Planning for zero tourists, zero revenue

In the first of a series of interviews with key CEOs on how they and their companies are responding to the Covid-19 crisis, Rod Oram talks to the CEO of Tourism Holdings, one of the sector’s largest operators in New Zealand

“In tourism, we’re assuming at times we’ll have zero revenue,” says Grant Webster, chief executive of Tourism Holdings, one of the sector’s largest operators in New Zealand.

THL is already close to such a collapse of activity and income. The last few tourists are returning campervans to their bases; yet, a wave of cancellations and a dearth of new bookings means minimal revenue in the coming months.

“The focus industry-wide is a genuine plea to customers to ‘rebook, don’t cancel’,” says Webster, who is co-deputy chair of Tourism Industry Aotearoa. THL has one advantage. It is suggesting to its customers in the US, UK and Australia who had planned to visit here that they can rebook in their home countries because it has campervan operations there.

The overwhelming goal for THL and other tourism operators is to preserve as many jobs and as much capability as they can. “We want the industry to be alive and well” when the recovery eventually begins, says Webster.

His very great concern, though, is tourism attractions are already closing around the country and laying off their staff. “Over the next few weeks tens of thousands of people will lose their jobs in tourism. There will be several hundred thousand jobs lost before too long.”

He urged the Government to extend its wage subsidy programme to all companies regardless of size and across all sectors. A few hours after this Newsroom interview with him, the Government signalled it would take that step. But the subsidy will only partially reduce wage bills. Tourism operators will still have other wage and business costs, yet scant, if any, revenue. The sector will still lose some of its capability and capacity.

The UK government, in contrast, Webster says, initiated a far bolder sweep of measures at the end of last week to help all companies across its economy. There, the approach is focused on furloughs rather than layoffs – staff remain on companies’ books but the government pays 80 percent of their wages.

As the Covid-19 crisis escalated globally over the past couple of weeks, THL responded and innovated in two main ways: “repurposing” its activities; and adopting some different work practices.

On the first, it’s seeking ways to deploy its campervan skills. It already had some disaster relief experience from, for example, California’s bush fires and Florida’s hurricanes. Here in New Zealand it helped house evacuees from Wuhan who were in isolation last month at a military base on Auckland’s North Shore. Some of its vans are now in use for the city and county governments in the San Francisco and Los Angeles areas and a few other US cities.

More creatively, it’s working on how to use its core campervan skills in mobility, space, bedding, showers, water and heat. It is looking to meet new needs for temporary housing; and its manufacturing arm is investigating the need for the likes of mobile stations for testing and hand-sanitising.

On the staff front, THL is doing extensive scenario planning with various estimates of length and depth of the global economic contraction. This is helping the company to understand “what we do to survive as a business; how we can sustain as many jobs as we can; and how we can create as many jobs as we can in the future,” Webster says.

Meanwhile, “we’re desperately working on other opportunities to keep people in their roles,” Webster says. “But we’ve made it clear to them there will be role changes and job losses. This is the single biggest challenge for the business and the single hardest to work through with people.”

While there are still frontline staff working at campervan bases, virtually all support staff are now working remotely. At the company’s headquarters in Auckland there are just a few people left in a space built for more than 60.

THL began trialling remote systems two weeks ago. The key attributes it’s developing are collaboration, communication and contact.

On the first, it uses video as much as possible to help foster co-working; on the second, it urges staff to be clear with each other who they’re contacting and how they will communicate with them rather than simply “dumping five times as many emails” in their inboxes; on the third it encourages people to take, for example, online coffee breaks together so they have a chance to chat.

“This is the biggest reset opportunity the industry has ever had and will ever have.”

Among THL’s big lessons so far, Webster says, are:

- “Repurpose at pace.”

- “Maintain your understanding of delegation and decentralisation. You have to let people make decisions in their own areas.”

- “Self-management and management of your team becomes really important. People need routines and sleep. Recognise this is a marathon, not a sprint.”

- “Relationships really count in a time of crisis like this.”

Above all, he urges: “Take a minute to lift your head up beyond this. There is going to be a large number of businesses that won’t survive, or will close their doors for a period. There is a risk and opportunity for tourism in this.

“The risk is some inappropriate owners will take over those assets at low values and reinforce the bad side of how the industry operates.

“Yet, there is an opportunity to rebirth the industry in a manner that is aligned with tikanga Maori, that is aligned with environmental sustainability.

“This is the biggest reset opportunity the industry has ever had and will ever have.”

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