"People & brand make TUI strong"

It was very successful, in a demanding market environment, especially considering the political and economic conditions – above all in Germany and in Europe. The financial year 2024 was very successful for TUI. We have reported very positive progress on revenue as well as earnings. Sustainable, profitable growth remains our aim, but that includes a healthy balance sheet structure. We are a big step closer to our target of reducing net leverage to well below 1x. We have maintained our crucial focus on free cashflow, which we are using for investments and for paying back debt. We are investing selectively in operations with a promising future, but at the same time we are strengthening our financial basis. That is in the best interests of the company, our shareholders and our employees. TUI is much more robust today.

We are developing our tour operator business into a fully integrated functional marketplace for holiday and leisure experiences. That gives us more scalability, greater efficiency and more profitability and in this way, we are expanding our international presence. It is also the key to many new markets and customers and should substantially boost our margins. That is why we pushed ahead so purposefully with restructuring our business in 2024. David Schelp presented his master plan and now we are implementing it. We are producing at much better cost, especially thanks to building our global production platforms. A second module in the transformation: we are developing an enlarged commercial function for our TUI Airline so that in future we have more independence in managing its performance. It will give the airline a stronger role within the Group and enable it to reach additional customers. And thirdly, we have created a new unit to take charge of our expansion into attractive new business areas and new tour operator markets. We have been very successful with TUI Poland and now we want to roll this out into other, new markets, e.g. in Eastern Europe, the Americas and later Asia. This is partly about ancillary revenues around the actual holiday, but also about products like TUI River Cruises, TUI Tours, so round trips. We see a lot of potential for that everywhere.

For our tour operator business, package holidays remain the strategic core product. In future they will just be far more flexible and dynamic, with more options and choice for customers to make the product even more attractive. Package holidays, even if the term is a bit old hat, deliver definite value added for customers: safety, service, convenience. Besides, there is the high quality of advice they receive in the travel agencies. Even for young target groups, that is increasingly important. We recognise clear potential there. But in addition we want to offer our customers a whole range of leisure experiences. To that end we are building a scalable model and aligning our product world towards it. This transformation enables us to enhance our market opportunities while at the same time reducing risk. We are becoming more efficient, more agile, and laying foundations for growth – with a strong focus on sales, quality and service. We set ourselves apart from the competition thanks to our own products, i. e. our own hotel brands and cruise liners. We are growing in this field. It remains a strategic priority. Our very profitable TUI hotel operators and cruise ships naturally benefit from the strength and presence of our tour operators with their access to more than 20 million customers.

The TUI brand is and remains a powerful asset. In a nutshell: people & brand make TUI strong. We keep hearing that the Smile is iconic. We want our brand to be as significant as other international top brands, even beyond Europe. So we are adding more emotion to the TUI brand – in sport, for example. Like the TUI Palma Marathon. That day was a fantastic experience for thousands of customers and millions of virtual spectators on social media, as well as for hundreds of TUI employees who ran one or the other course that day as well. We have a few more plans like that. We are combining the strong brand, sport, emotion and lifestyle – via sponsoring and via tailored products and holidays.

Holiday Experiences – embracing Hotels & Resorts, Cruises and TUI Musement – turned in another very strong performance last year. In terms of earnings, our hotel and cruise companies are our strongest pillar. I know the business very well, as I was responsible on the Board for building it up and expanding it. Many of the investments we made in our hotel brands like Riu, Robinson and TUI Blue and new vessels for Mein Schiff and Hapag Lloyd are now reaping rewards. Alongside traditional tour operating, TUI has developed a very profitable line of business with its own products. That is sometimes underestimated in the big corporate picture. With about 430 hotels, TUI is a force to be recognised among international hotel operators. We are well positioned here and we are looking to grow further, not least in Asia. With the hotels we are expanding based on our asset-right approach and since the pandemic we have already added another 72 new hotels to our pipeline since 2022.

TUI Musement is also pushing to broaden its platform and commercialise experiences, tours and transfers. That business is growing thanks to new products and activities. Our ambition is clear: we want to be people’s go-to partner for their leisure experiences, whether on holiday or at home in Hanover, Munich or Amsterdam, whenever they plan to visit a concert or a museum, or take an excursion on Mallorca. We intend to expand the range on offer considerably. But I firmly believe that our strong TUI brand is up to the job: holiday, leisure, TUI – and all with one click of the app.

In the Cruises segment, the very positive development continues. TUI Cruises is one of the most profitable major shipping companies in the world. With cutting-edge vessels, diversity, attractive itineraries and outstanding service. We are continuing to invest, with the arrival of Mein Schiff 7 in June 2024 and two more newbuilds in the next two years. Every new liner brings us more differentiation thanks to innovative products and sustainability features. Mein Schiff is in a class all of its own when it comes to innovation, quality and service. And in our Marella fleet in the UK we have also been carrying out modernisations for our customers. The bulk of our revenue is made with our package cruises, and that fits perfectly with our integrated business model.

We are seeing global growth in demand. We will go about that by drawing on and expanding our strong position in terms of brand, sales channels, products and destination presence. A concrete example is the expansion in Eastern Europe that I mentioned – we have just launched in Czechia, other markets in Eastern Europe will follow – and at TUI Iberia our digital platform recently went live for customers from Southern Europe and Latin America. In the Hotels business we have been operating globally for a long time, primarily with our own hotels in Europe, in the Caribbean, in Asia and in Africa. China and other Asian countries are just entering the equation with the first TUI Blue hotels. In the long term, we will drive global growth through our platforms.

Sustainability has been crucial to TUI for many years. And in a holistic sense, which means the environment plus social sustainability plus living conditions locally in destination countries. Ultimately we can only build a future-proof business model if we do it in a sustainable manner involving all our partners and if they can benefit, especially the countries and local communities where our holiday-makers visit. We engage in open dialogue on topics like over-tourism in our destinations, on regulatory conditions and on opportunities for more protection of the environment and climate. Our targets for ecological sustainability were formulated together with the Science Based Targets initiative and we are fully focussed on implementing those targets and our sustainability agenda.

I am sure that we can meet many climate targets faster than we currently imagine. The public debate is often about costs, but we should all be talking more about the benefits. There is more to it than the responsibility we have. Many investments in sustainability pay off, so they make economic sense too. Often we only look at the purchase price, but not enough at the production costs. If we bear both in mind, the business case looks different. I can see a shift in mindset – at TUI we are making good progress because we want active change. In the segment Hotels & Resorts we want to almost halve our carbon footprint by 2030 and achieve net zero in 10 years at the latest. That is happening thanks to solar panels on hotel roofs, plant and equipment that consumes less energy, and technical efficiency gains. On our ships, the levers are things like green on-shore power during port calls and alternative fuels at sea, like those that will feed Mein Schiff 7.

They are the heart of TUI. They represent the brand, the quality and the spirit of TUI. That calls for extremely good teamwork, a willingness to change and the desire to grow together, to win. We keep a close watch on how our almost 67,000 employees feel, what they think, where there is room for improvement. I was pleased to note that last year we saw a big leap in our Engagement score to 80 points, 8 points more than last year. And on the Group Executive Committee, too, a strong management team has come together and we are all pulling in the same direction. That visibly motivates the workforce as well and generates security and clarity. We are also making sure that all our colleagues embrace digital transformation, including Artificial Intelligence, as an opportunity, both for themselves and for TUI. Let me take this opportunity – also on behalf of the Group Executive Committee – to say a big thank you to all our employees at TUI, who have worked with great professionalism, passion and major commitment to achieve success for TUI in the past financial year. The energy displayed by our people is tremendous. That welds us together and generates a lot of strength.

I believe in the opportunities that Europe has. But politics needs to free itself from the grip of those who seek to regulate more and more new things. There is a lot that is not running smoothly. The over-regulation, especially in Germany and the EU, is hindering investment and growth. The location costs are simply too high. Instead of that we need investment in digital infrastructure and a tangible elimination of bureaucracy. A moratorium on legislation is essential. The EU, in particular, should concentrate on fewer issues. What do I do in the company when I see challenges? I focus on three or four major goals, all of them with leverage. I subordinate other topics to that. After all, not everything that’s important is necessarily urgent. I would say that principle works in politics too. But there needs to be a will to set priorities and exercise leadership. The same applies to financial matters and budgets. An example from our industry: all these new regulatory requirements are pushing up the price of package holidays, whether it’s the German travel insurance fund or the far-reaching compensation rules for late arrival. This ought to be reviewed to ensure a level playing field for all providers. That is something politicians ought to be addressing, because a package holiday offers the best consumer protection of all. Here we need to enjoy the same terms as the purely online platforms. Anyone who offers travel should look after their customers and provide the cover they need.

I am optimistic about the future as well. Our customers don’t like to skimp on their holidays, even in times of crisis. All the same, we are well prepared because of the political and economic conditions in Europe. TUI is on the right path to becoming a global marketplace for holiday and leisure experiences. We have created the right conditions to achieve our medium-term goals: building global platforms, pushing harmonisation and rolling out our business worldwide. By growing with new products and reaching out to new customers we will gain market share, boost growth and earnings and – very important – continue to improve our cashflow. And we will be more independent from Europe as a region. At the same time, we will maintain our focus on quality, sustainability and TUI as an employer of excellence. Behind all this we have a strong TUI team, our people all over the world. And with that I go into the coming year full of confidence.