December 1, 2016 / 12:55 PM / a year ago

UPDATE 1-Ryanair launches package holiday service

(Adds quotes, plans for city breaks)

By Conor Humphries

LONDON, Dec 1 (Reuters) - Ryanair launched a package holiday service on Thursday to take on tour operators such as TUI by offering flights with accommodation and transfers bundled together for the first time.

Europe’s largest airline by passenger numbers, Ryanair will start by offering summer packages to customers in the United Kingdom and Germany, Europe’s two largest package holiday markets, Chief Marketing Office Kenny Jacobs said.

The airline will then start targeting other markets and offer city breaks to cities such as Prague and Berlin.

Ryanair, which rose to prominence offering cheap, no-frills flights, wants to become the “ of travel” by boosting sales of third party services such as hotels and car hire via its website, which it says gets 1.5 million visits a day.

The airline has been forced to cut its profit forecast for the year to the end of March in October due to a weaker pound but plans to boost its market share by selling more cheap tickets and is expanding in Europe.

This month, Ryanair raised its passenger growth forecast saying a price war was hurting rivals and reaffirmed that profits would rise 7 percent this year, outperforming most of its competitors.

Besides package holidays, the airline is also planning eventually to offer concert and sports tickets as well as other travel services in the coming years.

It has characterised the strategy in part as a defensive move to avoid becoming a commodity sold by internet giants such as Google and Amazon.

Kenny said he expected such firms to become direct competitors in packaging travel services in the coming years.

“It is going to be an interesting space. Everyone is going for the same ball in the middle and everyone wants to own more of the trip,” he said, citing a move in recent weeks for accommodation provider AirBnB to offer city tour services.

Ryanair will try to undercut traditional package holiday firms by forgoing commissions to drive volumes, Kenny said. He said up to half of the smaller boutique package firms might go out of business as larger companies muscle in.

Ryanair declined to say how much of the European package holiday market Ryanair was targeting but said it would set out targets in six months time.

“We are already bringing you to the destination ... if we can offer you top class hotel inventory and we forgo our part of the commission to drive bookings, we’re confident we’ll have the best offer,” Kenny said.

Ryanair Holidays will operate with support from Spain-based tour operator Logitravel and accommodation provider World2Meet, and will focus initially on sun holidays to Spain and Portugal. (Editing by David Clarke)

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