Do-It-All Tour Operators Continue Their Decline
February 12 2019 - 6:30AM
Dow Jones News
By Jon Sindreu
Tour operators that run everything from travel agencies to
airlines, cruise ships and hotels are a uniquely European business
model that seems to be nearing its final days. On Tuesday, shares
in TUI AG (TUI1.XE) fell more than 4% after the German company
reported earnings that fell short of already-depressed
expectations. They are down 40% over the past six months.
The slowdown in the European economy is the latest factor
casting doubt on the profitability of vertically integrated tour
operators--following the rise of comparison-engine companies like
Expedia Group Inc. (EXPE) and Booking Holdings Inc. (BKNG), which
have torpedoed traditional travel agencies. TUI's hotels and cruise
ships keep doing well, analysts at UBS pointed out, but the idea
that it's easier to fill them efficiently by running an airline and
a network of travel agencies doesn't seem to be working.
TUI's main competitor, London-based Thomas Cook Group PLC
(TCG.LN), is doing even worse, because it has a much smaller focus
in these few profitable areas. Its stock has dropped almost 70% in
the last six months, and managers have said they are studying the
sale of the airline division. In this case, less definitely seems
to be more.
Write to Jon Sindreu at jon.sindreu@wsj.com
(END) Dow Jones Newswires
February 12, 2019 06:15 ET (11:15 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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