Saga hails ‘outstanding year’ for cruise and travel businesses

Saga has hailed an “outstanding year” for its cruise and tour operating businesses as they are poised to return to profit.

The over-50s travel and insurance group reconfirmed in a trading update for the half year to January that it was looking at opportunities to “optimise” its two-ship ocean cruise arm, which could include a partnership deal.

The company expects ocean cruise revenue growth of around 30% year-on-year, with annual profits [ebitda] due to exceed £40 million per ship.

The booked load factor for 2024-25 is “materially ahead” of the prior year at 66%, compared with 62%.

Saga said: “Given the ongoing momentum in ocean cruise, the business is now approaching optimum capacity, building on the continued high demand for our successful boutique cruise offer. 

“We are exploring opportunities to optimise the business, including potential partnership arrangements which, consistent with our move to a capital-light business model, would support further growth, crystallise value, reduce debt and enhance long-term returns for shareholders.”

The group’s river cruise division is expected to return to underlying profit, with revenue of around £44 million and 17,000 passengers against £29 million and 12,000 passengers a year earlier.

Tour operating is on track to return to pre-pandemic underlying pre-tax profit with annual revenue growth of up to 45% with passengers up by 20% to 58,000. The tour operating arm is being combined with river cruise, as previously disclosed by the company.

Saga added: “Our travel business is also making progress, largely in line with the dynamics over the last year. 

“At 28 January 2024, booked revenue for 2024-25 was £115 million, 12% ahead of the same point in the prior year, with passengers of 35,000, 2% ahead.”

Group chief executive Mike Hazell said: “For 2023-24, Saga remains on track to deliver significant growth in revenue, in addition to an underlying profit more than double that of the prior year, exceeding our previous guidance. 

“Our cruise and travel businesses have had an outstanding year, having taken around 120,000 passengers on holiday, with customers continuing to be drawn to the strength of the Saga brand and offer. 

“As a result, these businesses will return to profitability, in line with expectations. 

“In insurance, the market-wide inflationary environment and declining policy volumes are continuing to impact our performance.

“The year ahead will see a continuation of these trends across our business. 

“Bookings for the new seasons in cruise and travel are robust, showing good overall progress.”

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