Experience Co is actively looking for New Zealand acquisitions and greenfield opportunities as a strategic review of the group nears its end, says new chief executive John O’Sullivan.
O’Sullivan, the former boss of Tourism Australia, told the Ticker that despite launching a review of all of the Australian-listed operator’s businesses, its New Zealand skydive operations played a vital role within the adventure tourism group.
“New Zealand has been, will be, and is a really key part of our business,” said O’Sullivan, who joined Experience Co in July after leading Tourism Australia since 2014.
“We’ve got a great team over in New Zealand, led by Clark Scott. Scotty has done an amazing job with our business in our three drop zones out of Queenstown, Wanaka and Glenorchy. It’s also the business that I entrusted out of our group to have my first ever skydive with – that’s how much I trust them.”
The strategic review could see the Wollongong-based group, which has been on a buying spree of tourism businesses over the past few years, sell recent acquisitions to help turn around losses from slowing tourism and unseasonal weather.
New Zealand’s pedigree and experience in adventure tourism fit perfectly with Experience Co’s core proposition and meant it would remain “a really key part of our narrative”, said O’Sullivan.
“We are actively looking at possible acquisitions as well as greenfield opportunities in that market. We’ve got a number of sites that we are looking at both in the North and South Island. I can’t reveal too much to your readers, but Scotty is actively looking at different options for us.”
Experience Co, formerly known as Skydive the Beach, bought Queenstown and Glenorchy skydive company NZONE for $17m in 2015 and Skydive Wanaka in 2016 for $10.4m. It also purchased Performance Aviation Limited, an aircraft and helicopter maintenance business based in Wanaka for $500,000, and has bought land at Pukaki Airport near Twizel for a new Mackenzie jump site.
“New Zealand has been a core part of our expansion, and it’s been done very successfully,” said O’Sullivan.
“I can’t preclude what’s going to be in the strategic review but New Zealand has been a key part of our success over the last few years. It has done well and we believe the market is there for it to continue to do so.
“We’ve got great locations in the Queenstown district, which gives us a position of strength in that market. And I know from my time at Tourism Australia that Queenstown is a renown destination for adventure and so is New Zealand. From our point of view, it’s a no brainer.”
The findings of the strategic review, which was launched before the group announced in its FY19 results a A$62.2m write-down of its Australian adventure business, would be presented at Experience Co’s annual general meeting this week. The company suffered a statutory net loss after tax of A$48.3m for the year to June 2019.
“For me, the key thing is having a strategy about where you go next,” said O’Sullivan.
“I think one of the things that we didn’t do well is that there are some of our businesses that we expanded into for expansion’s sake.
“From my perspective, no acquisition should ever be ruled out when it presents itself but you need to be very clear about what fits within your portfolio and what doesn’t. And that’s the key part of the strategic review; it’s about simplifying the business and having a better understanding of where we go to next.”
Although inbound tourism growth was slowing in New Zealand, O’Sullivan was confident the sector would bounce back.
“We see fundamentally inbound tourism into New Zealand as being strong. Yes, growth has slowed but that’s a trend happening globally right now, it’s not just confined to New Zealand,” he said.
However, Experience Co’s skydiving business was doing relatively well because it attracted an independent, more robust part of the market, said O’Sullivan.
“For example, even though Chinese visitation into New Zealand is down at the moment, our [Chinese skydive] numbers are increasing by about 9%, so we get a part of that market that’s not really affected by the broader trends within that market,” he said.
“For us, that is one of the strengths of our model. We’re not necessarily looking for sheer volume, we’re looking for the right sort of customer, that high-value customer, which New Zealand will always appeal to.
“We agree with Tourism New Zealand in that there are some headwinds for international tourism into New Zealand and we are monitoring our activity to make sure our business rides through that. But the industry is cyclical, it will bounce back and New Zealand is fundamentally just such a great destination – one, which when I was running Tourism Australia, I used to look on with great envy.”
In tomorrow’s Ticker, John O’Sullivan talks about his time leading Tourism Australia and how he viewed Tourism New Zealand’s work on the international stage and the evolution of the 100% Pure New Zealand brand.
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