THL’s Hall makes mark in tourism

A report in The Dominion Post says Tourism Holdings chief executive Trevor Hall, says that I remember the day, referring to the one specific day in which Australian tourism attractions company MFS Living & Leisure (MPY) turned its attention from trying to buy part of THL and suddenly decided it wanted the whole company.

Mr Hall, not long in the chief executive’s seat at THL, had, as part of his restructuring strategy, decided to split the company into two operating divisions: vehicle rentals including household brand names Maui and Britz, and a tourism leisure group with attractions such as Kelly Tarlton’s and the Waitomo Glowworm Caves.

As an indirect result, MPY, an offshoot of the highly aggressive Queensland finance and investment company MFS, became interested in buying the tourism leisure group and began due diligence.

Then there was a meeting in Melbourne between THL and MPY to discuss progress.

“I could tell in that meeting that they had worked out that rentals was a pretty good business,” Mr Hall says with chuckle. “Because suddenly they were talking more about the rentals than they were about the business they had been doing site inspections and due diligence on for the past three weeks.”

The negotiations did indeed change direction after that, with THL chairman Keith Smith doing a “fantastic job”, Mr Hall says.

The result was that MPY put a $2.80-a-share bid on the table in late April last year.

“It was a very, very good price for shareholders,” Mr Hall says.

“It was obviously at the top of the market. And it was cash.”

Not everybody agreed, however: some institutional shareholders and brokers said the offer undervalued the company; other people accused THL of trying to sell off New Zealand’s silver.

“It is not a sense of a cop-out or selling off New Zealand,” Mr Hall says. “Our job ultimately is to represent the shareholders’ funds. This time last year it was a very good offer.”

Probably, the bid’s success would sooner rather than later have spelt the end of Mr Hall’s role as THL’s chief executive, a job he had held only since July 2006.

“I’ve been a chief executive since about 1995 and probably at 47, which I was then, I didn’t really have much interest in reporting to another chief executive.”

To a lot of people’s surprise, however, the offer did not succeed. It had been conditional on achieving 90 per cent support, and reached 83 per cent by the time the offer closed in late July. Mr Hall says he has never had conversations with MPY about the bid’s failure, but thinks it “pretty odd” that the Australian company did not choose to go unconditional, which would probably have allowed it to mop up the rest of the shareholders for maybe another $1 million or $2 million.

Instead, the whole issue left MPY many millions of dollars out of pocket – “to this day we can’t understand who was punching their numbers for them”.

For the businesses within the THL stable, it was perhaps a narrow escape. MPY is now suspended from trading on the sharemarket, as is MFS, as both companies struggle with big debt burdens.

Mr Hall, however, believes that if MPY had taken over THL, the combined companies would have been able to service debt levels.

“I believe it would still be working at the moment. Obviously MFS had 20 per cent of it, so I’m not too sure . . . What I never understood was the relationship between MFS and MPY.”

It appears Mr Hall was neither surprised nor disappointed by the bid’s failure – he just got on with being the chief executive of THL.

“I don’t think we even blinked.”

Within a day, he was on the telephone restarting talks about the future of some of the businesses in the tourism leisure group.

The result was that THL joint- ventured its Johnston’s Coachlines business, keeping a one-third share, and tipped its Great Sights bus tour and Fullers Bay of Islands coach and ferry businesses into the InterCity Group. In exchange THL took a 49 per cent stake in InterCity, which has the country’s largest coach network and is “a quality operator”, Mr Hall says.

The moves were “a great bit of industry consolidation”.

“I believe that industry consolidation in New Zealand is coming. It’s coming for a number of reasons. One is that barriers to entry have been quite low in New Zealand – and that’s had an impact on quality.”

After the two joint-venture moves, THL is now “fine-tuning” the rest of the tourism leisure group. “We are focusing on what assets we keep, what assets we sell. I’m not hiding that.”

The rentals division is a different story. Mr Hall is keen to build on the reputations of the big brands Maui and Britz. He says that THL is actually the No 1 motorhome rental company in the world in terms of hire days.

“There’s this little, tiny Kiwi company which is actually dominant around the world, and it’s something that is not really well- recognised about Maui and Britz on the global market.”

The brands are huge in Australia and New Zealand and well established in Europe. Now the push is on for the United States.

“Maui and Britz are already known by every person in Europe who is selling in the US. There is no customer development that needs to be done,” Mr Hall says.

The company will, however, be “very cautious” in how it expands in the US because of the current economic ups-and-downs there.

Mr Hall is something of a veteran of the tourism industry. He has a marketing background and started his career with a multi- national cleaning products company before cutting his teeth on tourism at the front line – driving buses in Europe while on his OE.

Other jobs have included working for Mount Cook Group, being European regional manager for the New Zealand Tourism Board, being chief executive for Totally Wellington and, most recently, being chief executive of the New Zealand Lotteries Commission.

He was attracted to the THL job by a number of things, including that he knew some of the businesses, which were once part of the Mount Cook Group. He also likes the business’s diversity and that the job requires a lot of dealing with people.

Asked where he wants to see Tourism Holdings in five years, the answer is simple: “Large. Larger than it is now.”

He goes on to say that he wants to see the company continue being innovative.

“Its future is in clustering around camping, caravans, motor parks, motorhomes . . . so looking for opportunities in that sector and getting very focused in that sector.”

He believes New Zealand has great opportunities ahead in tourism. He points to the new generation of aircraft that fly further as opening a lot of doors. These planes will allow easier access from the burgeoning market of India.

Also, there are opportunities from the increasingly affluent South American middle class.

“New Zealand’s golden years of tourism actually haven’t arrived yet because it has been a difficult destination to get to for the last 10 to 15 years.

“But that all changes from about 2011 onwards.”

A Report by The Mole from The Dominion Post