TUI focuses on growth: expansion of hotel portfolio via global hotel fund

International

Against the backdrop of a return to normal operating business, TUI is increasingly focusing on profitable growth again.

This is to be generated in particular by expanding its own product portfolio. TUI's hotel brands are among the key growth drivers and contribute significantly to the TUI Group's earnings. The Hotels & Resorts sector has been generating consistently positive results for several quarters and its underlying EBIT for the last four quarters has even exceeded the respective pre-crisis level. The Group intends to use this momentum to further expand the hotel portfolio. The asset-right strategy already initiated at the end of 2019 via management and franchise contracts as well as successful joint ventures and investment partnerships will serve this purpose.

In the current financial year, the hotel portfolio was expanded by 32 properties, some being operated under the TUI Blue brand. In order to further accelerate the less capital-intensive expansion, the global hotel fund was also initiated last year and, following an initial successful phase of capital raising, is now moving into the first investment phase. The fund, which was launched together with Luxembourg-based HANSAINVEST, has acquired the 5-star "Emerald Zanzibar Resort & Spa" on Zanzibar in Tanzania. The parties have agreed not to disclose the purchase price. Peter Krueger, member of the TUI AG Executive Board responsible for Group Strategy and M&A, as well as the growth segment Holiday Experiences, which includes hotels and hotel brands and participations: "Profitable growth is the focus of our strategy for the future. Our own hotel and club brands make a significant contribution to growth and the company earnings and offer our guests exclusive products. We initiated the hotel fund with the aim of further expanding our successful hotel portfolio and increasing the earnings of the segment, while at the same time being able to offer professional investors an attractive hotel property investment. We have succeeded in doing this well, the fund is equipped with initial funds and is operational. Now we are moving into the first investment phase. The fund has the means to purchase further hotels. The next concrete investment opportunities are already being pursued."

After a transition period, the all-inclusive resort will be operated by TUI Hotels & Resorts from the beginning of 2024, and all bookings already made by guests will be taken over. TUI is thus expanding its offering on the East African island to four hotels. In addition to the TUI Blue Bahari Zanzibar, the Group also operates the RIU Palace Zanzibar and the RIU Jambo there together with RIU.

The fund also intends to acquire a hotel property from TUI's portfolio. This is currently operated by a TUI hotel brand and will continue to be run as such in the future by means of a management contract. Here, too, the parties have agreed not to disclose the purchase price. TUI will invest the proceeds of the sale in further hotel growth.

GLOBAL HOTEL FUND

For decades, TUI has very successfully designed and operated leading and high-quality brands in the holiday hotel industry such as RIU, Robinson or TUI Blue and developed holiday destinations. This position is also to be further expanded via the global hotel fund launched with HANSAINVEST, which is primarily aimed at institutional investors with a long-term investment horizon.

The fund is designed for growth and plans to invest primarily in new hotel facilities that are acquired or newly developed and are not currently part of the TUI Group. The properties will essentially be operated under the TUI Group's international hotel brands (such as Robinson or TUI Blue) and managed operationally by TUI. The return from the investment in hotel assets accrues to the fund investors. TUI receives ongoing remuneration for operating the hotel facilities and for providing investment advice to the fund.