TUI AG Capital Markets Day Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jamie Rollo - Morgan Stanley & Co LLC - Analyst : Thank you very much for that. Jamie Rollo from Morgan Stanley. I've got three questions, please. But I'll ask them separately because I appreciate you don't have pen and paper. That was all very interesting. The opportunities are clearly there. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 25, 2025 / 7:30AM, TUI1n.DE - TUI AG Capital Markets Day Can you just, maybe, explain why the margin is so low to begin with, then? Because you talked about the benefits of being vertically integrated and the content and so on. So when you look at yourselves versus the peers in benchmark Markets and Airlines, why was it only 1.5% last year? Is there anything between you and the other TUI companies, in terms of transfer pricing, hidden subsidies, what you're selling, your commercial terms for Hotels and Cruises? Is there anything like that or is it just inefficiencies and just the high overhead cost? That's number one.

Question: Jamie Rollo - Morgan Stanley & Co LLC - Analyst : Okay. Thanks. This second question -- oh, sorry, Mathias.

Question: Jamie Rollo - Morgan Stanley & Co LLC - Analyst : And this might also be a question related with the financials. But the case studies were interesting, particularly the German distribution differences with the UK and the higher accommodation. Are there any sort of distribution to sales ratios you can give us to compare those two countries? Or, maybe, GP1 margins, just to give us a feeling for the opportunity? Or is that something we're going to talk about later?

Question: Jamie Rollo - Morgan Stanley & Co LLC - Analyst : Sorry. One more relevant one then. booking.com came out pretty high in those two charts, the customer preference. What can TUI offer to your customers that booking.com can't offer? And how about your purchasing, as well? Can you buy better than them?

Question: Jamie Rollo - Morgan Stanley & Co LLC - Analyst : Thanks, just a question on the airline actually. So if I understand it correctly, you're becoming a bit sort of less vertically integrated and more of a standalone business. So how do you sort of manage what percent of your seats go into the marketplace? I think it's sort of 70% of the moment is sold and it's 30% seat only, but it's going to become more seat only. So how do you manage that sort of internal balance. And also doesn't that make you more exposed to low-cost airlines and sort of seat only competition there? And how do your cost metrics stack up against the low-cost airlines? Have you got some benchmarks there?

Question: Jamie Rollo - Morgan Stanley & Co LLC - Analyst : Hello Jamie Rollo from Morgan Stanley again. Three questions, but I'll be quick. So individually, what are the distribution channels and how those change over time? I think 40%'s the top rate, but I assume that's falling each year as you go more global. How are OTAs and other channels? Peter Krueger - TUI AG - Member of the Executive Committee, Chief Strategy Officer & Chief Executive Officer Holiday Experiences, Member of the Executive Committee Yeah, it depends again what David said before, it depends by the destination. So if I look, for example, at the at the market in Mexico where we have a lot of hotels, we have long-haul demand through TUI. We have distribution channels of local OTAs. I mean the third largest customer base in our Mexican hotels are Mexicans. So there's a strong domestic markets. So we work with local OTAs. And then of course we have a strong, very strong direct business. So when I look at Riu, the share of direct traffic likewise Robinson is already very high because the brand has a very strong brand recognition already in the US and Canada. So in other words, a lot of people are booking the Riu hotels directly and then of course we work also with OTAs in other markets.

Question: Jamie Rollo - Morgan Stanley & Co LLC - Analyst : Thanks. And then finally, what uplift did Blue Diamond see when it joined the Marriott portfolio, and would you consider something similar for maybe Riu? Peter Krueger - TUI AG - Member of the Executive Committee, Chief Strategy Officer & Chief Executive Officer Holiday Experiences, Member of the Executive Committee Yeah, it's a good question. So I have a very clear opinion on this. So I think, the smaller you are as a hotel company, the less strong your brand is, the more value added comes from these partnerships. So in other words, if I have a strong brand like Riu, 100 hotels, very well-known in the US already, the benefit will be smaller. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 25, 2025 / 7:30AM, TUI1n.DE - TUI AG Capital Markets Day For a brand like Royalton, which is only a sub-brand of the Blue Diamond portfolio, if you only operate 10 hotels, then the value added can be higher, right? And that's why I think our strategy is very clear. We want to own our own brands, our own distribution. I think we're big enough, we're strong enough. We're also working on a concept how to consolidate all of these brands under an umbrella brand, but this is not for today. It's just something we're looking at. And then of course, one of the opportunities we have started to speak about in the past and that we're also looking at is loyalty. Because one thing is, to buy the customer, to get the customer in the hotel. But we have a very loyal customer base already and we can do more on loyalty. So to your question, we be thinking about the same concepts and we don't necessarily need partners. It doesn't mean that here and there we do some partnerships, of course, to optimize, but in general strategically we want to own our brands and our own distribution.

Question: Jamie Rollo - Morgan Stanley & Co LLC - Analyst : Jamie Rollo from Morgan Stanley. Just back on the capacity growth. I mean, why haven't you ordered new ships until now? I appreciate it does take five or six years, but most of the other cruise lines ordwarding ships in 2023 and early '24. Was that because -- more was sort of still for sale? Or was it just the balance sheet was...

Question: Jamie Rollo - Morgan Stanley & Co LLC - Analyst : I assume the other answers were also honest as well. But anyway -- and on the aging fleet, as you said, it will be over 30 years in a couple of years' time, and there'll be additional costs, maintenance, dry docks. Can we expect profits to be held roughly where they are at $140 million for Marella? Or could they decline over the next?

Question: Jamie Rollo - Morgan Stanley & Co LLC - Analyst : Jamie Rollo from Morgan Stanley. Could we just get back to some of the questions earlier in the presentation about quantifying the transformation of the torperator. So you've given us the 1.5% to 3% margin target. It looks like about half the upside is from the marketplace. And I asked the question earlier about gross GP1 margins. You've given us the group at 15%. You've given us. Thank you for the distribution cost. Where do you see that 15% GP1 and 10% distribution costs sort of at the end of the program? Obviously, your revenue is going to be much higher. You've got the top of the P&L, the bottom of the P&L, but a bit of help on the middle will be quite helpful.

Question: Jamie Rollo - Morgan Stanley & Co LLC - Analyst : So yes, thank you. And just one more on the cash side. I mean, I appreciate you taking -- you're going to talk about the cash return later this year. Is there anything you can say in advance in terms of just sort of parameters behind that, what the earliest in theory could be for dividend. I assume it's got to be a minimum reasonable size? Anything like that would be helpful, Mathias.