KEA says Australia has been difficult and less profitable than it would like. However, entry into Australia has helped grow the New Zealand operation.
Setting up
As a result of the merger between the two largest campervan operators there was a large pool of skilled employees and a number of campervan depots available in the market, which KEA was able to acquire. This allowed KEA to shortcut the two to three years it would have taken to establish the same level of market knowledge and infrastructure.
In KEA’s view, this approach was also less expensive than a greenfields operation.
The Australian operation is run separately from New Zealand to protect the New Zealand operation from any risks associated with its Australian counterpart. At the same time it enables KEA Australia to leverage the name, reputation and business experience of KEA New Zealand. The main disadvantage of this model is that each operation stands alone financially.
KEA operations in Australia and New Zealand are, for the most part, managed separately with the exception of IT, which is mainly undertaken in New Zealand.
Differing fleet financing arrangements between New Zealand and Australia put stress on the Australian business. This, coupled with the size of Australia and KEA Australia’s need for more investment in infrastructure, resulted in some challenging initial years for KEA.
KEA believes it is important that a consistent image is maintained across New Zealand and Australia. This enables KEA to sell Australia and New Zealand as one package to the European market.
Lessons
- Understand the differences in Australia and adapt the business model as appropriate. It is important to have a good look at Australia before leaping in.
- The benefits you receive in New Zealand from being a relatively large business are not replicated in Australia.
- Carefully consider how the business is to be structured.
- Have a contingency plan that protects the New Zealand business.
- KEA believes that a substantial amount of money is needed if your business model requires you to work in multiple states and territories.
- Australia has more demanding and complex regulations and it is important to understand them.
More information:
www.keacampers.com
