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TUI looks to expand past German, British base

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Eyeing to court non-European tourists with more spending

power

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European tourism needs more budget options, experts say

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TUI looks for more income with new local experiences offer

By Joanna Plucinska

LONDON, Feb 25 (Reuters) - TUI wants to attract

holidaymakers from China and the United States to its new hotels

in Asia and is offering cheaper destinations in eastern Europe

as budget-conscious Europeans spend less and book shorter

vacations, its top executive said.

The plan is part of an expansion already underway for the

German group whose all-inclusive package holidays have for

decades been popular with Germans and Britons seeking sun and

sea in southern Europe, Turkey and Egypt.

Europe's largest tour operator has grown beyond its home

turf in recent years with packages to more far-flung locations

like Zanizibar, tapping a boom in high-end travel after the

COVID-19 pandemic.

Now, it wants to lure Americans and Chinese travellers to

hotels it is building in China and South East Asia, as well as

to hot spots, such as Tenerife, CEO Sebastian Ebel told Reuters.

The group, which last year switched its listing from London

to Frankfurt, plans to open 22 new hotels in China and South

East Asia in the next three years, catering to Chinese

travellers, who have avoided travelling to Europe since COVID.

"For us, it's important that we are in more and more

markets, also to balance out risk overall," said Ebel.

Earlier this month, weak results and sluggish bookings data

from TUI and its smaller UK rival Jet2 ( DRTGF )

raised concerns about slowing European demand, knocking their

shares. Inflation has hiked up costs in previously popular

destinations, such as Turkey.

While demand has remained strong, tourists from key European

markets, such as Britain and Germany, are spending less on their

holidays and are booking shorter and more affordable stays,

according to tourism associations and company data.

Traditional travel operators like TUI are also facing

competition from relatively new entrants, such as airlines

easyJet and IAG-owned BA which have launched package

holiday businesses in recent years and from Airbnb ( ABNB ) and

other home-share platforms.

"Value-for-money remains a key consideration for tourists,

with implications for destination choices, length of stay and

in-destination spend," the European Travel Commission (ETC) said

in its annual report published last week. Last year, the average

length of holiday fell compared with 2023.

The German and British economies underperformed last year as

worries about high inflation worsen and companies struggle with

high costs and competition from China.

The majority of TUI's 20 million customers globally come

from Germany and central Europe, as well as the United Kingdom

and Ireland.

SHIFTING TRAVEL

In recent years, TUI has also invested in marketing

campaigns, improving its app and building or investing in new

hotels outside of its traditional European destinations and

offering holidays outside of the high summer season, the company

has highlighted when presenting its earnings.

Britons in particular are shifting their travel dates to

either side of the traditional peak summer travel months, data

from British travel association ABTA shows, in an effort to find

cheaper deals and avoid crowds.

TUI has also touted planned investments in the Polish

market, citing affordable spa and hotel options, as well as

growing spending power of the country's population of nearly 37

million. It has also launched plans for expansion into Czechia.

This week, it launched an "Experiences for Locals" programme

in Britain and Germany, looking to lure people to pay for

activities like cooking classes, painting workshops and walking

tours at home.

TUI is also offering more "dynamic" packages which allow

travellers to pick flights, hotels and car rentals separately

and shop around for flights.