A deal that was the best part of two years in the making could hardly have come at a better time for Hamilton-based tourism operator Leisure Time Group – and for Waikato’s tourism industry.
It has acquired Auckland events company Lime & Soda, adding valuable extra domestic capability to its offerings as borders are closed to overseas travellers.
With a strong emphasis on inbound tourism, which saw relatively fallow months through winter, two years ago Leisure Time Group decided to start looking for an events company to augment its offering and address the seasonal dip.
After a lengthy search, managing director Scott Mehrtens says they were able to clinch a deal with boutique firm Lime & Soda to kick in on April 1 this year. It went unconditional on February 28 “and then the whole world changed”.
As the coronavirus pandemic took hold, a busy looking March through to June for international visitors came to a sudden stop. “It was devastating to our international tourism just like everyone else’s.”
That makes the domestic market all the more important, and the Lime & Soda acquisition all the more welcome.
“We looked at it long and hard all the way through. And the reason why we wanted to do this was to de-risk our tourism business. Lime & Soda is very domestic-based, they’ve got a wide range of clients from different industries.”
Mehrtens says that gives them some assurance around lines of revenue over the next nine months when international markets are very uncertain – particularly as domestic events are largely being postponed until later in the year, rather than cancelled.
Lime & Soda’s owner, Debra Dufty, has joined Leisure Time Group and heads the Events/MICE (meetings, incentives, conferences, events) team. She and her team will remain in Auckland.
Mehrtens endorses the government’s actions in closing borders, despite the immediate impact on his own business.
“It had to be done. We don’t begrudge what’s happened, it is for the greater good. You know, we are all in this together.
“Obviously the greatest risk to New Zealand was people coming in from other countries, so you can totally understand and endorse what we’ve done and and I think it’s going to be better for us in the longer term.”
Tourism Minister Kelvin Davis has announced a rethink of the industry post Covid-19, and has tasked Tourism New Zealand to lead the project.
““We have an opportunity to rethink the entire way we approach tourism to ensure that it will make New Zealand a more sustainable place, enrich the lives of all our people and deliver a sector which is financially self-sustaining in the longer term,” he said.
Hamilton & Waikato Tourism chief executive Jason Dawson welcomed the move.
“We will be an active participant to help develop the plan – domestically and internationally,” he said.
“It’s giving us the chance to pose questions around our previous visitor arrivals and expenditure growth, what does success look like for the future and how do we move our sector from a ‘boom and bust’ cycle?
Mehrtens says New Zealand is already being written about positively by some international travel writers, citing a BBC Travel section article that puts New Zealand in the top five countries when it comes to bouncing back from the pandemic.
He says Leisure Time’s agents around the world are keen to discuss New Zealand offerings because the country is considered a bucket list destination but also a safe one and well respected for the decisive action taken in recent weeks.
“Of course,” he adds, “this accounts for nothing until we feel it is safe to re-open borders.”
In the meantime, as domestic tourism becomes more important, the Lime & Soda acquisition will be helpful.
“We’ve got products that we can sell to New Zealanders now and into the future. And we’re definitely ramping that up to be able to offer that to the traditional supply chain because there will be travel agents around New Zealand going, what are we going to sell?”
In the absence of overseas options, those agents will be turning to local offerings and that will involve the whole industry, he says.
“We all need each other. I can’t offer a tour without a hotel chain. A hotel chain has to be a viable proposition, though. And there’s a lot of infrastructure and a lot of private enterprise that have got a lot of money tied up in the tourism industry; it is in a lot of respects very capital intensive.”
Away from the Air New Zealand headlines, he says there are plenty of “ma and pa operators” with a lot of money tied up in tourism operations, often with large bank debts.
“And they were a viable business until two weeks ago. So it’s pretty heartbreaking.
“No one wants to be in this situation but it is what it is.”
In the case of Leisure Time Group, that included making tough decisions early on. “We went through a first wave of redundancies a few weeks ago prior to wage subsidies being fully announced and available. So we did have to make an initial cut, which wasn’t pleasant.”
He says, however, that staff understood it wasn’t Mehrtens’ or the company’s doing, but the impact of the virus.
“Because we need to know that we are going to survive this – and we will survive this.”
He expects to see mergers and acquisitions over the next few months to make businesses more viable. Leisure Time Group’s growth strategy has been around acquisition, and he says they are likely to be looking for those opportunities themselves.
“We’ve been around for 33 years. This is by far the worst thing that we’ve had to deal with in terms of contingency planning. But we’re very optimistic that we’ll get through to the other side of this.”
Article written by Richard Walker and published in Waikato Business News.