Tour operator TUI to counteract late booking trend with new price strategy Winter 2003/2004 prices cut 11.5 per cent on average / Early booking discounts for all beach hotels / TUI Stars brochure expanded further / New golf brochure

Hanover, July 28, 2003

TUI, Germany's leading tour operator, launches new price strategy to encourage German travellers to book early again - to counteract the increasing trend of booking late in the hope of snapping up a bargain holiday. As announced at today's presentation of the new winter 2003/2004 brochures by Volker Böttcher, the chief executive of TUI Deutschland, TUI has cut prices in its brochures by an average of 11.5 per cent. On the other side of the coin, TUI plans to largely dispense with major price promotions during the course of a season. Böttcher clearly spelled out that they would "reduce the supply of holidays" and remove capacity from the market, rather than slash the prices of their own quality products.

2003 a one-off
TUI Deutschland CEO described 2003 as a "one-off". The Iraq War, the SARS lung infection, and particularly the continuing poor state of the economy, caused the sector considerable problems. But Böttcher was optimistic that: "We are off the bottom and things are picking up again." TUI Deutschland's booking trend has been on the positive side for over ten weeks now. Sales for the summer season are currently around 10.8 per cent down year-on-year. But despite the continuing good demand, Böttcher emphasised that it will not be possible to completely claw back the deficit. Business in most other European source markets is much better than in Germany: tourism turnover across the TUI Group (TUI AG) is down by 7.3 per cent.

The deficit in the ongoing summer season is particularly large in holiday destinations in North Africa and the eastern Mediterranean. The latest figures for the areas with the worst reduction in turnover reveal the following picture: Tunisia (-35 per cent), Turkey (-25 per cent), Egypt (-15 per cent) and Asia (-39 per cent). Majorca, the largest single destination, is again enjoying an upswing: although turnover is still slightly down year-on-year (-6 per cent), the number of tourists has already increased. Despite the difficulties faced by the market, destinations currently enjoying a nice growth in turnover include Bulgaria (+17 per cent), USA (+22 per cent), Cuba (+35 per cent), Dominican Republic (+14 per cent) and the Canaries (+5 per cent).

Medium-haul around 10 per cent cheaper
TUI's new price strategy has two facets: firstly, TUI has considerably reduced the prices in its brochures; secondly, early booker discounts are being extended to include all beach hotels throughout the Mediterranean. Travellers thus benefit from considerable reductions in price: this makes all medium-haul destinations around 10 per cent cheaper on average. Long-haul destinations come off even better and are around 14 per cent cheaper. "We have significantly streamlined our production processes and are now able to produce more cost effectively. In addition, there are also positive effects from the Euro/Dollar exchange rate and concessions from the hoteliers," explained TUI Deutschland CEO Böttcher, who also highlighted that the new price strategy did not come at the expense of TUI's profits. The biggest price cuts can be enjoyed for trips to Mexico (-25 per cent), Dominican Republic (-15 per cent), USA (-20 per cent), and Thailand and the Maldives ( -10 per cent each). And volume destinations are also noticeably cheaper: Majorca (-10 per cent), Canary Islands (-8.5 per cent), Egypt (-16 per cent), and Turkey and Tunisia (-9 per cent). The only destination affected by a price hike is Austria (+1.4 per cent). The prices for holidays in Germany remain stable.

Fewer bargains – cuts in capacity if necessary
According to Böttcher, travellers can look forward to good value offers for the winter season, but should no longer expect to be able to take their pick of holidays at rock bottom prices a few weeks before departure. This winter there will definitely be a much smaller selection of last minute bargains. Böttcher added that they would cut capacity if needed, and not hesitate to switch aircraft in the Group fleet from Germany to other source markets. "If it brings about an improvement in returns, we would sacrifice market share if necessary."

Quality and service in abundance
TUI's 24 winter brochures contain a wide range of high quality vacations. Almost 4000 brochure pages present more than 5000 holiday products catering to all tastes. A newcomer to the brochure family is a golf brochure aimed at golfers of all types from beginners to experienced enthusiasts. The brochure presents over 100 different products in 17 holiday destinations. The TUI Stars brochure, which was first brought out in summer 2003 and features the best holiday hotels around the world, has been enlarged and positioned even more as a premium product. The brochure contains 150 crème de la crème addresses at 30 different destinations. And the comprehensive range of services has been enhanced even further with additional attractions including taxi and limousine services and being looked after by a "personal guide" for private tours at the holiday destination.


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