* Sees growth potential in China, South America, Southern
Europe First-quarter loss narrows by 17 pct
* Reiterates full-year earnings target
* Shares up 5 pct
(Adds strategy detail, analyst, shares)
By Victoria Bryan
BERLIN, Feb 14 European travel and tourism
company TUI aims to start offering holidays to
customers from countries such as China, Brazil, Spain and Italy
as it seeks new ways to keep its hotels full and drive sales.
TUI has been reorganising its business to invest in more of
its own hotels and cruise ships and has been selling off what it
views as non-core operations, such as the Travelopia portfolio
of specialist holiday brands that it agreed to sell on Monday.
Chief Executive Fritz Joussen said on Tuesday that TUI sells
holidays to southern Europe but does not take customers from
those countries on holiday, while emerging markets such as China
and South America offer greater potential for new customers.
"It's about nothing more or less than the global expansion
of our brand," he told shareholders at the company's annual
general meeting in Germany, saying that TUI is targeting an
additional 1 million customers and 1 billion euros ($1.1
billion) in revenue within the next five years.
Joussen said that TUI would focus on its online sales to
minimise costs and would also direct customers to its own hotels
in places such as the Caribbean and Thailand to minimise risk if
it proves impossible to build up the business in new markets.
"Many have entered China and come back with a bloody nose.
This should not happen to us," he said.
The Chinese market has proved a difficult proposition for
foreign travel groups and TUI has previously set up a joint
venture with little success, but Joussen said that an increasing
number of Chinese holidaymakers is changing the landscape.
Joussen did not indicate how TUI would implement its plans,
but Euromonitor senior analyst Wouter Geerts said that other
companies have expanded in China by investing in local players.
Geerts pointed to U.S. group Priceline's move into
China through Ctrip and said that said that TUI could also look
at how hotel groups such as IHG have set up Chinese
TUI earlier reported a first-quarter loss of 66.7 million
euros ($70.9 million) -- a 17 percent improvement on last year
-- and reiterated its forecast for core earnings to rise by at
least 10 percent this year.
Tourism companies typically make losses during the winter
months, and the combination of TUI's year-on-year improvement
amd the Travelopia sale helped to lift its shares by 4.9 percent
to 12.14 pounds by 1153 GMT.
Rival Thomas Cook last week gave a cautious outlook
for its financial year, but Joussen said that TUI's summer
bookings from the UK were up 3 percent on last year on revenue
up 12 percent.
Joussen said that the revenue jump was largely because of
higher prices and customers spending more to travel further
"Higher prices are necessary because of the depreciation of
the British pound. You need higher prices to cover higher costs
in destinations," he said.
($1 = 0.9408 euros)
(Editing by Susan Fenton and David Goodman)