04/12/2012 05:45 GMT

Thomsons Holidays Owner TUI Hails Return Of The Package Holiday

Thomsons Holiday owner TUI has reported positive results after reaping the benefits from changing its business model in 2012.

Total revenue declined 2% to £14.5 billion, however, underlying operating profit increased by around 4% to £490m, and pre-tax profit is up 8% to £390m.

Current trading is said to be "strong" for the winter season across all markets, except France, and bookings for Summer 2013 are already looking healthy.

Karl Burns, analyst for Shore Capital, told Huffington Post UK The reason TUI has done so well compared to rivals such as Thomas Cook was because it had changed its product offering.

"The tour operators have come under pressure from online travel agents and DIY holidays, building their own holidays from scratch, without using a tour operator," Burns explained.

"This was eating into the sales of tour operators, as their products offering could be replicated. TUI moved into differentiated and exclusive products, offering hotels which are generally 5*/All-inclusive bas well as guaranteeing rooms and sometimes putting up capital (money) for refurbishment."

Online travel agents, by comparison, can't do this, as they are only an exchange between holiday makers and the resorts. Thomas Cook was "very late" to this change in product and strategy, Burns added, and TUI also benefits from having a large online agent presence through products like Late Rooms.

"The economic backdrop will impact, but TUI has proved that by managing capacity, they can sustain demand and pricing," Burns concluded.

Last month saw Thomas Cook announce a £490m loss, but much was blamed on the high fuel costs, pressure on consumers' pockets and the rise of internet travel agents.

The ongoing turnaround programme under new chief executive Harriet Green was praised by analysts, but many remain cautious of whether Thomas Cook can pull through the recession or not.