European tourism giant TUI on Wednesday reported a sharp fall in headline profits in its 2016-17 financial year, but said its underlying performance remained solid, thanks to its hotels and cruise line businesses.

TUI -- based in north German city of Hanover and listed on the London stock exchange -- booked net profit of 645 million euros ($758 million) between October last year and September this year.

That was a fall of 38 percent from the previous year.

By contrast, operating, or underlying profit was up 12 percent at 1.12 billion euros -- in line with TUI's own forecasts.

"Our successful strategic reorientation can be clearly seen in the figures," chief executive Fritz Joussen said, noting that the group's own hotels and cruise lines accounted for half of the operating result.

Since 2014, TUI has been transforming away from its former business as a tour operator, a process continued this year as it sold off assets like specialist travel provider Travelopia and its remaining stake in shipping firm Hapag-Lloyd.

Business is more profitable and less subject to seasonal variation, Joussen said.

Group revenues increased by 11.7 percent to 19.2 billion euros.

And TUI drew in 6.3 percent more customers, bringing its total to more than 20 million people over the year -- with most of the growth coming from its northern Europe region.

Executives will offer shareholders an increased dividend of 0.65 euros per share, compared with 0.63 euros the previous year.

Looking ahead, they now expect to keep up a pace of growth in operating profit of at least 10 percent each year until 2020 -- one year longer than previously.