Campervans versus cruise ships: One more speed bump for Tourism Holdings

THL has fleets of campervans around the world. Photo/Supplied

Campervan sales and rental company Tourism Holdings’ profit has hit its sharply reduced profit targets, with the company identifying a new threat to its vehicles - cruise ships.

The firm, which generates most of its $922 million revenue overseas, reported an underlying net profit after tax of $51.8m, within its guidance range and slightly up on analysts’ consensus forecasts.

Tourism Holdings (thl) in May issued a profit warning in which it slashed its earnings forecast for the 2024 year and today backed off any timeline for its longer-term $100m profit goal.

In its market update in May it said it expected its net profit in 2024 to be between $50m and $53m. THL’s previous guidance, issued in February, was for a net profit of around $75m.

Its shares have slumped this year from $3.80 in January to a low of $1.82. They opened today at $2.08.

In its annual report out today, chief executive Grant Webster said the tourism recovery was hitting speed bumps and RV sales and rentals were facing more competition.

“We have seen RV travel lose category share to cruise ship travel, which has experienced a significant recovery in the last 18 months,” he said.

However, he was confident RV travel was well positioned and poised for success.

“Our optimism stems from the growing interest in RV travel among younger demographics, the rising population of individuals aged 65 and older over the coming decades and the wider shift in tourism preferences in favour of sustainable, local travel and unique adventures.”

Despite operating conditions for the coming period being uncertain, the company expected an increase in underlying profit in the current 2025 financial year compared to the 2024 financial year.

“To date, tourism has been more resilient than other sectors amid the tough economic circumstances as international leisure travel has continued to recover from the sharp decline seen in 2020,” Webster said.

“Current rental forward bookings demonstrate year-on-year growth in hire days in the 2025 year within our key markets of New Zealand, Australia and North America.

“However, booking intakes in recent weeks indicate that the recovery is slowing, potentially impacting rentals in calendar year 2025.”

This indicates that it “may take longer than initially expected” to return to pre-Covid-19 levels, which aligned with broader industry feedback and sentiment.

The company has a fleet of 7921 campervans globally and purchases and production for the next two years have been adjusted accordingly, with lower fleet capital expenditure planned.

“We expect that vehicle sales will remain subdued for longer in FY25 and ultimately rebound in line with a wider economic recovery once interest rates fall and household financial pressures ease, allowing for increased consumer confidence in making large discretionary purchases.”

International tourism was still recovering from the pandemic.

Thl notes in its annual report that the United Nations World Tourism Organisation reported that, in the first quarter of 2024, tourist arrivals to North America and Oceania increased by 10% compared to the previous year.

Despite this growth, visits to Oceania were still 15% lower and those to North America were 5% lower than the first-quarter figures from 2019.

“The trends we see from a number of countries suggest that the rebound in leisure travel is trailing behind overall tourism recovery, with a faster recovery observed in travel for the purpose of visiting friends and family. These trends indicate that leisure travel has a reasonable runway to return to 2019 levels,” the company says.

Webster - whose total remuneration has fallen from $2.52m to $1.64m - said the company saw headwinds as cyclical and associated with the wider economic downturn rather than any structural change for the RV industry.

He said renewed bank debt facilities also reflected lenders’ confidence in thl’s outlook and provided increased flexibility to continue to invest in new fleet and take other opportunities as they arise in a down market when competitors can’t.

Two new lenders have been added to the financing syndicate and it had increased the facility size by $225m.

It is now back to the drawing board for reaching a $100m net profit goal.

The economic climate in the key markets of New Zealand and Australia and more broadly overseas has deteriorated more than anticipated when it set the goal and this was unrealistic for the 2026 financial year.

“Given the prevailing economic conditions and persisting uncertainties, it would be inappropriate for us to set a precise timeline for reaching our goal,” Webster said.

This year Webster - a leading figure in the tourism industry - will reach the milestone of working for thl for 20 years.

“This is something I never expected and, given the nature of publicly listed companies, is not that common.”

The company’s 7835 shareholders will be paid a final dividend of 5c a share, 100% imputed and payable on October 4 taking the full-year dividend to 9.5c, down 37% on last year.

Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.