Tourism Holdings boss Grant Webster says more Kiwis will rent or buy motorhomes. Photo / Brett Phibbs
Tourism Holdings boss Grant Webster says more Kiwis will rent or buy motorhomes. Photo / Brett Phibbs
When Tourism Holdings boss Grant Webster first saw the global travel business begin to implode, he knew it was going to resemble a horror movie - but he hoped it would be a short film.
While Covid-19's human and economic toll is now reaching feature length, he still has hope that's where it could end.
"Let's hope it's not a Peter Jackson-style trilogy."
Webster's company is one of the largest motorhome operators in the world, with other tourism businesses also in its portfolio, and was slammed by the fallout from the virus outbreak. Its share price fell from $3.45 at the start of the year to a low of 55c just before New Zealand went into level 4 lockdown in March.
It has since recovered some of that fall, and Webster says THL as a company has the capability to bounce back to where it was in 12 months' time.
"The best horror film ideas can win an Oscar somewhere for someone, so certain people will win out of it and we plan to be one of them. And that's what you've got to focus on."
Holding on to as many staff as it can and retaining a good corporate reputation is crucial to rebuilding the business.
The firm is claiming the wage subsidy for about 660 staff in New Zealand, and despite most of its business being in a sector that effectively closed down for close to two months, it has so far avoided significant layoffs here, unlike other firms which have claimed the subsidy and still made large numbers of staff redundant.
Webster says business leaders need to ask themselves how history will judge them.
"Because it's a historic moment, without a doubt you need to step back from the decisions that you make and ask 'what will this look like in retrospect?' And it can be anything from the way you deal with people, to the way you deal with customers, to how you deal with health and safety or other things."
Financial watchdogs such as the Financial Markets Authority will be looking at what companies did during this time with the benefit of hindsight, he says. "Everything you do, just stop and think about it, not just react to what's right in front of you."
Because it's a historic moment, without a doubt you need to step back from the decisions that you make and ask 'what will this look like in retrospect?' And it can be anything from the way you deal with people, to the way you deal with customers, to how you deal with health and safety or other things.
Webster says he has already seen reputational damage to businesses which should not have claimed the wage subsidy. "The Government did the right thing, and expected people to do the right thing in response."
Tourism Holdings has been able to retain its Australian staff under that country's job support scheme, but has made bigger cuts in the US among its workforce of about 200.
Diversity helps
Tourism Holdings is the largest provider of RVs for rent and sale in Australia and New Zealand, and the second largest in North America. It operates the Maui, Britz and Mighty brands in this country and in the US it has the Road Bear and El Monte brands, renting and selling RVs. It has just sold out of a US-based technology venture for $10 million and also has a 49 per cent stake in a British motorhome firm. Within New Zealand it operates Kiwi Experience and the Discover Waitomo group, and is a joint venture partner in Action Manufacturing, New Zealand's largest motorhome and specialist vehicle manufacturer.
Webster says that for now, it's the sales part of the motorhome business that gives THL its best shot at weathering the storm in the near term. The company has changed its focus to selling off more of its fleet of 2500 motorhomes in New Zealand, nearly all of which have been parked for weeks.
In Queenstown it would sell them from its rental base and do the same at Mangere in Auckland. It would also start doing maintenance work in Christchurch for some of the estimated 20,000 motorhomes on New Zealand roads.
"And that's something that we've never been able to get into because we haven't had the resource and space," says Webster. "We know everything you need to know about motorhomes and campervans, and we have all the right equipment and parts and everything else for all those thousands of privately owned motorhomes in New Zealand."
Now is the perfect time to discover our own backyard. Photo / Supplied
The motorhome lifestyle had been growing among older people in the past few years - the "grey nomads" -and Webster says younger people and families could become more interested now.
"We think there's quite an opportunity here. And there's quite a lot of interest to buy motorhomes. While people can't travel internationally, they are going to look domestically and a lot of people have thought about motorhome holidays, thought about motorhome purchases."
People who couldn't afford a holiday home may think a motorhome is a better option, especially one from an established operator such as THL, which can provide back-up.
Second hand THL motorhomes range in price from $20,000 to about $80,000 and new ones built by Action Manufacturing go for as much as $150,000.
"Potentially there's going to be some deals, not ridiculous deals. Nobody needs to fire sale them because with low interest rates the holding costs aren't that great, but we want to stimulate the market, so yes, we'll have some discounts."
His company usually sold about 600 motorhomes a year and to bolster the balance sheet an extra 250 could be on the market.
Action Manufacturing also makes ambulances and Webster says there is scope to chase more business such as vehicles for the Defence Force.
"We've got some really good skills there, and they've always kept the level of diversification as it doesn't make sense to have your eggs in one basket, so this is the opportunity where that side of the business shines more than the motorhome side and that's okay."
Supply chains for van chassis and parts are holding up, but Webster says this is something the company is keeping a very close eye on and any shortages might not be felt for several months.
Reigniting the rental business
Renting vans in New Zealand stopped almost completely when the borders closed as about 90 per cent were hired by international visitors. The business was dealt a further blow when the domestic lockdown was imposed. A few were used for quarantine in New Zealand, and in the US some of the 2000 vehicles there were used in the effort to provide emergency cleaning facilities, cooking, accommodation and storage, says Webster.
The vehicles are ideal for people who need to self-isolate, he says.
"So that was pivot number one that worked that worked a little bit, it certainly worked in the US ... you know, even power companies that have critical roles that they're using [motorhomes] for accommodation."
But leisure rentals are the core business, and with borders closed, that means reigniting the domestic markets.
In the US, where 50 per cent of rentals were to Americans, business is already picking up. In Australia, 35 per cent of the market was local, and while that figure is just 10 per cent in this country, the lifting of travel restrictions is the catalyst for getting Kiwis into campers.
"People are really interested," says Webster.
Pricing for the international market meant rates could reach $500 a day at some times of the year, but this would change.
"The internationals pay more," he says. "The demand's going to be lower, so overall we will be pricing differently for domestic customers. You're probably easily going to be getting 25 per cent off depending on what happens in other markets, but it's going to be cheap accommodation, good transport and a really different kind of holiday."
Tourism Holdings says the US domestic market for its RVs is bouncing back. Photo / Supplied
He says there will be a small proportion of the market who are too shell-shocked to travel even domestically for a while - and some who just can't, because of their economic predicament. But he is confident that large numbers of Kiwis will want to see their own country.
"The rest of the market is going to consider that there is no better time to see New Zealand."
The "other markets" he refers to would begin with Australia, if or when the idea of a transtasman travel bubble comes to fruition.
Webster acknowledges uncertainty over timing, but says the tourism industry needs to be getting very excited about that tantalising prospect of our biggest visitor market opening up.
"That's a real opportunity for us to get things right as an industry, but also to get some volume back to make sure that we're sustainable."
While he won't rule it out completely, there are no plans to raise capital now and his company is looking at acquisition opportunities.
"We'll keep a close eye on the market and see where we can do the right thing for the potential for people to join. That's what we did after the GFC (global financial crisis) and it was incredibly successful."
Biggest challenge of the outbreak
"Remaining really focused on such a severe change, the uncertainty for our people and keeping them aligned and motivated into multiple scenarios. And for us, that multi-jurisdictional change, and keeping on top of government support packages across the world and what's right for us and what are we allowed and what does it mean as to how many jobs we keep. The complexity and changing nature of it was the biggest challenge."
"Seeing the agility that exists in an organisation and where adrenaline takes people. It's quite phenomenal how those first five weeks worked. The crisis management response, dealing with things that we've never thought we'd have to deal with, health and safety responses . People can turn themselves to things that you never thought they were capable of."
Your business in one year will...
Be fully back up and running if the borders are open, but if they're not we will be a very domestically focused organisation. We will be thriving in 12 months' time.
