TUI is one of the world's biggest hoteliers!

SSTH Editorial Team | 22 Jun, 2017

In conversations about major hotel groups, how often have you heard mentioned the names of the big tour operators like TUI?

Probably rarely.

Besides being the world's biggest tour operator by some margin, with annual revenue exceeding €17bn, the company is also one of the world's major hotel groups.

RIU Hotels & Resorts (103 hotels & 44’883 rooms) which is jointly owned (50/50) by TUI and the Riu family, was ranked 29th worldwide for room capacity in Hotels magazine's latest "Hotels 325" survey.

If the capacity of TUI's other hotel brands like TUI Blue, Robinson, TUI Magic Life, TUI Sensitori, TUI Sensimar, TUI Family Life (and there are many more) were added in, the total would certainly rank in the top-25, about the size of NH Hoteles, Spain's second hotel chain.

TUI Sensatori Resort Punta Cana
Photo credit:  TUI https://www.tui.co.uk/ 


TUI wants to control customer experience 

In fact, hotels have now become a central feature of TUI's strategy which is to control the customer experience from booking to flight, to transfer – all the way to the hotel room.

For a holiday trip, accommodation is clearly the number one criterion which a tour operator must get right in order to maximise customer satisfaction.

TUI has declared that it wishes to move away from acting as a traditional tour operator intermediary to become a 'content' company that directly supplies its own hotels (and cruise ships) to its customers, rather than relying on third-party partners.

According to the company's CEO, Fritz Joussen, in the last fiscal year, TUI already had 50% of profits coming from its 'content' business (i.e. hotels & cruises), which is more resilient, more cash converting, and also much less seasonal.

Whereas in the tour operator business, there are typically three quarters of operating losses and one quarter of operating gains, in the content businesses the profit is much more evenly spread throughout the year.

Robinson Club Agadir
Photo credit:  Robinson Club https://www.robinson.com/en/en/home/ 

Warm-water beach destinations favoured

TUI Hotels & Resorts now has a global footprint of some 350 hotels & resorts in 30 destinations.

In contrast to most hotel chains whose properties are to be found in cities, TUI's portfolio is about 90% - concentrated in warm-water beach destinations, stretching from Thailand, to Sri Lanka, the Maldives, to the Caribbean, many of which can operate year round.

There are, nevertheless, a few properties in other types of locations, such as the Alps, Tuscany and the Mecklenburg lake district in northeastern Germany.

Robinson Club Maldives
Photo credit:  Robinson Club https://www.robinson.com/en/en/home/ 

Very little franchising

Another way TUI seeks to control customer experience in its properties is through the asset management structure.

With only a minimum of franchised properties, TUI maintains a tight grip on service delivery at its hotels.

This approach also runs counter to the trend in most hotel chains which is towards an asset-light structure with increased franchising.

TUI to grow its hotel stock

Expansion of TUI's hotel capacity is a key pillar of the operator's strategy and will focus on the group's seven leading leisure hotel brands (RIU, TUI Blue, Robinson, TUI Magic Life, TUI Sensitori, TUI Sensimar, TUI Family Life), as mentioned above.

The Caribbean and the Indian Ocean are two regions particularly targeted for this expansion, since they offer the possibility of year round beach holidays.

The company aims to grow by a total of 1.9 million guests over the next five years. TUI is looking to add around 60 new hotel properties to its portfolio by about 2020.

These additions could include acquisitions and conversions, new-builds, as well as lease or management contracts. Franchise contracts will also be considered, but only with long-term and trustworthy partners.

Robinson Club Arosa
Photo credit:  Robinson Club https://www.robinson.com/en/en/home/ 


Development criteria

In most cases, TUI requires direct beach access for its new hotels which generally should be no more than 90 minutes from an airport.

The new hotels and resort properties should be sizeable – in a range of 200 to 500 or even 600 rooms, depending on the brand.

Required rooms sizes depending on the type and brand vary between 18 sq m for a single room at a TUI Magic Life resort to 50 sq m for a two-bed family room in the more upscale Sensitori hotels, where some of the units should be 'swim-up' with private pools.

Sensitori and Sensimar sound almost the same, but with some important differences. As opposed to Sensimar properties, which should offer a play house for 3 - 12 year-olds, a nursery of at least 200 sq m for 0 - 4 wear-olds, as well as an outdoor playground of at least 78 sq m, Sensitori hotels are specialised in adults-only holidays and tend to be smaller with 200 to 300 rooms- more a place to go and chill out.


 

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