Travel agent TUI (TUI) reports a very robust set of full year numbers given a difficult backdrop, helping the shares rise 5.4% to £12.00 – making it the best performer on the FTSE 100.

The company reports turnover up 5% to €19.5bn and core earnings up 10.9% at constant currency to €1.15bn in the year to 30 September.

TUI also reiterates guidance for underling earnings to increase at a compound annual growth rate of at least 10% in the three years to the September 2020 financial year.

These results are underpinned by strong demand for its higher margin hotel and cruise offerings.

'Our own holiday experiences content account for more than 70% of our earnings: hotels, cruises, excursions and destination activities. This enables us to clearly differentiate ourselves from the competition,' says CEO Fritz Joussen.

AJ Bell investment director Russ Mould also draws a comparison with its peer group, most notably Thomas Cook (TCG) which recently traded at multi-year lows due to concerns over its balance sheet and warnings on profit.

Mould says: ‘The diverging fortunes of travel groups TUI and Thomas Cook continues to widen, as evident by the former’s full year results which show a fourth consecutive year of underlying earnings growth.

‘Anyone expecting TUI to follow in the footsteps of its sector peer Thomas Cook with a profit warning will be severely disappointed.

'TUI is soldiering ahead with expansion of its own hotel and cruise offering and its experience holidays are seeing considerable growth, offering the likes of Italian cookery classes in Tuscany or wine tasting at a Portuguese vineyard.

‘There is clear evidence that consumers increasingly want experiences over material goods. TUI has spotted this trend and repositioned its proposition accordingly.

‘Rather than simply fly a customer to a different country and plonk them in a hotel and not bother about what they do in the day or night time, TUI is now curating the whole experience. It’s a clever move and one that Thomas Cook may look at in envy.'

Issue Date: 13 Dec 2018