Adventurous travellers have found their home on the road during the last two years. Photo / Getty Images
Adventurous travellers have found their home on the road during the last two years. Photo / Getty Images
Tourism Holdings chief executive Grant Webster says the merger deal with Australia’s Apollo will help accelerate the building back of its campervan fleet to pre-Covid levels.
After a lengthy process to gain regulatory approval, THL and Apollo Tourism and Leisure have merged with shares issued following the deal now tradingon the NZX.
To get over the line with regulators, Apollo and THL sold some of Apollo’s newest vehicles to independent campervan hire company Jucy for $45 million.
Apollo has also sold its Star RV motorhome brand to Jucy, giving its competitor a bigger presence in the Australian and New Zealand market.
When first announced last year, the merger had initially valued Apollo at $137m. THL is the largest commercial provider of RVs for rent and sale in Australia and New Zealand, and the second largest in North America.
In New Zealand, THL owns Kiwi Experience and operates the Discover Waitomo group. THL also owns Action Manufacturing, a motorhome and specialist vehicle manufacturer.
Tourism Holdings chief executive Grant Webster has headed the company since 2008. Photo / Brett Phibbs
THL chief executive Grant Webster said the deal allowed his company to diversify around the world and get into new regions and new segments of the market.
Both companies manufacture and sell vehicles and the annual cost savings of the merged company are put at between $27m and $31m.
“They are significant. It gives us a platform for future growth,” Webster said.
Revenue for THL for the 12 months ending June 30, 2022, was $346m for an operating profit of $6.9m, and Apollo revenue of $282m ($2.8m).
In an investor presentation detailing the Apollo deal net profit guidance for THL in the current financial year is put at above $30m and Apollo at $21m.
THL’s share price was yesterday trading at 12-month highs of $3.69, more than three times what was when the pandemic hit in March 2020.
Webster said that pre-Covid the companies had about 11,000 to 12,000 vehicles in total. This number had sunk to about 7000,
He said it was hoped to get back to pre-pandemic levels within the next five years to meet the booming demand for motorhomes.
“This helps us get more fleet faster. We’ve got the combined manufacturing capacity means that we can be more efficient around what we build across Australia in New Zealand, that diversification of suppliers and types of vehicles.”
High demand and a shortage of capacity had resulted in yields spiking. The presentation says in the current year they are up by more than 35 per cent in New Zealand and 70 per cent in Australia compared to immediately pre-Covid.
Webster said he would roll out more vehicles if he could.
“It’s not about reducing fleet. We have the ambition to meet all customer demands and needs in the fleet.”
The business was subject to supply chain issues and spiralling costs and the rationale for the merger was to make cost savings which would help customers in the long run.
“This isn’t about impacting the customer negatively. This is about cost-out makes us more competitive and focused on growth.”
Peak pricing has not moved dramatically but the number of advance booking discounts had fallen.
“We’ve still got an incredibly wide range of pricing. Obviously, the shoulders are far more attractive still than peak.”
He advised bargain hunters to look out for relocation deals.
“If somebody’s happy to be a little bit more flexible and take that standby kind of approach. We’ve still got plenty of those.”
The merged company had 2200 RVs in Australia, 2500 RVs in North America, and 400 in Europe.
In those places it was still a relatively cheap way to travel, said Webster. He has been chief executive of THL since 2008, and said the company’s capacity of around 60 per cent in New Zealand was sitting around the same levels as inbound airline capacity.
He said he was confident of full recovery within five years because the motorhome sector had benefited from the impact of the pandemic.
“There’s no reason we can’t be at or above the pre-Covid levels and within that time period at all, we see that this category actually has benefited from an exposure around Covid.”
Demand for motorhomes has boomed in the past three years. Photo / 123rf
There was a strong desire to get out into the natural environment and the desire to travel with family and in small groups is very strong.
“The RV category globally has definitely been a winner.”
While there were strong bookings into the end of next year, the prospect of recession here and in key source markets could be a handbrake on recovery.
“It’s all about the growth curve, getting back to where things were pre-Covid. We were on the floor [when the pandemic hit]. The fact that we’ve got up off the floor and we’ve got a growth curve is a positive sign,” he said.
“For us, we see that it [recession] could slow the recovery as opposed to actually stopping growth or seeing the industry going backward.”
Even if unemployment went into high single digits, there would still be 90 per cent plus of the population who during the pandemic have been restrained from travel and still want to.
“There’s definitely a group who have held back due to pricing of the whole supply chain or the airlines, accommodation, transport. What comes across now is those customers can’t wait any longer.”
They adjust accordingly – instead of going for 25 days they go for 21, and instead of staying at the five-star resort they’ll stay at the three-star resort.
Webster said travel trends from 100 years ago, as the world emerged from the Spanish Flu epidemic, provided a useful guide.
“It’s the century on, but nevertheless, it’s about what happened to the psyche of the population at the time and that had been constrained.
“They said ‘We want to be free’ and it actually sparked a very strong surge in tourism at the time.”
