we reward the early bookers with attractive prices at the beginning of the season, while checking the number of discount offers that become available at the same time,” said Böttcher. He announced that, consequently, the travel offers for the upcoming summer would be reduced slightly. TUI plans to decrease flight capacities by approximately five percent and the number of hotels offered by about 20 percent.

“Tri Q” quality campaign
TUI is now starting a quality campaign entitled “Tri Q”, which will, among other things, consist of new, innovative products, rigorous quality controls and a quality report. “Tri Q” stands for quality assurance, quality innovation and quality control. “A sensible pricing policy alone is not enough to stay on top. Only the combination of an attractive price and good product quality will finally determine which tour operator customers will prefer,” commented Böttcher. Quality is one of TUI's original specialities. A quality assurance programme covering all steps of the value chain of a package tour has been designed to secure existing and improve future quality standards. In addition, TUI plans to publish its quality index in an annual quality report in the future.

Outlook for the summer of 2004
Germany's leading tour operator is expecting moderate growth for the 2004 summer season. According to the estimation of TUI Deutschland executive director Böttcher, the tour operator market is likely to grow by between three and four percent in sales. “With a growth rate of five percent next summer, we want to expand and reinforce our position as the market leader,” said Böttcher. However, stable economic and geopolitical conditions are prerequisite to any growth in this industry. Nevertheless, Böttcher is confident that, with the help of the TUI price strategy, it will be possible to curb the trend towards short-term holiday booking in the not-too-distant future.

2002/2003 tourism year in review
According to TUI, the 2002/2003 tourism year was an exceptionally difficult year for the entire industry. In spite of this, however, TUI and its German tour operator brands were able to successfully defend their position of leadership on the market. The German TUI tour operators closed the 2003 summer season with a decrease in sales of 8.9 percent. Actual guest figures in the summer of 2003, however, were only slightly lower year on year, with a minus of 3.2 percent. A weakening economy, people fearful of losing their jobs reluctant to spend money, the war in Iraq and SARS all played a part in quelling Germans' desire to go on holiday. The losers of the 2003 summer season were definitely the countries in the eastern Mediterranean and in North Africa, who were unable to recover from the negative effects of the war in Iraq despite their race to make up for it at the end of the period. The winners of the 2003 holiday summer season included the Dominican Republic with an increase in sales of 8.8 percent and Bulgaria once again, with sales growing by 9.8 percent. Sales of car trips in Germany and city tours were also up once again by a single-digit percentage figure. Judged by the importance of the destination, Spain was the hands-down winner of the past summer season. TUI recorded sales increases on the Canary Islands as well as on the Spanish mainland. “But there can be no question that the real winner of the summer for us was Majorca,” said Böttcher. Although the queen of the Mediterranean lagged behind with about 4.2 percent fewer sales, Majorca recorded a noticeable increase in visitor numbers for the first time in two years (10.8 percent).


For further information please contact:
Björn Beroleit, phone +49 511 566-1310
Nicola Gehrt, phone +49 511 566-1435