TUI Sees Profit at Upper End of Forecast as Hotels Fill Up

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Visitors walk along the water at the beach near the Riu hotel in Cancun.

Photographer: Cassi Alexandra/Bloomberg

TUI AG, Europe’s largest tour operator, said profit growth will be at the upper end of its forecast after occupancy of hotels improved and business out of the U.K. was more profitable.

Underlying earnings before interest, taxes and amortization will grow by 12.5 percent to 15 percent in the year ending Sept. 30, TUI said Thursday. The company earlier forecast the measure’s gain at between 10 percent to 15 percent. Earnings rose 13 percent in the three months through June, while revenue from U.K. customers for summer vacations gained 6 percent.

The company filled 78.9 percent of its hotel beds in the first nine months, up 2.3 percentage points. The shares rose 94 pence, or 9 percent, to 1,139 pence at 8.15 a.m. in London, the highest intraday gain in 8 months.

Repatriating and re-booking guests after a shooting in Tunisia cost the company 10 million euros in the quarter, and will create additional costs of 25 million euros as several governments advise against travel to the country, Chief Executive Officer Fritz Joussen said on a conference call. Demand from markets including Germany and Belgium for vacation in Greece slowed on political turmoil.

Revenue per bed generated at its Riu hotel chain rose 15 percent in the quarter, while occupancy at its Iberotel chain, mostly present in Egypt, rose by 11 percentage points as more clients returned to the Red Sea destination. The cruise business’s profit rose as the TUI Cruises brand benefited from two new ships taken into service.

Thomas Cook Group Plc on July 30 said the combination of currency headwinds, costs to re-book clients from Tunisia to other destinations following the terror attack and lower margins in short-term bookings to Greece will add up costing the company $100 million this year. Thomas Cook’s financial reporting is in pounds, while TUI AG, based in Hanover, Germany, reports in euros. TUI said currency effects added 18 million euros to its operating profit in the first 9 months.

Bookings at TUI for the important summer period are up 4 percent through Aug. 2, with 89 percent of the offering sold.

TUI reiterated it expects sales to rise by between 2 percent and 4 percent this year, adjusted for currency fluctuations.

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