Roy Davidson, 12 September 2019



Tourism Holdings (THL) is New Zealand’s largest motorhome rental operator and the second largest operator in Australia and the US. It also owns and operates cave licenses including the famous Waitomo cave. THL also has a 50% stake in a joint technology venture Togo. THL have partnered with RV manufacturer Thor Industries to bring together a group of technology companies aiming at enhancing the RV experience.

Tourism Holdings is a leader in NZ

With an estimated supply of around 4,500 motorhomes, the market for RV rentals in NZ is largely consolidated, with the top three players accounting for 75% of supply. THL has led the industry consolidation by acquiring its two main rivals Kea and United Rentals in 2012, which resulted in an estimated 20% reduction in supply between 2012-2015. This helped address the overcapacity that prevailed during the previous years, and it also boosted THL’s market share from 27% in 2012 to around 45%, making it the largest player in the country.

EL Monte’s acquisition lifts THL’s US market share

THL acquired EL Monte for an enterprise value of $93.5m in 2017. The acquisition was funded by $82.2m of debt and 3.4m THL shares. The acquisition catapulted THL’s market share to almost 30% in the US, behind industry leader Cruise America (around 50% market share). Longer term, the acquisition is expected to deliver earnings growth and improved returns through scale benefits, synergies and cost rationalisation.

The US segment continues to be the main challenge

THL has been moving towards a more ‘flexible’ fleet model where stock is held for just one season and then effectively on-sold as new. While this model has a number of benefits, it also increases leverage to consumer confidence and asset price cycles. Subsequently, THL has completed an operational review of its US business, finding that the business model is not broken, but rather that the excess supply issue in the face of slowing economic demand will dampen near-term profitability. As a result, THL will lower its capital expenditure profile and decrease its fleet size in the US from FY20 onward to acclimatise to a lower demand environment.

THL has enjoyed a supportive economic cycle

The vast majority of the firm’s operating earnings stem from its New Zealand, Australian and US tourism businesses. It is important to note that THL’s core industry, tourism, is heavily impacted by the economic cycle. In a strong economic cycle, consumers’ propensity to travel generally increases, as does the demand for ‘discretionary’ goods such as motorhomes. However, in periods of slower economic growth, these supportive factors tend to fade. THL has recently recapitalised its balance sheet to provide headroom and flexibility around Togo. We view this as sensible, given the somewhat cyclical nature of the tourism industry.


  1. regulatory change
  2. economic downturn
  3. increased competition