Monday, June 17, 2013

Taking ownership?

Publicly listed Jasons Travel Media have released their trading results to 31 March 2013 and it's not pretty reading.

Anecdotal evidence would suggest that AA Travel, that offer similar travel media services are also feeling the pain, but their trading results are not publicly available for comparison.
Jasons Chairman, John Sandford qualifies his company's disappointing result by painting a gloomy picture of the leisure and travel industry. Admittedly these comments have been been amplified in MSM reports that tend to focus on the negative.
Interestingly, Sandford has also been reported as running a similar diversion that MANZ regually promotes by placing blame on the "unregulated" short stay accommodation sector that includes the rise in popularity of private holiday home rentals. Jasons has resisted thus far in offering media services to this industry.

While Jasons pointing the finger at an alternative accommodation sector may give some in the motel industry sort-term comfort by qualifying their own pedestrian performance in recent years, fostering a victim mentality amongst moteliers is not helpful.

Much like Jasons, the motel industry need to take ownership of their own poor performance.
The motel stock in New Zealand is aging and some older leasehold motels have become past the best economic use of the land well before their time. This is frustrating for both the landlord and the leaseholder and can be predominately due to an inadequate schedule of repairs, maintenance and chattel upgrades undertaken by a revolving door of past leaseholders that have stripped value.

While the motel industry look warily at the scrum of alternative accommodation sectors such as bed and breakfasts, apartments, private accommodation etc, the real competition has come from the hotel sector. In spite of continued hard economic times, the hotel sector have retained up-to-date skilled management, reinvested in their product, operate well in the online environment, offer value and effectively deliver and communicate to the public stratas of consistent quality brands.

All is not doom and gloom as the motel industry is still a valid product that offers value to the travelling public. Large pockets of motels that are run by switched-on moteliers have managed to keep ahead of the game and operate profitably. They have been able to maintain or increase the value of their leasehold investment by keeping up maintenance, increasing tariff, growing occupancy and buying additional lease years at reasonable prices. 
"Jasons Travel Media chairman John Sandford says small operators in the leisure and travel industry are struggling despite a record high number of tourists coming to the country.
Jasons reported a loss of $1.5 million for the year to the end of March but says it has a turnaround plan aimed at returning the company to profit next year.
The business which specialises in travel, tourism and leisure says the loss compares with the previous year's profit of $96,000.

Mr Sandford said revenue has been difficult to maintain for Jasons and its competitors because of the highly fragmented market.

He said the company is also affected by the tough trading conditions facing small and medium business clients, despite the high tourism numbers.

Mr Sandford said commercial accommodation operators are being challenged by the non-commercial sector, particularly in accommodation where there has been massive growth in the use of holiday home rentals.

"Because the holiday home people don't have to comply with a whole stack of local authority rules, taxes, regulations, central government taxes."

For example a holiday home operator can have a Sky TV subscription which is used by the guests who the home is rented to, but a motel owner must pay for Sky television subscription for every unit in the motel - so the costs are enormous.

He said more people are coming into the country but their dollars are being spread across a wider range of people.

Mr Sandford said good operators are continuing to grow and improve their business, but the ones that are weak for whatever reason are struggling."
Source: Click HERE

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