UPDATE 1-TUI Travel sticks to profit goal after strong bookings

Thu Feb 6, 2014 5:32am EST

LONDON Feb 6 (Reuters) - TUI Travel, Europe's biggest tour operator by revenues, stuck to its target of 7 to 10 percent annual profit growth after strong bookings in January for summer holidays that generate the bulk of the firm's earnings.

The British group, which owns the Thomson and First Choice holiday brands, said it sold 1 percent more holidays in its mainstream business, the largest part of the company, this January compared to the same period last year. The average price paid by customers was 3 percent higher.

"Trading remains in line with our expectations and we are confident of delivering 7 percent to 10 percent growth in underlying operating profit during the year," Chief Executive Peter Long said on Thursday.

The higher selling prices were a result of customers booking more all-inclusive holiday packages, said Long, referring to trips which include the cost of food, drink and services.

Shares in TUI, whose top three destinations are the Canary Islands, Turkey and the Balearic Islands, traded down 1.9 percent at 416.3 pence at 0939 GMT. The stock has gained 40 percent over the last twelve months.

Numis analyst Wyn Ellis said overall the update was positive but given the stock's good run, investors were taking profits.

TUI is 55 percent owned by German travel and tourism group TUI AG and has its biggest customer markets in Britain and Germany.

For its financial first quarter to the end of December, the group said its underlying operating loss narrowed to 108 million pounds from a loss of 116 million in the year-earlier period, helped by improvements it made in its French business.

Customers have taken fewer holidays to Egypt in recent years due to turmoil in the country, but Long said TUI was starting to see an improvement in demand for trips there.

"We are seeing a recovery albeit it's still very slow but it's building and we believe that will continue as we go through the summer months and in terms of bookings for next winter," Long said.

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