The sales have started.
The travel group TUI is selling a stake in 21 hotel properties - 19 existing Riu hostels and two new buildings - in order to redevelop its balance sheet.
A few days earlier, the largest, state-supported tour operator in Europe had announced the separation from its Tuscan village of Castelfalfi, which had been lavishly renovated for tourism.
Timo Kotowski
Editor in business.
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While the proceeds remained unnamed for the Castelfalfi farewell, the group is expected to receive up to 670 million euros by surrendering its 49 percent stake in the Riu hotel package.
TUI is to receive at least 540 million euros immediately after the transaction is completed, and another 130 million euros may follow over the next two years, depending on the course of business.
Since the hotel investment was last valued at 433 million euros, there is a book profit.
Competition authorities still have to agree, TUI is expecting a deal in late summer.
"The proceeds are to be used to reduce the coronavirus debt of the group," said TUI.
"Business model successful in the city hotel sector"
At the same time, the group declares that the sales are not just due to the pandemic, but are part of a long-term strategy. "We are separating hotel management and holiday experience from real estate ownership, as we announced at the end of 2019," the TUI strategy director Peter Krüger is quoted as saying. For vacationers, the hotels can still be booked in the TUI program, but the group will no longer be involved in the property and the stones of the houses. "This is a business model that has proven to be successful in the international city hotel sector," explains Krüger.
For the separation from the 21 hotels, TUI has found a partner in the direct group environment in the Spanish hotel company Riu.
The Tuscany village goes to a Dutch buyer from the empire of an Indian entrepreneurial family, the hotel shares go to those Spanish hoteliers who have been running hostels together with TUI for a long time.
With around 100 stores, Riu is the largest brand in the TUI range.
In addition, the Riu family has a 3.6 percent stake in the travel company.
"The partnership between TUI and the Riu family has existed for many decades and will be further strengthened by the transaction that has now been agreed," says Krüger.
Strategy 2019 presented
As early as 2019, CEO Fritz Joussen presented a so-called “asset right” strategy for the future of the group. Accordingly, the group should only hold real estate and assets that are essential for the business, but otherwise concentrate on the management and operation of accommodations. The further development of TUI into a “platform company”, a term that Joussen has been using many times since then, was intended to serve as a tourism specialist with a growing focus on online marketing.
“The renovation continues.
The second step to becoming a digital company will change the company significantly, more than in the last five years from a traditional tour operator to a highly profitable hotel and cruise company, ”Joussen announced when presenting the annual balance sheet for the pre-Corona year 2019.
Now the corona consequences on the consolidated balance sheet are being mitigated.
In the cruise segment that was highly profitable before the pandemic, TUI was not the sole owner of the “Mein Schiff” fleet.
The ships run with the TUI logo on the chimney, but behind this is a joint venture between the Hanover-based company and the world's second largest cruise line, Royal Caribbean.
Most recently, TUI also brought the luxury and expedition ships from Hapag-Lloyd Kreuzfahrten there.
Something similar is planned for the British cruise brand Marella.
In the travel industry, it is not ruled out that further hotel sales will follow. TUI has stepped up efforts to get rid of real estate during the pandemic. 42 percent of the more than 400 domiciles from the TUI brand portfolio have so far been owned by the respective hotel companies that are wholly or partially owned by the group.