TUI Focused on Cutting Costs in Next Three Years

TUI Travel PLC’s goal for its first full year in business is to significantly cut costs and focus on experience-driven vacations, not the low-cost “commodity space.” In September, TUI’s tourism division merged with First Choice Expeditions to create TUI Travel.

TUI estimated it could cut $99 million in costs, in addition to cuts it already has made, for a total annual savings of about $298 million. TUI anticipated it could reach that target by the end of its third fiscal year, which ends September 30, 2010.

TUI Travel CEO Peter Long said the company was not concerned about a weakening in consumer demand. “We’re seeing an aging population who has money and time, and they want to go on holiday,” he said.

TUI Travel said it would close up to 100 of its U.K.-based travel stores over the next three years. As leases come up for renewal, the company will decide whether to renew.