This assignment is TUI AG is considered a European taking touristry supplier, with a varied scope of bundle vacations offered universe broad through its three chief sectors and legion trade names.

Harmonizing to TUI AG web site, TUI AG is divided in three sectors: TUI Travel ( Europe ‘s taking touristry company ) , TUI Hotels & A ; Resorts ( Europe ‘s prima vacation hotelkeeper ) and the Cruise brands Hapag-Lloyd Kreuzfahrten and TUI Cruises.

1.1 TUI Travel

TUI Travel ‘s is divided into four sectors: Mainstream, Specialist & A ; Emerging Markets, Activity and Accommodation & A ; Destinations. The portfolio includes a diverse scope of merchandises from bundle Tourss to niche merchandises such as yacht chartering, expeditions and pupil trips.


1.1.1 Mainstream

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Mainstream is the largest sector in footings of size and gross coevals. It services over 25 million clients a twelvemonth. The sector comprises a figure of taking circuit operators across Europe, operating over 140 aircraft and circa 3,500 retail stores. This sector services clients seeking bundle or self-package Sun and beach vacations.

1.1.2 Specialist & A ; Emerging Markets

This sector brings together over 40 specialist companies selling Tourss to finishs in North America, Europe and several emerging markets such as China and Russia. Specialist travel experiences include escorted Tourss to the Galapagos, around-the-world private jet expeditions, pupil spring-break trips to Acapulco and bespoke trips to Australia.

1.1.3 Activity

The lifestyle circuit operators and premium trade names operate in the market sections Marine, Adventure, Ski, Student and Sport.

1.1.4 Accommodation & A ; Finishs

This sector supplies on-line and offline hotel adjustment and finish services worldwide. The B2B division ( Hotelbeds and Portfolio Incoming ) provide adjustment, transportations and jaunts and holds a portfolio of finish bureaus. Its clients are tour operators, travel agents, sail lines and other corporate clients.

1.2 TUI Hotels & A ; Resorts

TUI Hotels & A ; Resorts comprises hotel trade names with high degrees of quality and service every bit good as high environmental criterions. The trade names cover a broad scope of hotel constructs at prominent and the most popular vacation parts and include such celebrated names as Grecotel, , Iberotel, Riu, Robinson and Magic Life.

1.3 Cruises

Cruises vacations have become more popular and therefore TUI Travel has seen the chance to work this section. With Hapag-Lloyd Kreuzfahrten and TUI Cruises, TUI AG ‘s portfolio has two quality trade names offering the nautical vacation experience for different mark groups particularly design for the German speech production market.


Tourism in Europe represent 5 % of the EU GDP harmonizing to the European Commission, bring forthing employment on the scope of over 9.7 million occupations.

Following the meeting of the European Council in December 2007, enforce of the Lisbon Treaty was deemed necessary to travel frontward in a universe with changeless increased competition and altering demographics.

Some of the facets considered towards the ‘Policies for a better life ‘ embedded in the pact are: globalization, clime alteration and the environment, energy use and supply, civil protection, public wellness and other issues ; moreover article 195 of the pact signifier the legal footing for the touristry industry in Europe which is aimed to reenforce the EU as the chief tourer finish in the universe, throughout cooperation and exerting good pattern between its members.

Further information gather from different web sites and web logs has bring to my attending that while in rule, the thought of fusion and standard policies among the EU member will guarantee benefits in the long term, the world is that there is still a batch of differences to be overcome by the members in order for them to work together towards the ideals summarised in the Lisbon Treaty.

However, Europe is considered one of the chief tourer finish whether is for short interruptions or bundle vacations for people from around the universe.

Given that Tui AG is considered the Europe ‘s taking travel group I believe it is more appropriate the usage of a SWOT analysis to turn to the current state of affairs, and since this assignment is concerned with strategic picks the rating of failing and strengths, every bit good as menaces and chances are indispensable for the preparation of such hereafter propose scheme.


As published in the DATAMONITOR study on TUI AG dated 19th January 2010 find the company ‘s public presentation for the year-end 2009.

TUI is considered one of the largest touristry operators in Europe ; it owns a broad web of travel bureaus and circuit operators, which offers comprehensive service, including cross-selling chances for the company and besides guaranting cost nest eggs due to economic systems of graduated table. However, economic lag in cardinal markets could impact demand for TUI travel concern operations.



Comprehensive services

Dependence on Europe

Leading domestic participant

High debt load

Unfunded employee station retirement benefits



Joint venture understandings

Economic lag in Europe

Turning planetary hotels and motels industry

Competition from low cost air hoses

Expansion of advanced engineerings

3.1 Strengths

Comprehensive services

TUI owns a broad web of travel bureaus and circuit operators which offers comprehensive services, including Airtours, Thomson, American Holidays, Discount Travel, Gebeco, Holland International, Nouvelles Frontieres, Arke and many more, active in around 15 European markets. It besides operates several air hoses including: Corsairfly, TUI Airlines Belgium, TUIfly, Thomsonfly among others.

The TUI Hotels and Resorts division offers a portfolio of hotels across cardinal finishs, including Spain, Turkey, Tunisia, the Balearics, Greece, Egypt, France, the Canary Islands and the Caribbean.

The company besides offers sails through its Hapag-Lloyd Kreuzfahrten subordinate, which operates luxury and premium category sail line drives. TUI transportation activities are contained within its Hapag-Lloyd Container Linie. With a wide spectrum of services, the company ‘s operations covers the whole touristry sector and the assorted phases of a vacation: from retail, tour operating, winging and adjustment up to services at the vacation finish.

Leading domestic participant

The company provided travel services for more than 30 million clients over 27 beginning markets. The company besides provides air hose services with a fleet of more than 146 aircraft and 350 retail stores in Europe. Further, TUI Hotels & A ; Resorts is the taking hotelkeeper in Europe with around 243 hotels with about 154,000 beds in 28 states. The major trade names of hotels include Riu, Grupotel, Iberotel, Robinson, Grecotel, Magic Life, and Dorfhotel.

3.2 Failings

Dependence on Europe

The company is to a great extent dependent on Europe for its grosss. Europe accounts for approximately 79.3 % of the company ‘s entire gross. Canada accounted for merely 6.9 % of the entire grosss in FY2008, while other parts accounted for about 13.8 % of its entire grosss.

Concentration of operations in a individual part increases the company ‘s exposure to local factors, such as lower demand, terrible conditions conditions, labour work stoppages, alteration in ordinance and economic conditions thereby curtailing belongings and income growing.

High debt load

The company holds a significant sum of debt. As of December 31, 2008, the entire debt outstanding for the company stood E4,974.7 million, of which E3,965.4 million is the long term adoptions. At the same clip, the company ‘s portion holder ‘s equity stood at E2,243.3 million, stand foring a debt-equity ratio of around 221.7 % .

Further, the involvement disbursals of the company besides increased at a rate of 17.9 % from E424.3 million in FY2007 to E500.5 million in FY2008.

The company ‘s significant debt limits its ability to obtain extra funding to fund future working capital, capital outgos and other general corporate demands, which is a disadvantage to the company.

Deficit in employee station retirement benefits

The company provides pension benefits and other post-retirement wellness and life insurance benefits to employees. During FY2008, the company incurred a sum of E90.5 million for the pension and station retirement benefit disbursals.

At the terminal of December 2008, the company ‘s projected pension and post-retirement benefit duties stood at E1,668.1 million in FY2008 as compared to the planned assets of E980.4 million ensuing into deficit position of E687.7 million. Substantial shortage station retirement benefits would coerce the company to do periodic hard currency parts towards bridging the spread between station retirement benefits duties and planned assets, which would cut down hard currency available for growing programs.

3.3 Opportunities

Joint venture understandings

The company entered a joint venture with Royal Caribbean Cruises ( RCC ) , an American sail holiday supplier. In March 2008, European antimonopoly governments approved the joint venture sail line planned by Royal Caribbean Cruises and TUI. Both the spouses would keep a 50 % involvement in the joint venture.

The new company, TUI Cruises, would began serve with one ship, in early 2009, and planned to spread out its ship size in 2011 and 2012. TUI Cruises will run into the demands of German-speaking clients seeking a premium sail experience. The onboard merchandises will be customized to German gustatory sensations and will embrace nutrient, amusement and comfortss. German will be the linguistic communication used onboard. Further in March 2009, TUI Travel and Air Berlin entered into a long-run strategic partnership for their German flight concern. The understanding is based on a cross ownership in which TUI Travel through a subordinate, will hold an involvement of 19.9 % in Air Berlin. The joint venture understandings would significantly beef up TUI ‘s bridgehead in the German holiday market.

Turning planetary hotels and motels industry

The planetary hotels and motels industry has witnessed a important growing in recent yesteryear. Harmonizing to the Datamonitor ‘s study on “ Global Hotels & A ; Motels ” , December 2008, the planetary hotels and motels industry generated entire grosss of $ 484,300 million in 2008, stand foring a compound one-year growing rate ( CAGR ) of 6.6 % for the period crossing 2004-08. In comparing, the Americas and European industries grew with CAGRs of 7.1 % and 5.6 % , severally over the same period, to make the several values of $ 184,300 million and $ 203,100 million in 2008. The public presentation of the industry is forecast to better further, with an awaited CAGR of 6.0 % for the five-year period 2008-13, which is expected to drive the industry to a value of $ 650,000 million by the terminal of 2013. With strong geographic presence in hotel industry, the company is good positioned to tap this chance in a large manner.

Expansion of advanced engineerings

The company has introduced a figure of information engineerings aimed at spread outing the merchandise and services portfolio. For case in 2009, TUI Deutschland developed a new production system ( NPM ) based on cost-saving package architecture and facilitates the production of travel offerings on the footing of single constituents. Further, the company besides introduced new hotel formats to spread out its hotel concern. In 2008, TUI hotels and resorts developed the new lifestyle hotel construct aQi in the 3-star leisure section. This hotel construct is based on a joint venture between TUI and a third-party undertaking developer and general contractor. The enlargement of new engineerings and the development of new hotel format would assist the company spread out its concern operations and consequence in better operational efficiency.

3.4 Menaces

Economic lag in Europe

TUI derives bulk of its gross from Europe. The grosss of the company depend on the general economic conditions. The economic mentality of Europe is expected to be weak after the recent convulsion in fiscal markets and consumer sentiments. Harmonizing to IMF ‘s recent economic mentality update October 2009, the GDP of Europe is expected to register a sulky growing of 0.3 % in 2010 after a negative growing rate of around 4.2 % in 2009.

Harmonizing to ITB World Travel Trends Report, in the first eight months of 2009, international tourer reachings in Europe declined by 7 % and are expected to register a diminution of 4 % to 6 % for full twelvemonth 2009. Further, the European travel industry is likely to remain level in 2010. The economic downswing has led to a terrible diminution in consumer assurance, which could cut down the demand for the company ‘s merchandises and services. Further, it could be hard for the company to obtain funding to fund its operations or investing chances, or to refinance its debt in the hereafter. Therefore a weak economic mentality for Europe would set force per unit area on the company ‘s top-line growing.

Competition from low cost air hoses

The rapid growing of low menu, low cost air hoses has had a profound impact on industry grosss that pose a menace to traditional web bearers. While the traditional bearers are sing terrible troubles, retreating from paths and cutting staff, the low cost sector continues to spread out at a enormous gait. There is grounds that the low cost bearers are even going dominant participants on a important figure of intra-European short draw point-to-point paths.

The extent to which this enlargement of the low cost bearers will impact the traditional air hose hub-and-spoke webs poses interesting inquiries for the European industry and policy market. Liberalization in Europe has opened enormous chances for the low cost bearers. The improved fiscal public presentation relation to traditional web bearers suggests that the low menu, low cost air hose menace will significantly escalate over the following few old ages. TUI ‘s air hoses concern operates a sum of 150 aircraft. Intense competition from low cost bearers could adversely impact the company ‘s operations.

4. Premeditation

While the information presented in the DATAMONTOR study shows difficult facts and figures about TUI AG and its place at the year-end 2009 in the market, the latest set of history published and available on the web site are in line with the scheme TUI AG had in topographic point once it was apparent that the fiscal recession will hold a negative impact on the company ‘s public presentation.

Despite the premises in relation to the effects for TUI AG of the downswing in the economic system, lets be cognizant that under the Lisbon Treaty all members most comply and work in a clime of cooperation, that will benefits EU as a whole, instead than prosecuting persons additions as independent provinces.

Tui AG and its flexible policy have unable them to set to the different scenarios that it has been subjected to as effect of the planetary recession impacting all sectors, primary fiscal and economic around the universe.

Bing listed in London Stock Exchange under the FTSE100, supply TUI AG with a high degree of assurance for its investors, every bit good as conformity with high criterions on corporate administration.

Besides their committedness on developing and keeping a sustainable policy in all its finishs in order to continue and better the environment and the degree of choice life of the population which are promoted as finishs.

Having an strong embedded corporate civilization across the group, enable Tui to confidently assure that its conformity policies are endorsed and enforced throughout the whole group ; guaranting a extremely efficient communicating channels from top to bottom of the hierarchy ladder ; this contributes to make consciousness and service as preventing step for the hereafter.

5. TUI TRAVEL at glimpse ( hypertext transfer protocol: // )

5.1 Experienced direction squad

The direction squad has a path record of presenting long-run growing whilst pull offing the concern through important alterations in consumer demand. TUI Travel has demonstrated to hold existent strength and deepness throughout direction squads across the administration.

5.2 Market-leading trade names

TUI Travel have some of the most recognized and extremely trusted trade names in the industry, which drive client keeping, cut down the cost of client acquisition and are attractive to adjustment suppliers and distribution spouses.

5.3 Market-leading places

In the Mainstream Sector TUI Travel is either the figure one or figure two positioned circuit operator in about all of our beginning markets, including the UK, Germany, France, Belgium, the Netherlands and the Nordic states.

5.4 Market consolidation

Consolidation in some of the key markets has improved the construction of the industry and has reduced the hazard of net income volatility historically driven by glut of capacity.

5.5 Competitive advantage

Accommodation & A ; Destination sector bargain over 150 million bednights per twelvemonth, doing TUI Travel one of the largest distributers of adjustment globally, this graduated table gives a competitory advantage when negociating with providers, leting to offer first-class value to clients.

5.6 Synergies

TUI Travel has identified ?200m of synergy benefits as a consequence of the amalgamation in 2007 and are extremely confident of accomplishing this mark.

Since the amalgamation, TUI Travel has successfully executed a figure of strategic actions to better borders in under executing concerns including scheduled winging operations in the UK and Germany and the Canadian circuit operator. Although TUI has a figure of concerns where borders continue to be diluted by strategic and concern theoretical account issues, work outing these represents an chance for significant future border betterment.

5.7 Specialist Sectors

In surplus of tierce of TUI Travel net incomes are generated by the portfolio of niche specializer concerns which enjoy high organic growing and border features and frequently display counter-seasonal profitableness. Growth in these Sectors is augmented by the extremely successful acquisition scheme, where placing new market niches and construct significant market places. This portfolio of concerns is alone and can non be replicated, stand foring a clear distinction from rivals.

5.8 Emerging markets

TUI Travel has gained an bing presence in the four major emerging markets of Russia, Brazil, China and India.


For intend and intent of this assignment the attending is focus on TUI Travel and its chief sector called ‘Mainstream ‘ , which is the premier beginning of gross to the group.

6.1 Choice 1: Continue with the current scheme.

TUI Travel current scheme, has prove non merely to be competitory, but effectual and efficient to the extend of being recognised as a leader in the touristry industry. Furthermore, TUI Travel has already get downing a decisive consolidation on the new markets, which will widen its geographical activities every bit far as Asia and debut in the South American market.

6.2 Choice 2: Further integrating on the bundle vacations by farther acquisition of a local Coach circuit operator in any of its cardinal markets i.e. UK.

Traditionally TUI Travel has gained its fight by agencies of acquisition, amalgamations and joined ventures throughout the universe.

A farther investing in a local manager circuit operator, will give them a complete integrating in the supply concatenation, as clients will be able to custom-make its vacations, from apparent tickets, adjustment, transportations to historic sites Tourss to the full guided by experient ushers. The UK has a huge figure of tourer sites, some of them proclaimed universe cultural memorials which makes them more attractive and extremely visited throughout the twelvemonth.

Presently in the UK there is merely three manager circuit operators, which offers the diverseness of services, and merchandises that could be attractive to TUI Travel: Evan Evan ‘s with more than 70 twelvemonth of experience is portion of the a city manager group Trafalgar who has a line of concern on touristry around the universe. Golden Tours formed in 1984 offering sightseeing service in England most good known attractive forces. Finally Premium Tours, a private limited company with lone seven old ages in the market that has managed to vie shoulder to shoulder with the other two more established sightseeing manager operators.


Critical analysis of all informations gather for the intent of this assignment, there is a strong disposition to agree with TUI Travel current scheme, as explained before it has provided the company with a alone competitory advantage, as they strive in developing services wholly incorporate which are hard to copy. TUI Travel is the universe ‘s largest integrated circuit operator. A strong place in the market enables the company to retain its high market portion and better investor assurance. TUI Travel portfolio consist of sale of flights, adjustment and farther touristry services, both as separate constituents and as a bundle.

During the last AGM in February 2010, the schemes proposed include extra agencies for hard currency flow coevals including the refinancing of owned assts, and the disposal of non-core assets every bit good as direction of the assorted fiscal instruments ( loans, loanblends, equity ) that will offer flexibleness in the long term.

Finally, the Chairman ‘s Letter Dr. Michael Frenzel CEO ensures assurance in the short and long-run hereafter. Contemn the recession and economic downswing, the amalgamate figures for the fiscal twelvemonth shows a successful public presentation in the Tourism activities, with increase of 10 % in gross with relation to 2008 figures.


hypertext transfer protocol: //


European Commission – Supporting European Tourism

Lisbon Treaty – Article 195

European Commission – Policies for a better life

TUI AG – Statement of the Board

TUI Travel – About TUI Travel Plc

TUI Travel – History

TUI Travel – Sectors

TUI AG – Group Strategy slide

TUI AG – Chairman ‘s Letter


1. Introduction: 2

1.1 TUI Travel 2

1.2 TUI Hotels & A ; Resorts 3

1.3 Cruises 3



3.1 Strengths 5

Comprehensive services 5

Leading domestic participant 6

3.2 Weaknesses 6

Dependence on Europe 6

High debt load 6

Deficit in employee station retirement benefits 7

3.3 Opportunities 7

Joint venture understandings 7

Turning planetary hotels and motels industry 8

Expansion of advanced engineerings 8

3.4 Menaces 9

Economic lag in Europe 9

Competition from low cost air hoses 9


5. TUI TRAVEL at glimpse ( hypertext transfer protocol: // ) 11

5.1 Experienced direction squad 11

5.2 Market-leading trade names 11

5.3 Market-leading places 12

5.4 Market consolidation 12

5.5 Competitive advantage 12

5.6 Synergies 12

5.7 Specialist Sectors 12

5.8 Emerging markets 13




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