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TUI sees healthy summer margins, eyes cruises growth

BERLIN (Reuters) - Europe's largest travel and tourism group TUI Group (TUIT.L) said summer trading was good and approved construction of another cruise ship for its Hapag-Lloyd cruise business as it seeks to take advantage of booming demand for holidays at sea.

TUI said summer customer numbers were up 5 percent, but turnover was growing faster, up 7 percent, driven by demand for Spain, Turkey and North Africa.

"We are expecting healthy margin development," TUI CEO Fritz Joussen told journalists after the group reported a narrower second quarter loss.

The quarterly results were driven by improved profits at its hotels and cruises business. The cruises business saw first half profit rise 23 percent.

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Joussen said TUI was seeing an opportunity in new customer groups for cruises, such as families and younger couples, but that growth was still coming from the traditional audience of older travellers.

TUI's board has therefore approved construction of a third expedition cruise ship for its Hapag-Lloyd luxury cruise brand, coming on top of another ship ordered for TUI Cruises earlier in the year.

"The cruises market has changed a lot, it's growing incredibly fast," Joussen said.

Overall, the group reported a narrower operating loss of 125 million euros ($148 million) for the quarter, which is traditionally loss-making, and confirmed a target for full-year underlying earnings before interest, tax and amortisation (EBITA) to rise by at least 10 percent at constant currencies.

(Reporting by Victoria Bryan; Editing by Maria Sheahan)