Luxury hotels demand boosts TUI Travel bookings

• Sees 2011 summer bookings up 8-16 pct in key markets
• Says Q1 operating loss narrowed by over 20 mln stg
• To focus on higher-margin holidays, online presence

London-listed TUI Travel, controlled by German group TUI AG, said its underlying operating loss for the first quarter had narrowed by some 20 million pounds ($31.8 million) from a year-earlier 107 million. Results are due this week.

TUI Travel said overall bookings were up between 8 and 16 percent in its key markets on demand for ‘differentiated’, higher-margin products, such as five-star Sensatori hotels or holiday villages designed for families.

“In the UK ... bookings for differentiated products are up 26 percent and we expect these products to represent half of all holidays sold over the full season,” it said in a trading update to accompany an investor day.

Chief Executive Peter Long said it plans to focus on rolling out these products to offset margin pressure on mass-market trips, being felt due to competition from online booking sites.

It also plans to expand online and invest in its accommodation-only businesses. However, it remained cautious given the uncertain economic and geopolitical environment.

Unrest in Tunisia resulted repatriating customers, while a contraction in fourth-quarter GDP prompted warnings of a grim 2011 for the British economy.

The company, which competes with Thomas Cook, also said it could make a further 40 million pounds of cost savings at its UK business and central functions.

Its UK operations came under scrutiny last year after accounting errors led to the departure of finance chief Paul Bowtell, two further directors and the company’s auditors, KPMG.