* Sees growth potential in China, South America, SouthernEurope First-quarter loss narrows by 17 pct
* Reiterates full-year earnings target
* Shares up 5 pct (Adds strategy detail, analyst, shares)
By Victoria Bryan
BERLIN, Feb 14 (Reuters) - European travel and tourismcompany TUI aims to start offering holidays tocustomers from countries such as China, Brazil, Spain and Italyas it seeks new ways to keep its hotels full and drive sales.
TUI has been reorganising its business to invest in more ofits own hotels and cruise ships and has been selling off what itviews as non-core operations, such as the Travelopia portfolioof specialist holiday brands that it agreed to sell on Monday.
Chief Executive Fritz Joussen said on Tuesday that TUI sellsholidays to southern Europe but does not take customers fromthose countries on holiday, while emerging markets such as Chinaand South America offer greater potential for new customers.
"It's about nothing more or less than the global expansionof our brand," he told shareholders at the company's annualgeneral meeting in Germany, saying that TUI is targeting anadditional 1 million customers and 1 billion euros ($1.1billion) in revenue within the next five years.
Joussen said that TUI would focus on its online sales tominimise costs and would also direct customers to its own hotelsin places such as the Caribbean and Thailand to minimise risk ifit proves impossible to build up the business in new markets.
"Many have entered China and come back with a bloody nose.This should not happen to us," he said.
The Chinese market has proved a difficult proposition forforeign travel groups and TUI has previously set up a jointventure with little success, but Joussen said that an increasingnumber of Chinese holidaymakers is changing the landscape.
CHINA OPTIONS
Joussen did not indicate how TUI would implement its plans,but Euromonitor senior analyst Wouter Geerts said that othercompanies have expanded in China by investing in local players.
Geerts pointed to U.S. group Priceline's move intoChina through Ctrip and said that said that TUI could also lookat how hotel groups such as IHG have set up Chinesebrands.
TUI earlier reported a first-quarter loss of 66.7 millioneuros ($70.9 million) -- a 17 percent improvement on last year-- and reiterated its forecast for core earnings to rise by atleast 10 percent this year.
Tourism companies typically make losses during the wintermonths, and the combination of TUI's year-on-year improvementamd the Travelopia sale helped to lift its shares by 4.9 percentto 12.14 pounds by 1153 GMT.
Rival Thomas Cook last week gave a cautious outlookfor its financial year, but Joussen said that TUI's summerbookings from the UK were up 3 percent on last year on revenueup 12 percent.
Joussen said that the revenue jump was largely because ofhigher prices and customers spending more to travel furtherafield.
"Higher prices are necessary because of the depreciation ofthe British pound. You need higher prices to cover higher costsin destinations," he said. ($1 = 0.9408 euros)
(Editing by Susan Fenton and David Goodman)
InterContinental Hotels (IHG)
