Wednesday Letter: Tourism Holdings’ Grant Webster

Tourism Industry Aotearoa chairman and Tourism Holdings chief executive Grant Webster on the year’s challenges and highlights and the opportunities ahead for the industry in 2018.

Grant Webster

“December already!?” has echoed around the office over the last few days. Everyone is rushing around in the midst of high season, knowing we are only days away from the busiest part of the year.

This year has felt long and busy – and there is a bit to go. I think we can blame the Lions tour (in a good way); we haven’t really stopped. Many of those non-ski related businesses that normally slow down over winter stayed busy; we had a long tail to the end of last high season, with a late Easter, and we have seen a strong shoulder going into summer.

The publicly listed company trading results and government statistics released over the last few months reinforce that it has been a record year again for tourism operators in New Zealand. There were likely more months of profitability as an industry than we have ever had before. Not for everyone, unfortunately, but the very large majority of the industry must be thinking it has been a boomer year and wondering ‘where to next’.

When reflecting on the year, and looking ahead, there are some obvious points which most of us would probably see as the priorities for discussion – infrastructure, social licence to operate, labour shortages and the impact we have on the environment as an industry.

I thought it might be of interest to hear some of the additional focus points from a thl perspective, both here in New Zealand and globally.

In 2017, thl has grown its exposure around the world and, amongst other changes, we are now operating a much larger business in the USA. There are always questions about New Zealand businesses’ ability to operate overseas, especially in the USA. It isn’t easy.

One of the challenges of growth is the increased responsibility from a legislative and compliance perspective. How to create a culture of responsibility, and not get caught into a process and rules trap, is a challenge; we face this everywhere.

I am reminded of Warren Buffet; in one situation he asked all his employees to be their own compliance officer. He said, “after they first obey all rules, I then want employees to ask themselves whether they are willing to have any contemplated act appear the next day on the front page of their local paper, to be read by their spouses, children and friends. Lose money for the firm and I will be understanding, lose a shred of reputation for the firm and I will be ruthless.”

Cyber security, data protection (the new European GDPR data laws are far-reaching and will impact any New Zealand tourism company with European customers) and increased risk of non-compliance anywhere is significant. Balancing a culture of entrepreneurship and innovation with compliance and policy is, in my view, going to be an increased focus. We have recently created a new General Manager role, titled GM Responsibility, targeted at assisting us grow the culture to one that embraces a sustainable business in all regards.

As we look to grow a sustainable culture, I am reminded of the importance of retention of people. We are in a low unemployment period (in all our operating countries) and finding the right technical skills is increasingly difficult. The threat of a negative cycle of higher turnover, and more intensity for training new crew in a growth period, is real. The loss of IP and the risk of throwing people too far in the deep end is real. I can see it in parts of thl around the world and we will need to have it as a key focus in 2018.

Lastly, I look at the 2016/17 theme of digital disruption and wonder what it will mean in 2018. We are seeing more intermediaries and everyone is fighting to own the customer.  I wonder when the owner of the capital will return to the forefront. It is, in my view, inevitable. As technology becomes more accessible, and machine learning and AI increases in capability, the owners of hard assets could easily become the key distributor again.

To close out, I have some predictions for 2018 – to look back on in 12 months’ time:

  1. Sustainability in tourism will gain significant momentum and move at the fastest pace we have seen yet. Over 1000 businesses will sign up to the TIA Sustainability Commitment.
  2. Labour shortages will see the largest increase in labour cost in at least the last 12 years. The costs will flow into 2019 pricing.
  3. As a result of point two, the gap between management and frontline pay will decrease the most it has in the last 12 years.
  4. All New Zealand tourism businesses will either have, or be in the final stages of implementing, at least one Chinese payment system.
  5. We will be lamenting a drop in Australian arrivals, albeit offset by other markets.

I hope everyone has a safe and happy season ahead.

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