An Operator’s View: Fullers Group’s Mike Horne

Fullers Group has invested almost $18m bolstering its fleet in the Hauraki Gulf. Image: Fullers Group

New Fullers Group chief executive Mike Horne tells the Ticker about the company’s new strategy, the internal changes at the business, coping with Waiheke Island community concerns, and the opportunities ahead for the ferry, cruise and coach operator.    

Mike Horne

I have witnessed the industry change drastically over the past six or seven years. At the end of the Global Financial Crisis, I was starting work at Tourism Holdings (THL) – and honestly, it was tough going. There were not the soaring visitor numbers we see today. But now, we can see from THL’s financial results earlier this week, that the industry has more than recovered.

While we can all enjoy this success, recent history reminds us that the industry is very cyclical – you come out of the good times and go straight into the bad. The challenge for us as an industry is to make our businesses sustainable for both the ups and the downs. The medium term outlook appears very good but when things start to change, how do you deal with that and what are your plans?

Businesses with very large asset bases, like THL or Fullers, which can have up to $100 million tied up in vehicles or vessels, need to be very sensitive to how their businesses scale. How can you take advantage of growth, but also prepare for seasonality or any slowdown?

New Zealand tourism is highly seasonal. You get peaks on top of peaks on top of peaks where you do not have enough capacity. Conversely, there are six or seven months of the year when these large assets are sitting idle. The unique opportunity for Fullers is that we have a strong commuter base in Auckland, which sustains us through the whole year. Providing value for commuters allows us to ride through any shocks or tourism downturns. That is a core part of our business – a base that we build our tourism services around.

Under a new strategy, Fullers Group has expanded to include additional tourism brands beyond our flagship Fullers and 360 Discovery Cruises ferry operations. Fullers Group now includes the ManaBus.com and nakedbus.com coach operations. InMotion Group, which owns Fullers, had previously operated the coach services as a separate business.

These once separate brands are all coming together into an integrated business. We also have a strategic sales and marketing company, Roam Experiences, driving campaigns across all brands. We can begin to add so much more value, as we can coordinate growth over the next three to five years.

One thing we are not doing yet but are very excited about is being able to deliver a seamless experience for our customers across the newly-integrated business. Currently, each business is successfully delivering its own seamless service but there is a huge opportunity for customers to move from ferry to coach with one easy, bundled package. That certainly presents challenges around customer experience design but there also some very simple gains.

We are experts on the logistics of travel, however, we want to build on top of that a focus on the on-board experience. Just changing our business’ own vocabulary from ‘passengers’ – which is what we are used to using on our coaches and vessels – to ‘customers’ encourages us to think not just about the travel aspect, but the whole experience we are providing. Whether a customer is a tourist or a regular commuter, their first impression of their destination is formed the moment they step on our vessel or coach.

We want to become even better at delivering the tour products that we currently offer, but new ideas are definitely on our radar too. Whether a new ferry or coach tour, or something complementary to those, everything is in the mix right now. Over the next three-to-five years, we will be aggressively building out product.

In terms of branding the group, we have not yet made a decision as to how that will develop as the focus for us right now is on pulling the integrated business together, doing it well, and delivering great products and services. However, as an integrated business we will consider what ‘integrated branding’ may look like but that is a big task and we will not be seeing anything change for this summer. Certainly, looking slightly longer-term, how we outwardly show the new integrated business is something we will be looking at.

One challenge we face and are doing our utmost to resolve is the issue of community concerns over our double decker buses on Waiheke Island. We put the buses in over the summer to help deal with the very heavy visitor demands during the peak season. However, they attracted the ire of some in the community concerned about the impact high visitor numbers were having on the island.

How do we move people around efficiently but in a way that is sympathetic to what Waiheke is and why people choose to visit and live there? It is an issue we need to think through very carefully and get right, especially for next summer. So, there is a lot of discussion to be had and we are working hard to determine the balance. Fundamentally, Fullers has a long and positive history with Waiheke which is something that we wish to continue.

Tōrea Fullers ferry

One of the major business accomplishments I’m proud to witness at the beginning of my time with Fullers is the completion of the Tōrea vessel. Next week, we’ll hold a commissioning ceremony for this newest addition to the Fullers fleet.

Tōrea’s arrival in Auckland marks the completion of a $17.6m investment in two identical vessels, built domestically by Q-West in Whanganui. Tōrea’s sister vessel Kororā began service in late 2016, and the two modern ferries will standardise the quality of service across the Hauraki Gulf.

The New Zealand tourism industry is absolutely flying and I feel very privileged to be leading Fullers Group, building upon the work of former CEO Douglas Hudson, at a very exciting time for the company. That is not just because of what is happening internally but also because there are a stack of great partners, stakeholders and operators that we want to work with to build a much bigger platform than just Fullers Group.

Around 75% of travellers who come to New Zealand come through Auckland, and many of them want to explore the Hauraki Gulf. Fullers Group cannot possibly cater for all of them alone. There are so many opportunities for collaboration and for many operators to work together as a group to provide that bigger experience.

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