Good morning, ladies and gentlemen, and welcome to the TUI AG conference call regarding the first quarter results. At this time, all participants have been placed on the listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your hosts, Mr. Friedrich Joussen and Mr. Sebastian Ebel.
Good morning, everybody. It will be a busy day today. Annual General Meeting Q1 results. I'm always a little bit confused of what presentation I should focus to. With the help of all the team, and also Sebastian is with me, so if the CFO is close to you, then nothing can go wrong. Let's go to page 4, and we will do the presentation as usual. I do some introductory remarks and the closing and the important pieces come from Sebastian. The first slide shows clearly we operated in Q1, 67% of capacity. We said 60-80, so that is spot on. Actually, we also continued commercially, I would say, on a very strong Q4 result of last year.
2.3 million customers and that is 4x what we had before when you look at revenue, 5x what was the year before. Very strong commercials and strong commercial pickup. 79% load factor actually says it is strong, but it is not where it should be in terms of a normal year. Normal year would have been 85, maybe even 90. It is actually regaining. That is reflected in the EBITDA almost break even, EBIT and also EBT EUR 400 million roundabout better than Q1 into prices. Hotels & Resorts stayed positive. I think that is very strong. A strong liquidity position EUR 3.3 billion.
Therefore, we are very comfortable paying back the first tranche of government funding 1st of April. I think this is all good news, but I mean, this is, of course, all history. I will come to the future, to the trading in a minute. Maybe I'm turning the pages to the different sections of our business. Hotels & Resorts actually is now 8.6 million bed nights. A year ago, it was 5.2. A normal year would be 9.1. We are close to a normal operations. And I think that has been also the theme in Q4 of Hotels & Resorts, even if not fed by the local markets, by our source markets.
Local business very strong, Caribbean, for example, Americas. Hotels & Resorts positive, and you will see that also when Sebastian talks about financials. Markets and Cruises, I would say, a little bit more difficult situation, particularly when you look at Q2 right now, and you see a little bit, you know, it's a lower sailing. Only six ships are now sailing, but the summer bookings are strong. The summer prices are strong, we remain very positive on summer. Markets Airlines maybe more important and more significant right now, 2.3 million customers. In a normal year, we would see 3.6. It's a little bit lower, or it's lower than Hotels & Resorts. Hotels & Resorts almost normal.
The markets need to still catch up. Maybe one last remark on that page is TUI Musement. TUI Musement, 10x the volume of the year before and higher, 250,000 excursions, higher than pre-crisis. TUI Musement is strongest growth. I mean, even in difficult times when customers from source markets are only 2/3 is overachieving already the numbers of excursions. That is the strong growth story I always talked about, particularly when we talk about strategy and growth segments for the future. Very attractive segments, and we are certain that this is actually the right horse to bet on. Now, when you go to the next slide, now we talk about future, and this is maybe more interesting.
You see the weekly booking profile for winter on the left side. You see the Omicron valley, right? In December, you know, the net bookings actually went down. The interesting thing now is that the net bookings of last week have been 94%. When you look at the accumulated booking for winter, it is actually in the table on the right, you see them as 42. This is 58%. Week-over-week, we add right now more and more customers, and you see the enormous dynamic development, you know, week-over-week. Just to give you an idea, the volumes are not small. Last week was actually 125,000 bookings for winter, so it is strong.
What's also strong is 15% revenue satisfied, so the margins will be good. Therefore, as we have also tweaked the capacity, the load factors will be okay. Margins, price is good, load factor is good, catching up demand, that is the theme for winter. Now, summer is more important because some of the volumes are much bigger. When you see the steady-state summer is actually -28%. That is, you know, the base we are starting now, 72% base. We are lagging behind 28% pre-crisis, but 22% higher prices. I have never seen, in all fairness, any market situation where we had 22% higher prices. You remember the early 20, early 2020, we said 14% higher volumes, 3% higher prices, and we felt good.
22% higher prices is a lot. When we turn the pages right now, you see that actually also the bookings are now tremendously catching up and we are now last week 100%. Spot on pre-crisis level when it comes to booking. You could argue, of course, this is lower booking and so on and so on, but also absolute terms, and I just want to mention it because it is also absolute terms, high numbers, because we are talking last week 275,000 customers, 100%. I mean, that says, you know, we are catching up on this 72%.
We are building now enormous momentum, and you can imagine that also the 100% might not be the end of the ceiling of development because you see the steep increase. As I said, you know, on the basis, you know, now on the base, 22% higher prices, you know, 100%, last week, you know, I would assume that we see a strong catch-up. The demand is high. The spending, the household savings are high, and it's driven by all markets. Just to give you an idea, strongest market now is Netherlands, + 70% up on pre-crisis. U.K. up 20% on pre-crisis. Germany is 20% down on pre-crisis, but packages are up 20% on pre-crisis.
Overall, it is a little bit lower, because of Austria and Switzerland and all the effects. Packages which are the higher margin business is up 20%, and even in Belgium is up 20%, and even Nordics is catching up. It's still below 100, but you know, the mix is now moving up. Particularly, I have to say, now the last weeks have been an enormous rally of bookings, and we assume that will go on. Let's talk about the sectors a little bit and sentiment. I mean, potential is what I talked about, the customer. You know, I will just leave it there. You know, even in the difficult Q1 was profitable.
I think that's not something to discuss about. Cruises we said, you know, we have been cruising, sailing with 14 ships. Now we are sailing with 6 ships because of the port restrictions and Omicron on the ships and so on. When you look at the last bullet here, you know the bookings for summer are strong, prices are good. Therefore, you know, as restrictions ease, that will be. It's not a matter of demand. To Musement is, you know, I will talk about this distribution, our own captive channels, so our app in a minute. You know, the secret of being 10x the volume year ago, being 1.5x the volume of pre-crisis is actually also third party.
You know that we talked about booking, you know we talked about TripAdvisor and all the other partners, and that is coming to life right now. As I said, it's the strongest growth pocket in our company. Okay, let's talk a little bit, and I know that you sometimes like it, and I like it as well, you know, about the business itself. You see our app. Almost 70% of our customers use our app. You know, you see that we have, of course, brochures and so on. I think the things which are also, you know, the excursions which are marketed, you know, dynamic booking flow messaging, cross-channel deep linking.
When you are on the website, you know, the app will remember that you have looked on the website and so on. All good stuff. You know, the dynamic book flow means that each customer individually gets excursions, and you saw the uptake. By the way, it is on the comparable. There's 7x the uptake to pre-crisis levels. It's very strong. Right now it's still ancillary selling. You know, soon will be coming accommodation-only future market. Stuff which is not packages, but which is alternate to our packages in different market. But what it's also doing, and this is the open nature of our new IT architecture, it has strong API interfaces.
For example, we have actually now connected the Mobi software to our app. What that really does is not only it gives you the Uber-like experience so that you know exactly when the bus is coming, and you see the map and the buses actually are arriving, so Uber-like experience. Also, you know, Mobi is also this artificial intelligence, intelligent route planning, so the question of how should the bus drive and what kind of route is actually optimal to save costs to bring customers faster to their hotels. Mobi is a very strong technology company which does connect via APIs. It's possible in the modern stack. I just wanted to give you a little bit of a highlight here. Okay.
Actually, something which we are also proud of is our sustainability agenda. Historically we always have been focusing on the airlines and being, you know, atmosfair ranking and you name it, the youngest fleet, low consumption, also the 80% pre-crisis hotel certification. All the verticals are very important, but when you want to fulfill the UN sustainability targets and the European Green Deal 2030, 2050, also the region needs to be sustainable. I have personally together with the Prime Minister Mitsotakis, who launched Rhodes as the co-lab for sustainable tourism.
What that really means is, you know, an open platform for all tourism and, you know, we want to get this destination sustainable destination, and it's a public-private partnership, and it's a role model for our global destination development. It's all fact-based. I mean, it's important that you have 2030, 2050 targets. We believe it more important to achieve progress short-term in order to be able to hit the targets. Rhodes, when I opened it, you know, I didn't know, but, you know, just for you to digest, 97% of the GDP is actually tourism.
If we don't get it right in Rhodes, you know, then we have a big problem because it's the only thing which happens in Rhodes and therefore, you know, it's not only tourism minister and so on, it's also the prime minister being focused, and I think this is this is very important. Why did they pick TUI? Well, because we have a long-lasting relationship, because we invest in the destination, because we bring customers. It's a lot of discretionary investment and customer spending, and that's of course very important when 97% of your GDP is actually tourism. The tourism agenda is actually and the sustainability agenda is developing. That's what I wanted to highlight here.
Now, next one, which I think is also very important, we always talk about vertical integration and that we are focused on building own differentiated content. You know that we have TUI BLUE and ROBINSON and TUI MAGIC LIFE, we see the brands and we are proud about them and we are very confident that we are doing the right things when you look at our profitability of these brands and how they develop and how they grow. We think we do the right things. Now, the issue a little bit with the strategy of differentiated content is that you have a challenge to grow fast, because when you invest a lot, you do it all on your balance sheet, you cannot grow fast.
To unleash that strategic dynamic, I know that we talked about it, but it's for us very high on the agenda. We need to grow off-balance-sheet and in cruises we do that as joint ventures. In hotels we do it with joint ventures. But even more important, we launch right now the first one, the first independent. It's an independent hotel fund, but you know, we are doing the advisory services to them. We are actually earning on GOP on revenue. It is a very new model, but it is a model which is potentially growing very fast. The first fund is launched. 40% of equity is in the fund right now. Since we have the fund, we get a lot of new opportunity as well.
The opportunities come because people know that there is growth money. Therefore we are convinced it's the right way to go. We have the full control, but we don't have the investment on the balance sheet. We think it's absolutely spot on in order to achieve differentiation as well as have not all the investment on the balance sheet. That's actually this. Then I think I'm done with my first section and now comes important numbers, you know, that actually show you very clearly how we performed, and that actually will do. Sebastian will guide you through the numbers.
Thank you very much, Fritz. A very warm welcome to everyone who has joined on the webcast today. Let me guide you through the quarter one results of the financial year 2022 on the following pages. Starting with the income statement, we delivered group revenue of EUR 2.4 billion in the first quarter, which is up EUR 1.9 billion on the prior year, reflecting the more open travel environment enabled by the successful rollout of vaccination during calendar year 2021. As Fritz mentioned, we operated 67% of our 2018-2019 winter capacity in Q1, which was in line with our expectations.
October delivered around half of this capacity, benefiting from good summer momentum, which unfortunately eased off in November and December due to Omicron-related concerns. We certainly now see this momentum returning in our bookings in the most recent weeks, and we can see this every day. Q1 underlying EBITDA was almost breakeven at a EUR 65 million loss, a significant improvement of EUR 392 million versus prior year. Q1 underlying EBIT loss reduced to EUR 274 million, improving by similar quantum to EBITDA, with Hotels & Resorts delivering a second quarterly positive underlying EBIT since the start of the pandemic. Adjustments this quarter, not too much to flag here. We have a EUR 21 million gain included this quarter relating to the sale of Nordotel Hotels, which is partly offset by ongoing costs relating to the Global Realignment Program of around EUR 10 million.
Our full-year assumptions for adjustments remain an expense of between EUR 90 million-EUR 100 million, of which around EUR 70 million were related to the Global Realignment Program. Therefore, no change to December. Q1 net interest expenses increased year-over-year despite lower cash interest, which you will see on the next page. This is primarily due to a positive one-off accounting effect in the prior year relating to the revaluation of the senior notes. Our full-year assumptions for net interest range of between EUR 380 million-EUR 425 million is based on our expectations of a more normalized business this summer, where we would anticipate lower drawings of our facilities as a result.
Lastly, group results after minorities was a loss of EUR 384 million, a clear improvement of almost EUR 400 million on the prior year, which is a solid step in the right direction. On my next slide, I want to touch on some segmental highlights, especially given we have seen an excellent performance delivered by Hotels & Resorts. Hotels & Resorts underlying EBIT of EUR 61 million is not only an improvement of EUR 157 million versus prior year, but is almost in line with full year 2019 Q1 results of EUR 69 million. The segment delivered its second consecutive positive quarterly EBIT, a development which I'm very pleased about, and for me a good start of our Hotels & Resorts to our new financial year.
Overall average occupancy was 64%, up 21 percentage points year-on-year, and average daily rate increased by 20% to EUR 72. Mexico did really well, delivering occupancy of 85%. Occupancy in the Caribbean was at 76% and across the Canaries they averaged 79%. This pattern was reflected in the Riu's result in particular, with strong performance in the core Caribbean and Spanish markets. Moving to cruise. You'll see here that our cruise segments delivered a EUR 67 million improvement year-on-year across the three brands, with TUI Cruises and Hapag-Lloyd delivering 67 of this improvement, which reflects the wider resumption of operations in the first half of the quarter. The quarterly result was held back from late November due to Omicron and increasing incidence rates.
This resulted in a number of amended bookings delaying to a later departure date and the early curtailment of three of our ships, which of course then impacted the results you see here. As already flagged by Fritz, it's likely that cruise will see a more challenging environment in Q2, although since a couple of days we have now within TUI Cruises, 10/ 12 ships in operations. Onto TUI Musement. Here we sold 1.1 million excursions in the quarter, an increase of 1 million versus prior year, generating a EUR 20 million improvement in underlying EBIT. Very simply, this illustrates the return of activities in our destinations and the broader range of offerings, and I'm convinced of the future growth in this segment. What we see here are the first steps in resuming our growth plans.
We have invested in the digital acceleration and the integration of Musement, so this leaves us very well positioned as the summer returns to normalized levels. Onto markets and airlines division. As already covered, we certainly saw a more open travel environment this quarter, with October seeing good momentum for both bookings and departures. The latter end of the quarter, however, saw a level of amendments due to Omicron concerns, which saw a number of customers delaying departure to a later period. A total of 2.3 million customers departed in the quarter, and I'm pleased to share that we have achieved a load factor of 79%, which is only a few percentage points behind full-year 2019 Q1 of 85%.
Combined across the segments, underlying EBIT was improved by EUR 164 million to a EUR 259 million loss, reflecting the 67% capacity operated over the period. A vast improvement on the previous year, which saw our operations largely suspended due to travel restrictions. The results include EUR 34 million net cost impact from hedging ineffectiveness. This is a non-cash item, as well as savings delivered by our Global Realignment Program across all markets. You can see here the similar pattern and underlying EBIT performance to Q4 with our European markets continuing the steam from summer 2021, which saw a higher level of confidence in departures.
Comparatively, higher to central and western, northern regions saw a loss of EUR 172 million. This primarily reflects the higher operational leverage for the U.K. business with U.K. Departure volumes, although improving, still limited on overall sentiments around testing requirements and changing restrictions. As you all know, testing on entry and day two PCR testing was only removed on December 7. Overall, this was a mixed result for the segment, but it serves to illustrate more than ever the benefit of our business model where we are diversified in our source markets. Ultimately, we are not solely reliant on one market to determine our return to profitability. To sum up our underlying EBIT performance, I will briefly run through our usual bridge. Starting on the left, where prior year Q1 reported a loss of EUR 776 million.
All segments delivered improvement year on year, with only hedging ineffectiveness of EUR 34 million as a material, one-off cost to flag in the quarter. Q1 capacity and its result was broadly in line with expectations, resulting in Q1 EBIT loss of EUR 274 million. For the second quarter, where we experienced some headwind on bookings from the Omicron discussions, we may see cruise in our market and airline business likely to deliver a weaker quarter. However, we see some good trends since the new year, which gives reason to, for early optimism as we head into summer and the positive trend is accelerating day by day. Moving over to our cash flow slide for Q1. As you can see on our slide, overall Q1 cash flow was driven by lower seasonal working capital outflow compared to 2019, and the proceeds from the capital increase in November.
Looking into the details, starting from the reported EBITDA of EUR -55 million, we saw, as expected, a Q1 working capital outflow of EUR 937 million, which was significantly less than usual due to lower summer 2021 business volume. The outflow was driven by the normal seasonal supplier payments and seasonal decrease in customer deposits. Just as a reminder to everyone, the level of working capital outflow we have recorded in a more normalized environment for Q1 2020 and full year 2019 amounted to roughly EUR 1.4 billion. The outflow of cash interest improved to EUR 93 million due to savings from lower RCF drawings and further year-on-year savings in context of interest and fees from the repaid senior notes. This was partly offset by coupon payments for the convertible bonds issued in April during last year.
All of which led to a total operating cash flow of -EUR 1.1 billion. The low cash out for CapEx of EUR 53 million is in line with prior year and underpins our continuous strict CapEx management. Prior year benefiting from divestment proceeds and sale leaseback financing. Our current assumption for full year 2021 net investments remain the same. Here we expect an overall cash outflow of between 120 and 280. Breaking this down, we expect cash CapEx outflow to be in the range of between 300 million to 350 million, which we expect to be mitigating by positive inflows of between 70 million to 180 million through some smaller divestments and positive net redelivery payments for aircraft. To assist you as before, we have included a modeling assumption table in the appendix of this presentation.
That brings me to the total cash flow of EUR 59 million, which was driven by the net inflow from financing of EUR 1.1 billion capital increase in November, in addition to the increased RCF drawings, partly offset by principal lease payments. Onto the liquidity position, let me run through our cash and the facilities as of the 3rd of February. We are pleased to report a strong liquidity position of EUR 3.3 billion, reflecting strict cost discipline, the expected lower working capital spend due to reduced summer 2021 volumes, as well as the proceeds from the recent capital increase. The outflow for the month of December and January was very much in line with expectations, with Omicron having less of an impact than initially anticipated and a strong cash inflow in the recent days.
With this strong liquidity position, we are well prepared for the remainder of the winter season and also in a very comfortable position to make the first step in handling back roughly EUR 700 million of government support early April. Onto our net position, Q1 net debt stood at around EUR 5 billion, in line with the year-end net debt position. The in line position reflects cash proceeds of EUR 1.1 billion from our recent capital increase, offset by operations and working capital outflow of roughly EUR 1 billion. The latter of which, as previously outlined, being much lower than what is seasonally typical for our first quarter. Additionally, on the bottom left of the slide, we have again provided the drawings of the silent participations, as well as under the RCF, as of both balance sheet date and end of February.
To the bottom right of the slide, we have provided the split of our financial liabilities with the full details on lease liabilities and liabilities to banks, which I know most of you find helpful. To finalize my section, I would like to reiterate my ongoing priorities as CFO. It is important to me that we continue with our strict cash and CapEx discipline, manage the working capital low back, and further execute on the asset-right strategy. Today you have heard further evidence of this with the initiation of the hotel fund. We will continue to drive operating effectiveness. This means where possible, we will work on optimizing our fixed capacities. Our Global Realignment Program is on track to deliver further 25% of our target this year.
Our digitalization, we see the good progress of TUI Musement, and we will continue to accelerate our digitalization plans and growth aspirations through dynamic packaging. Lastly, but certainly not least, we will continue to work hard on optimizing our financing structures. We will seek further delever opportunities using organic cash proceeds from routine portfolio optimization and the continuation of our asset-right strategy, all with the target to reduce debt and to further improve our credit rating. You may well have seen on our AGM agenda, the new capital authorizations, which we will ask our shareholders to approve today and to say it clear, these are inventory resolutions. We are convinced that the availability of options and the flexibility to act quickly and opportunistically upon market opportunities are a value for all stakeholders in these volatile times.
I'm pleased to say that we have made good progress over the last month, and that we will continue on this path. To conclude, it's our collective ambition and target to return the company to a solid and healthy balance sheet. TUI is well-positioned, and I look forward to updating you as well as we deliver on our ambitious ambitions in the upcoming periods. With this, I will hand over back to Fritz for the closing remarks.
Okay. Thank you. Thank you, Sebastian. I have one more slide, and then we turn to your questions. It's an important slide, I think. You know, the lower part of the slide says 3x cost leverage. Of course, you can move that ratio by moving debt down, and that's what we wanna do. Also to move cash conversion up and profitability up. We think we have done our homework in the crisis to be significantly up on EBIT long term, right? Or mid-term. This is by growth, and this is by efficiency. The pockets of the future growth of profitability as you see above. Where did we do our homework? I talked about the expansion of our tours activity segment. Already today, stronger than pre-crisis, even with lower customers.
Digitalization, mass individualization, 21 million customers. App as a distribution channel of activities are more relevant, more differentiating, more growth in the customer base. Cross-selling, upselling, of activities, of room upgrade and so on and so on. We see very promising first results. One of the reasons that actually our tours activity segment is so strong is also the new distribution channel, which we have here. I talked about the asset-right financing structure. Growth in hotel segment, growth in cruising by new tonnage and so on, and Sebastian talked to you about it, you know, the financing and joint ventures off-balance sheet. Very important, the first step is done in terms of the hotels. That will be a strong growth pocket as well.
Last but not least, the best predictions you can do is of cost saving. We promised EUR 400 million, 2,300s. Last year, we realized EUR 240 million. This year, we will do 9%, so EUR 340 million at least. All actions closed this year. We finish Realignment one year earlier than promised. These are the pockets which we believe will create sustainable growth and sustainable, also profitable growth and cash conversion, which is equally important than just managing debt down. That said, you know, I would like to open the floor to your questions.
The first question comes from Jamie Rollo from Morgan Stanley. Please go ahead with your question.
Thanks. Good morning, everyone. I have three questions, please. First, on the summer average selling price increase of 22%, can you quantify the mix benefit within that, given your packages are up and your flight only is down? Clearly, there's a very big difference in average selling prices between packages and seats only. Also, what are your margins on those bookings? Because you're showing us that you're paying 20% higher rates, for example, on the Riu Hotel portfolio. You've got higher fuel costs. Could you just confirm the margins are up for the summer as well? Secondly, I appreciate it's too difficult to give full year guidance, but we're nearly halfway through the second quarter, and you talked a bit about cruise and markets and airlines being worse than the first quarter.
Could you perhaps give us some steer on Q2 losses? I mean, competitors, for example, had a similar loss to the first quarter, around EUR 300 million. Is that fair? Finally, you mentioned, I think Fritz in an interview this morning, you're expecting the German states to convert, and you've got the EUR 1.7 billion authority you're looking for at the AGM for potential share issue, which I think, Sebastian, you described as authorisation resolution. Just really that EUR 1.7 billion share authority issue, how many shares do you think the company might end up converting to repay some of the state aid and debt? Thank you very much.
Okay, Jamie. Hello. You know, I won a bet because I said the first one will be Jamie Rollo, and it will be three questions. Okay, so that actually gives me 20 EUR of my colleagues around the table. 22% is all mixed, right? It's all mixed. It is a mix of destinations, enormously more long-haul, enormously more Cape Verde. Destinations where the margins are very good. Slightly longer holidays, slightly more five-star and four-star booking. You know, the 22% is a lot. The margins as the destinations which are particularly popular is now long-haul to the Caribbean and Cape Verde. I mean, these are by far the highest margin destinations we have.
Therefore, it is mixed, but also the margins are significantly up. That said, you know, maybe Sebastian will talk about, you know, hedging position in a minute. You know, we talked about should we do a full year guidance. In all fairness, we decided not to do it yet, yeah. In all fairness, when you look at the booking position right now and just the development over the last weeks, you know, which of the booking patterns should we have guided to this, with Omicron being prevalent in December and obviously 100% potentially even in the next weeks going above 100% for summer. In terms of the booking patterns, we would have liked to do something, but it should have been also meaningful.
Therefore, you know, what I see right now is extremely strong. But that said, if we can keep that a little bit a couple of weeks, maybe a couple of months as the big booking months as we see right now, you know, I think then we are more potentially in a better position to do that, you know. The big conversion I just said this morning because I cannot imagine that a state, you know, has the opportunity to convert at EUR 1 and doesn't do it. Therefore, I think it will happen. I have no particular information of when it will happen or how it will happen. I also know from all discussions I have that the state is potentially not a long-term investor. That's also clear, yeah.
That's also nothing I know, but just I assume. That said, Sebastian, particularly on, you know, on the capital and also on the hedging position on t he Q2.
Thank you, Jamie, for the question on the Q2. As we said, the first quarter was impacted by the Omicron variant, as Fritz described this, which impacted significantly December, but also January. The Q2 is normally the weakest quarter we have, with losses between EUR 200 million-EUR 300 million in normal years. We do see the impact of Omicron in the second quarter. We also see a catch up, so it's very difficult how these two effects will be. We do expect that the Q2 will be weaker than the Q1 due to early Omicron booking impact. On cruise, we have now with TUI Cruises and Hapag-Lloyd, as said, 10 ships again in operations.
There were very few bookings from mid-November till almost now. We have seen also now a strong impact, and we have strong forward bookings. It's really exciting to see, and I'm really curious to see how strong the catch-up effect will be. This is not yet clearly to predict. On the hedging position, we haven't had the lines which we would have had before. That's why we hedged later than normal. For the winter, we are well hedged. For summer, we have hedged the booking position. There are two effects which offset almost, which is the stronger pound and euro as we had anticipated and the higher fuel price.
That is why we think we can cope with that on today's level. On the capital measures, I actually don't know if the inventory decisions, if that is a real English word, but we couldn't find a better one.
A lot of the decisions will depend on when is the right occasion, how strong is the business and the operating cash flow. That's why we cannot give any guidance on that. The focus very much now is to really get the strongest cash flow generation we can do.
Brilliant. Thanks. Sorry, just as a follow-up. In terms of Q2, something between the normal EUR 300 million loss, but I assume not as bad as the EUR 600 million loss a year ago, somewhere in between?
If I would agree on that, I would give a guidance, which I don't want to do. It will be less than last year's quarter two.
Brilliant. Thank you very much, and apologies for being so predictable. Thank you.
That's good. Okay.
The next question comes from James Ainley from Citi. Please go ahead with your question.
Great. Morning, everybody. Just wanted to follow up on that question on the share authority. Assuming that the silent participation one is converting, can you just confirm how many shares it would convert into currently? And therefore kind of how many shares left over in the authorization. Second, when you think about the new hotel fund you're raising, could you sort of sketch out the economics of the fund? I guess what I'm trying to understand is how much equity you'll put in and what ultimately the profit contribution could be from that fund once it hits maturity, please. Thank you.
The final participation, the conversion is for EUR 1, so it's 420 million shares. This is what you can deduct from the authorization. As said, these are inventory decisions, no concrete plans on that. The hotel fund, and this is very important, is independent of TUI. The hotel fund can invest in any property. The facilitator is HANSAINVEST. Of course, it's our interest to manage these hotels, but it could also be that these are other hotels. If you look at comparable hotel companies' official data, normally the income is 3% of the revenues, 110% of the GOP without any capital deployed. This is why we are doing it.
It's an independent body from TUI, and we will manage the hotels, and that gives us acceleration of building our hotel brand network.
Okay, great. Thank you.
The next question comes from Richard Clarke from Bernstein. Please go ahead with your question.
Thank you very much. Thanks for taking my question. Just starting on the balance sheet. Obviously, you've made a disposal in the quarter of Nordotel Hotels. Not an asset you've talked much about before. Is there much else of that kind of asset that you can sell? Any other disposal plans to come? Then the second question, you're obviously seeing a shift from flight only towards packages. Has that been TUI-led? Have you been pushing that, or have consumers actually been wanting to book more packages and maybe the reasons behind that shift? Then thirdly, on cruise, I think on your guidance on summer close to normality is a markets and airlines comment.
Maybe you can just talk to me about how you see the cruise recovery come, when that can return back to normality in your view.
Okay. Flight only is also. I mean, first of all, we sell whatever we can sell, right? We are not in the business to educate our customers. The mix itself is of course, when you do it as overland, then you know, long-haul is more prevalent, then you have more packages, right? Also sometimes, you know, when you look, you see the first scarcity is coming up, right? Scarcity means, of course, that you cannot book independent, right? When you look, for example, summer bookings, when you look, for example, the first high season now will be the Easter weeks. Easter weeks, you know, the destinations will be full. That's also good for margins, by the way, and good for the late pricing.
It's not that we necessarily want, I mean, it's good for us, but it is customer-led, it's scarcity-led, and it's destination-led. You know? The other question was, is there more left to sell? I mean, is more left to say.
No, that was on the asset.
That was not what I said. No, I mean, the third question was, are cruises recovering? Cruise recovery, maybe you do the selling of if there's more to sell. The cruise recovery is a little bit, I would say, common sense. People would actually go on cruising right now. Of course, when the infection rate, you know, limits your access to harbors, to it limits actually your cruise operation. Of course, it is volatile. We believe that the summer will be much better because last year it was also much better.
When you look at the booking patterns right now, bookings for summer, particularly for Q4 this financial year, but also for Q3 starting, but particularly Q4, is on pre-crisis level, and prices are, if at all, higher than pre-crisis. Therefore, we assume that demand will be there and also that that, you know, if we can do the savings, that the savings will be done and it will be very attractive. That's what we assume, particularly in summer when the infections, you know, are less influential and, you know, you have had Denmark, you have had U.K., and also even Germany are very conservative, but there's right now opening of everything before Easter is thinkable.
I mean, therefore, my personal view is, it is not unlikely that this will be on pre-crisis or close to pre-crisis levels. On Nordotel, Sebastian and I mean, maybe you can take that question.
Yes. First we sold Nordotel into Grupotel, which is one of our joint venture companies, which is very good fit in with our strategy. We keep 50% of the after-tax profits. Do we have similar opportunities? It is part of our normal business that we sell the one or the other assets that we have done in all the years. We have discussed Marella. There would be a significant synergies to bring this into the TUI Cruises joint venture. For the time being, we have to see when we have the right moment. Cruise should recover first. The good thing is that, due to the ownership of three out of the four ships, the Marella is generating a good cash flow.
We can wait until we can achieve the full value of Marella. There is a few things which we will do. Marella would be the biggest project.
Thank you.
The next question comes from Karan Puri from JP Morgan. Please go ahead with your question.
Hey, morning. Just a question from me, firstly on the pricing. Do you think this the price rises are sustainable? I know it's been driven by mix, but do you think it's a one-off just using cash flow to recover lockdown? Or do you think there could be a fundamental sort of change going forward? On the Marella point on the sale, obviously we've been talking about returning cash to the government as paying down that this facility. I mean, how are you balancing potential just getting the right price for Marella and also paying down that same facility? Thank you.
Maybe I take the first one. You know, the second, I think on the strategy, you know, on particular balance sheet, you know, Sebastian, I think. Pricing, it's not sustainable. I mean, 22% pricing until the end of the season, you know, this would be paradise. I mean, having a starting point where we have significant bookings now, you know, 20%, 30%, above 30% on summer business and cumulated 20% up on pricing has never happened to me, and I've never seen it. Also the additional bookings which come. I mean, we talked last, even last times we talked, we were 25% or 23% up or whatever. I mean, it's now for quite some time, 22%, 23% up.
It's so much longer than I expected, but of course, at the end of the season, it will be lower because 22% up in prices would be an enormous profitability. It says as long as we can keep the prices up, the better it is. Also one thing that should be mentioned, we see right now one market trend, which I also have not seen before, that elasticity is relatively small. Meaning if people don't book right now for summer, it's usually not the price. If people don't book for summer now, then it's usually uncertainty. Therefore, we keep margin up, prices up, because we don't believe that lower prices would increase demand right now, right? We have a late booking pattern. We keep our nerves and we keep it. We keep the prices up and play the price cards.
I believe, you know, the mix right now, when you look at the mix, where people travel, how people travel, we will keep quite some part of the 22%. Will it be 22% by the end of the season? No. But you know, Sebastian, you really have a good view on these things as well. You know, if we had 22%, we would be happy.
Yes. I mean, the interesting thing as Fritz said, that the price level we do see at the moment supports what we have seen before. This is quite unusual. Maybe there will be also some scarcity, but you never know. It's very difficult. Otherwise, the winter is more end of season now and we still are 15% up.
Yeah.
Maybe it's also interesting. Let's say mid-season is still 15% up. The weak January was the pickup in February also supports strong prices, which is also unusual. Marella, as Fritz said, we anticipate a good full recovery for the second half of the summer. I think it's very important that we do see this recovery to formulate a view what a fair price would be, because we are not under pressure to sell something because of the need of cash. As I said, the situation of Marella is three owned ship, one leased in ship from TUI Cruises. The company with decent low occupancy is cash generating.
Therefore, the interest which we would need to pay is easily offset by the positive cash flow. It's really the question of optimizing the value for you as shareholders.
Okay, super. Thank you.
The next question comes from Alex Brignall from Redburn. Please go with your question.
Good morning. Thank you for taking the questions. I'll do three. Why not? On bookings, a couple of points on that. On the U.K., could you tell us how booked the U.K. Is and relative to that 24% of the whole fleet? Then on the sort of broader booking environment, obviously January is a very heavy booking month. If the volumes stay as they are now, how would that then compare to a normal seasonal pattern? I guess my point is, you know, what happens in February, March, April? Do the normal bookings go down a bit, up a bit? How would that sort of look?
On the hotel fund, could you tell us how that ties in with the plan you talked about previously on increased franchising and growing the brand in that way and how the two are related, if they are? My third question, I think, online and how is that impacting your sort of gross margin after, you know, commissions and distribution costs? Thank you.
In the bookings, you know, we are ahead, right? In the bookings in a normal year, in the U.K., we would be around just below 40 and now we are mid-40s. The booking in the U.K. is the only market where we are cumulative ahead. Since this week we are also in the net adds ahead. Also, you know, because it's such a big portion of our booking profile, it's also pricing. You can judge a big part of the 22% price is actually part of the U.K.
As we have now more than half of the fleet, well let's say half of the fleet of our aircraft in the U.K., and particularly more or less, let's say 80% of long-haul aircraft in the U.K., you know, the U.K. will be an enormous driver of the full summer profile. Now that said, you know, I said Netherlands is amazingly high, now 70% above pre-crisis levels in terms of net adds. At the same time, you know, of course, the total amount of bookings in the Netherlands is still relatively small, lower than comparables pre-crisis. The U.K. is very strong. That said, what was the other questions?
What happens to February, April normally?
Yeah. Usually you have an enormous booking peak right now, and usually comparables come down. Therefore, our comparables, the 100% will be overachieved in certain weeks, you know, from now. I would have expected the crossover point for summer bookings later in February. That it was in the 1st week of February was a little bit of a surprise to me. It will, you know, of course stay up. You know, it's not only the comparables but also the total booking. I mean, you know, as I said, last January, it was 275,000 bookings per week. It's not only relatively high, but also absolutely high in that respect, you know.
Then the hotel fund owns the hotel. The independent fund owns the property of the hotel. We would manage with our core brands these hotels. ROBINSON, MAGIC LIFE, TUI BLUE, these would be the brands for the hotels we manage. It's not a franchise.
Okay. The franchising plan is completely, that's a totally separate independent strategy to this.
Yes. You refer to the growth we have for, especially for TUI BLUE, where we increased from 10 to above 100, and where we want to grow and accelerate the growth through franchise and management. This year, the hotel fund, independent of TUI, owns the property. We would manage the hotel.
Thank you very much. Just the online question, margins from online bookings as well.
Can you so how the online margin is?
Yeah, Sebastian, you got the question.
I mean, this is really now very exciting. The online margins, which were historically lower than retail margins, it's now closing. What is also very interesting, the more we sell through the app, the lower distribution costs we have because with the app we don't have any distribution costs. That is really online is not online. There are good trends. Of course, we have just started the journey and we put a lot of efforts to accelerate the journey. The good thing is that we are still at a starting point, so the benefits can be huge.
You know, one thing is also, you know, I want to mention one thing. Strategically, you know, we, you know, it's not our target to reduce online sales costs. I mean, strategically, we want to get cut over to the online proposition, and this is particularly true in Germany. In Germany, for example, we had the strongest sales, online sales Sunday in the company history last Sunday. And you know, one of the reasons is we spend a little bit on online sales. I mean, you know, as we gain market share, we are the only, you know, in the traditional tour operators, the only player with a significant online presence. So, you know, we are driving online now in order to significantly have more control. The ultimate goal, as Sebastian says, online is not the end state.
The end state is mobile, and that's the reason why, you know, the app, which is now used for itineraries, will become also the strongest growing sales channel for our holiday experiences as well, so the packages as well. Because conversion is good, attention is good, sales costs are very good. But as I said, you know, strategically we are still, it's nothing changed that we want to become more and more an online company, and particularly the biggest development areas are in Germany, where retail was always so big and scattered distribution landscape is tens of tour operators, yeah.
That's really helpful. Sebastian, your comment about online versus retail. When you said retail, were you talking about your own stores? Because typically the thing that hurts the achieved margin versus the margin before the season is the cost of paying third parties like in Germany. I guess my question is the online needs, if it reduces your use of third parties, which are not completely the same.
The customer buys the product where he wants to buy. The product in our own retail, we have a good margin, and as I said, also the margins now online are coming closer to the retail margins, which is, I think, a quite normal way. We have seen that in England, that the margins you can compare. This is the same path with Germany.
I mean, the ticket size online usually is smaller than in retail because you have one-click away competition. The ticket size is smaller, distribution costs are a little bit smaller. You know, as Sebastian says, this is now converging, if you like. Yeah.
Brilliant. Thank you very much.
The last question comes from Cristian Nedelcu from UBS. Please go ahead with your question.
Hi. Thank you very much. Three questions if I may. The first one on the second half of this year. I mean, you used to generate a bit of around EUR 1.2 billion in the second half pre-COVID. You're talking now about summer capacity broadly aligning 2019. So can you talk a bit about the moving parts in that EBIT? Can you achieve the EUR 1.2 billion in the second half? Or which are the moving parts? Secondly, in terms of Q2, could you give us a bit of a steer around working capital, cash contribution in Q2, maybe referring to past Q2 levels or how we should think about it?
Lastly, the authorization, the 1.6 billion or 1.7 billion shares authorization, if need be, could you talk us a bit through the process? How did you get to this number? I mean, why isn't it 1 billion new shares authorization or 2 billion, or how did you get to the number? In that regard, I mean, you did mention that the 700 million reducing the state RCF in April, that's the first step. So do you have any visibility on the timeline of further reductions in the state RCF? Is anything already agreed with the Germans? Thank you.
I mean, as you know, it's a good try, but we cannot give guidance, right? I mean, so you know, as I said, you know, it's difficult to prognose right now when you are 72% on normal level and your cash outflow velocity is 100%. This will be, you know, and then 22% up in price. It's difficult to do these kind of prognoses. That's the reason why we consciously said we don't give any guidance now. We think about it till next time. You know, it's not that we are against guidance, but it should be meaningful. If I said EUR 1.2 billion was right, you know, that would actually contrast everything I said before.
Cash generation, maybe Sebastian, can you take that or, you know, on Q2?
Yes. We would also not give guidance.
Okay. No guidance.
I think it will be. I mean, it depends on affordability. I said something about that and how strong the bookings will be. We are positive there, but you have to do your own.
We are amazingly aligned. You know, how did we get to the authorizations more or less? We got the standard.
The legal framework.
It is the legal framework which together with the supervisory board and talks to investors and also in the best interest of the company, we have flexibility and if windows occur, we do the right things. We wanna achieve the 3x leverage. That's our main objective. To do the right things, we have then, you know what did you say? Inventory approvals.
Yeah. Inventory approvals. Of course, the Supervisory Board together with the first hand, you know, we will make a plan, and we will of course communicate as soon as we can.
The numbers are technically. That is the legal framework that was not calculated from something which we would like to have or what we need. It's just what you normally do, and this is given by the legal framework in Germany.
Understood. Excellent. Thank you for that. Just on my second question, so on the Q2 working capital, I understand that it's difficult, but can you make any comments related to the usual Q2 working capital movement in cash? You're saying bookings are strong over the last week, so should it be a much stronger cash inflow from working capital than the usual Q2, or can you provide any color there?
I believe bookings bring cash. Yeah, yeah. I mean, that will be strong. I mean, there will be strong bookings. Of course, as usual, you have Q1, you have a strong January bookings as well. So therefore, you know, but it will be a strong cash inflow versus, you know, with the position we are in right now. I mean, that's very clear.
Okay, understood. Thank you very much.
Thank you. Thank you.
There are no further questions.
Thanks a lot. Have a great day.
Thank you.
See you soon.
Bye-bye.
Bye-bye.