Tourism Holdings Limited

The Business

Tourism Holdings operates the world's largest commercial RV rental fleet, with approximately 8,564 vehicles across New Zealand, Australia, and North America. The company buys or builds motorhomes (via its subsidiary Action Manufacturing), rents them to tourists for weeks or months, then sells them into the used vehicle market. Revenue splits roughly 52/48 between rental services and vehicle sales, making THL part tourism operator and part fleet asset manager. A 2022 merger with Apollo Tourism gave THL global scale and a portfolio of ten-plus brands spanning budget to premium segments, but also introduced a North American operation that has not yet earned a positive return. THL completed its exit from the UK market in early FY26, simplifying the business to three core geographies.

Recent Performance

FY25 (June 2025) was a trough year. Underlying net profit fell to approximately NZ$29 million, down from NZ$46 million the prior year, as oil prices above $100 inflated operating costs while RV sales volumes declined amid weak consumer confidence. Rental revenue grew 11% over the period, driven by improving international tourism flows, but vehicle sales revenue fell 6% as buyers deferred purchases. The net effect was EBITDA of NZ$190 million, down from approximately NZ$218 million in FY24, with margins compressing from 23% to 21.2%. North America continued to underperform, generating negative returns for the third consecutive year and requiring a NZ$37 million goodwill write-down. The stock has traded in a range around A$2.20-2.60 over the past twelve months, supported by takeover interest from BGH Capital (a PE consortium holding 19.9%) and a subsequent strategic buyer.

Outlook

The recovery is underway but modest. Forward rental bookings are up 15-30% across NZ, Australia, and Canada, with the US showing a 50% increase off a deeply depressed base. Revenue is expected to grow at roughly 5% annually from NZ$894 million in FY25, driven by rental volume recovery rather than pricing. EBITDA margins should recover toward the low-20% range over FY26-FY27, below the prior peak of 23%, before competitive pressures and cost normalisation pull them back over the medium term. This is a recovery from a trough, not a structural improvement in the business's earnings power. The largest source of uncertainty remains oil, with WTI currently at $107 and sitting near the upper end of a manageable range for the business.

Key Risks

Oil is the dominant risk. WTI sustained above $120 would meaningfully compress earnings through direct fuel costs and suppressed consumer demand for RV holidays, pushing the business toward its bear-case scenario. The dual takeover process creates binary risk in both directions: if both bids lapse without a formal offer, the stock would re-rate to standalone value, representing a material decline from the current price; if a bid completes, it would deliver a step-change premium. North America remains a structural concern. Three consecutive years of negative returns and NZ$37 million in goodwill already written down raise the question of whether the underperformance is cyclical or permanent. If the region cannot reach breakeven by FY27, a distressed divestiture becomes the likely outcome, crystallising losses at a price well below the capital originally deployed.

What to Watch

The thesis-defining event is the resolution of the dual takeover process, expected by December 2026. BGH Capital lodged a non-binding indicative offer at NZ$3.10 per share in May 2026. A strategic buyer subsequently emerged at NZ$3.30-3.40 and was granted due diligence access in June 2026. The board has stated it believes value is "well north of $3.00." Whether that expectation is met, and whether competitive tension between two bidders produces a formal offer, determines the outcome.

• H2 2026 RBA rate cut cycle — A pivot toward lower rates would support RV sales recovery and consumer confidence, providing a tailwind to the vehicle sales division and reducing pressure on the balance sheet.
• 18-24 months North America breakeven — US bookings are up 50% from a depressed base, but the region needs to generate positive EBIT to validate the Apollo merger rationale. Progress toward breakeven by FY27 would materially reduce impairment risk.

Company Description

THL operates across three segments. The rental division (approximately 52% of revenue) leases motorhomes and campervans to tourists, primarily international visitors on multi-week holidays. The vehicle sales division (roughly 48%) sells ex-rental fleet and new builds into the retail market through dealerships and online channels. Action Manufacturing, a subsidiary, builds motorhomes in-house, providing vertical integration that most competitors lack. Geographically, New Zealand and Australia generate the majority of profits, with North America contributing revenue but not yet earnings. The company manages ten-plus brands spanning budget (Hippie Camper) to premium (Maui, Britz), capturing demand across the full price spectrum. Fleet size sits at approximately 8,564 vehicles.

Where the Growth Is

Rental revenue is the growth engine. It grew 11% in FY25 off a base that itself grew roughly 8%, representing genuine momentum rather than a base-effect recovery. Forward bookings are up 15-30% across NZ, Australia, and Canada, with the US up 50% from a depressed base following several years of underperformance. This volume recovery is the primary driver of the expected EBITDA margin improvement from the FY25 trough of 21.2% toward a mid-cycle level. The rental division's fixed-cost structure means incremental volume flows through to earnings at a meaningfully higher rate than the headline revenue growth implies.

Competitive Position

THL's advantages are real but not deep. The company holds approximately 60% of New Zealand's RV rental market and is the only vertically integrated global operator, with Action Manufacturing providing a 5-8% cost advantage on fleet builds. Scale matters in fleet procurement, depot distribution, and online booking infrastructure, and it would take a well-capitalised competitor five or more years to replicate THL's global network. That said, switching costs for customers are essentially zero. Travellers choose on price, availability, and vehicle quality, and peer-to-peer rental platforms (currently under 5% market share) represent a long-dated but real disruptive threat.

The competitive advantages require continuous execution to sustain. They are scale-based, not structural, and could erode if a PE-backed competitor entered aggressively or if P2P platforms gained traction. The current position provides durable pricing power within individual markets but does not prevent margin compression over a five-year horizon if the competitive environment intensifies.

Management and Capital Discipline

CEO Grant Webster has been with THL for over a decade and has executed several decisive moves: divesting the UK business, closing the Brisbane facility, and pursuing the Apollo merger that created a global platform. The Apollo deal has been a mixed result. The NZ and Australia integration delivered cost synergies, but the North American operation has not earned a positive return in three years and required a NZ$37 million goodwill write-down in FY25. Webster is transparent about NA's underperformance, which distinguishes him from management teams that obscure bad news in disclosure.

Less credible is the publicly stated aspiration of NZ$100 million in net profit, which requires bull-case assumptions across every segment simultaneously. The dividend was cut 67% during FY25 and is only beginning to recover, reflecting a board that has prioritised balance sheet repair. That is the correct sequencing given the leverage position, but it does indicate the business is operating with less financial flexibility than the headline revenue scale suggests.

Financial Position

Net debt stands at approximately NZ$370 million (excluding lease liabilities), putting leverage at around 2.1 times EBITDA. Including NZ$200 million in IFRS 16 lease liabilities, total obligations rise to NZ$570 million. Covenant headroom can absorb a revenue decline of 25% or more before triggering a breach. The fleet itself provides balance sheet support: vehicles are liquid assets with recovery rates above 70% of book value, and gross profit on fleet sales runs at approximately NZ$84 million annually. Facility availability exceeds NZ$300 million. The balance sheet is adequate but not comfortable, with limited capacity for further acquisition-driven growth until leverage falls below 1.5 times.