TUI has raised its full-year profit guidance, citing record demand for its hotel and cruise brands that pushed the travel group's underlying performance ahead of market expectations.

The German-British operator, which runs hotels under brands including Robinson, RIU and TUI Blue alongside three cruise lines — TUI Cruises, Marella Cruises and Hapag-Lloyd Cruises — reported that both its Hotels & Resorts and Cruise divisions delivered record results.

The upgrade signals that packaged holiday demand in TUI's core European source markets — Germany, the UK and the Netherlands — remains resilient despite sustained inflation in accommodation and flight costs. Hotel occupancy and average rates across the group's owned and leased portfolio strengthened during the period, while cruise vessels sailed at close to full capacity.

For European hospitality operators, the guidance raise underlines a structural shift in leisure travel spending: customers continue to prioritise holidays and experiences even as discretionary spending elsewhere contracts. That demand supports rate growth across Mediterranean and Canary Island resort markets, where TUI's hotel portfolio is concentrated, and sustains charter flight capacity into those destinations.

The announcement also sharpens the competitive position of vertically integrated operators. TUI controls aircraft, hotels, cruise ships and distribution, allowing it to capture margin at multiple points in the customer journey and to flex capacity between owned inventory and third-party contracted beds as demand shifts.

Investors responded to the improved outlook, with the raised guidance marking another step in TUI's recovery from the pandemic-era collapse in travel. The group has spent the past two years restructuring its balance sheet, cutting legacy state aid from Germany and consolidating its listing structure.

TUI now expects underlying EBIT for the full year to come in ahead of its previous guidance, driven by the momentum in hotels and cruises through the key summer season, which typically delivers the bulk of group earnings.

The outlook revision follows a pattern across the European travel sector, where tour operators and hotel groups with resort exposure have consistently upgraded forecasts while city-centre and corporate-led segments recover more slowly.Operators with heavy leisure-resort weighting — notably in Spain, Greece and Turkey — continue to report the strongest rate and occupancy growth in the region.

TUI will report full interim results with detailed divisional figures, where analysts will scrutinise RevPAR and occupancy data across the hotel brands, load factors on Marella's UK-focused fleet, and booking curves for winter 2024-25. Further guidance revisions remain possible if summer demand holds through the late-booking period.