Buying Cardrona good fit

Southern tourism company Real Journeys has ventured on to unfamiliar trails with its purchase of Cardrona Alpine Resort. ODT Wanaka bureau chief Mark Price asks chief executive Richard Lauder why the company got into the ski business.

Richard Lauder, chief executive of Queenstown-based Real Journeys and acting chief executive of...
Richard Lauder, chief executive of Queenstown-based Real Journeys and acting chief executive of Cardrona Alpine Resort, outside the base building. Photo by Mark Price.
Two years ago, Real Journeys chief executive Richard Lauder got back on the skis and hit the slopes with his children.

Then, two months ago he was leading the company as it bought its very own skifield - Cardrona Alpine Resort between Wanaka and Queenstown.

The purchase price has never been disclosed but the business was estimated by previous owners, Australian-based Vealls Ltd, to have a value of $35 million.

Richard Lauder expands on questions about the future of the substantial acquisition:

On Real Journey's lack of ski industry experience
''We understand the hospitality and hosting association with tourism, so we don't actually see running a skifield as unusual in respect of the sort of business we currently do run. It is hospitality, it is feeding people, and giving them experiences. It is similar to what we might do on a boat in Milford Sound or at the glow worm caves or on the Earnslaw. it isn't an unusual fit for us.''

On dealing with the seasonal aspects of tourism:
''We had 60 days of road closures in Milford Sound last summer and winter, so that was 60 days we couldn't operate. So, those things affect us all the time. But Cardrona is counter to Real Journeys' normal seasonal swings. February is traditionally the biggest month of the year for Real Journeys and May, June, July and August are the quiet months. So, actually having a business that kicks in in June and extends through to mid-October is actually quite good for our balance; our seasonality.

On resource sharing
''We are still running the businesses separately. But there will be quite a few Real Journeys staff who are seasonal who will work winters at Cardrona and a lot of Cardrona staff who were seasonal who will work the summers at Real Journeys. It's a big advantage. An example might be our coach drivers. We have a lot of trips going in and out of Milford and Doubtful Sound over the summer but it's quite a lot quieter over those winter months. So we can redeploy drivers and coaches to bring people up on to the skifield. So there's quite a lot of potential crossover of staff between the two organisations which will give each of the teams a lot more certainty around employment and the ability to stay around.''

On senior management
''I'm acting chief executive. The previous chief executive (Duncan Vealls) was with Vealls in Melbourne, so apart from that we still have the same senior management team. They know how to run this thing. A couple have been here coming into their 21st season so they know what they are doing.

On future directions
''We've bought Cardrona because it's an exceptional asset. It has a great reputation and a great brand. So we are not changing any of that. What we are looking at is just seeing where we might be able to enhance Cardrona and Real Journeys by some sharing. For example, using Real Journeys' offshore sales and marketing capability to promote Cardrona a little bit more in the foreign markets. There can be some cross-selling [between the operations].

The prospect of change for skiers

Cardrona Alpine Resort instructors Dee Hameed (left, in red) and Charlie Gardner (right) guide...
Cardrona Alpine Resort instructors Dee Hameed (left, in red) and Charlie Gardner (right) guide their young charges in the skifield's Skiwees programme in July 2012. Photo by James Clark.
''I don't think they will see any extraordinary change. We got a lot of feedback from our client base here at Cardrona that they were nervous about change. So we are not planning to suddenly change it and we are very sensitive about not changing the culture of Cardrona as well.

Potential for growth at Cardrona
''We've only owned the skifield for four months so to suddenly be saying we are going to be doing this and that and the other thing is pretty premature. We still think there's capacity on the field as it stands today ... just altering some trails to hopefully encourage skiers to go in different places. That immediately increases the capacity if you are steering people to underutilised assets. There's no expectation that we are going to open another valley and put another chair in and build another base facility.''

On the competition
''There is no doubt Coronet Peak is the poster child of the ski industry because of its proximity to Queenstown and the fact that you can just stand at the bottom of the hill and see the snow on it. That has a major influence on whether people go skiing or not and, of course, once they're here then we fight over which field they go on. If Coronet is not looking good then that does affect all of us, even though we might have great snow.''

On Real Journeys' growth
''We purchased the Walter Peak site just after buying Cardrona so I guess that signals we are in the market to grow the business. We are optimistic about tourism; we are certainly optimistic about this part of the world. We will continue to invest here as opportunities come up.''

On China
''We have had quite strong links into China ... and good brand awareness in China. So, we certainly see opportunities to leverage off that once the Chinese want to experience snow-based activities. I think we will test that market this year. The Chinese are now more than 20% of our business in Real Journeys. They are our single biggest market and they have been growing at 20% to 30% a year. So you can't ignore the fact that Chinese tourism is really important to our sector.''

On a China-Cardrona ski industry partnership
''There is a view that we might be able to establish a relationship with one of the Chinese skifields and maybe do some training of instructors. We will look to see whether there is some sort of partnership we can form with one of the Chinese skifields. That may bring us a pool of staff and also create a reputation in China as an off-season destination. My understanding is that there are about 200 skifields in China now, up from about 15 to 20 years ago. It's massively growing.''

- Mr Lauder's comments have had some minor editing.

Real Journeys
The company
Leading South Island, family-owned, tourism business in its 60th year.
Operates the TSS Earnslaw on Lake Wakatipu, the Walter Peak High Country Farm, Milford and Doubtful Sounds cruises, the Te Anau Glowworm Caves, day walks on the Milford Track and Stewart Island ferry and tour services. Also has a stake in Black Cat Cruises, Queenstown Rafting and Milford Sound Flights.

Richard Lauder
MBA (Otago), bachelor of chemical and process engineering and a graduate diploma in arts majoring in ethics (Canterbury).
Previously executive chairman of Excell Corporation and first chief executive of Christchurch City Council-owned City Care contracting company.
Joined Real Journeys April 2012.
Married with two children.

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