Iraq dries up THL bookings

By SIMON HENDERY

Tourism Holdings has shelved a planned balance sheet restructuring because of fears that an Iraq war could deal another blow to international travel.

THL, the country's largest tourism company, yesterday posted an interim profit of $5.2 million - twice what it achieved a year earlier following the fallout from the terror attacks of September 11, 2001.

Having spent the past 17 months working on strengthening its balance sheet and improving cashflows, the company is again facing uncertain times.

The problem this time is travel bookings drying up as holidaymakers await a resolution to the Iraq crisis.

"People have stopped travelling for fear of a major war," said THL managing director Dennis Pickup.

"It's not as though New Zealand is unattractive [as a destination]. It's just that they don't want to be distant from their dependents."

Tourism Industry Association chief executive John Moriarty said his organisation had been telling its members for several weeks that it was a good time to put profit protection mechanisms into place and hold on to cash reserves.

"The sentiment is very much towards caution on forward bookings."

THL chairman Keith Smith said a planned capital restructuring by the company - signalled in November and approved by the board for unveiling today - had been deferred "until the future trading outlook becomes more certain".

The company declined to give details of the proposed restructuring.

THL runs the Maui and Britz campervan and car rental businesses in New Zealand and Australia, the Kiwi Experience and Oz Experience backpacker bus networks, and several other New Zealand tourism businesses, including Johnston's Coachlines, Kelly Tarlton's in Auckland and the Waitomo glow-worm caves.

It earns just under 40 per cent of its revenue in Australia and Smith said that while THL was enjoying steady business in New Zealand, "Australia remains soft".

International visitor arrivals in New Zealand rose 9 per cent during the second half of last year, but fell 3 per cent over the same period in Australia.

Pickup said despite the dip in bookings, industry research suggested that once the Iraq situation was resolved, THL's tourism markets would bounce back quickly.

Smith said the company was comfortable with analysts' forecasts that it would make a full-year net profit - excluding unusual items - of $6 million to $8 million.

"THL believes that this is achievable provided there is not a prolonged war in the Middle East or major terrorism attacks which, predictably, would curtail international travel significantly."