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Asia a Major Growth Source for TUI

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According to TUI, a leading European leisure travel company, Asia and Russia offer huge growth opportunities for the future.

Mr Peter Long, CEO of TUI Travel PLC, speaking at the ITB Asia Convention in Singapore on 23 October said, “We expect to see another 600 to 700 million people travelling from and within Asia over the next five years – and mainly to other Asian destinations.”

TUI Travel, part of one of the world’s leading leisure groups – and the result of the merger between Germany-based TUI AG and the British First  Choice – operates primarily in markets at a mature stage of development, such as Europe and Canada. But it sees its future growth coming largely from emerging markets, which it why it is now focusing on Asia and Russia.

“We already have a strong presence in the Asia region,” said Mr Long, “with brands such as Pacific World, HotelBeds, AsiaRooms, Turismo Asia, TUI China, Aitken Spence, and Le Passage to India.

“Our planned expansion will use these established platforms,” he said. However, TUI also expects online sales to be significant – a segment in which the group has become a market leader in the last few years, despite intense competition from online intermediaries.

According to Mr Long, TUI has an enviable product range (some 200 brands ranging from mass market programmes to luxury holidays averaging US$55,000 a head) and market position.

TUI also has the advantage of strong vertical integration with tour operations, retail distribution (3,500 travel agencies), accommodation, and seven airlines, with a total fleet of 160 aircraft.

Mr Long said that he expects Asian markets to show different demand patterns from its European sources – there will not be the same interest in  mass-market products, for example. The fact that TUI believes most of the demand will be for intraregional destinations also explains why the group has invested so heavily in developing infrastructure in the region.

The TUI boss admitted that the operating environment could be tough in the short term. “The situation is clearly challenging,” he said. “But I have had equally challenging times in the past.”

What remains unknown, noted Mr Long, is how much consumer demand will weaken. He said this uncertainty requires a more flexible approach together with careful planning.

“Fundamentally, I believe that customers do not want to forego their annual holidays,” said Mr Long. “Although they may cut out that [extra] short break.”

As far as European markets are concerned, Mr Long said that high airfares are currently having an impact on demand for longhaul travel, “But I also think that, in the medium term, Europeans will want to travel to longhaul destinations.”

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