KEA Campers

KEA’s decision to enter Australia was driven by:

• the market opportunity arising from the merger of the market’s two largest campervan operators
• creating an Australasian business. Internationally the campervan sector in Australia and New Zealand is seen as one tourist destination.

Where is KEA as at March 2011?

The impact of the global financial crisis took a considerable toll on KEA’s Australian operations, forcing it to cut production at its Auckland factory by around 50 percent and adjusting its staffing levels accordingly. 

Despite this the business still managed to achieve budgets in both parts of the business. The market has begun rebounding and production is almost back at pre-2008 levels.
 
The impact of the global financial crisis is still being felt in the motor home rental sector and is being manifested through clientele booking patterns. Where previously clients booked vehicles months in advance, allowing KEA to adequately allocate staffing and resource requirements, they saw clients delaying booking until the last minute.
 
However, the company took the bold step of putting up its quotas in 2009 and refused to cave in to the discounting trends by holding its pricing steady.  While this resulted in having a larger percentage of its vehicles “parked up”, it also meant the company was able to cap depreciation, tyre and road-user costs and regain more control over its day-to-day operations.
 
The company launched a new internet booking system in 2008 which has continued to pay big dividends with internet and direct bookings remaining strong across both sides of the Tasman. In spite of this it continues to operate separate reservation systems, as the trend towards more direct bookings has meant KEA has been asked to display a lot more localised knowledge.
 
Although there have been significant difficulties with the Australian operation over the years, KEA has made it a point of adapting its core business model to ensure it is adequately positioned to respond swiftly and succinctly to changes within the market place.

What has KEA learnt?

• A one size fits all mentality does not always work: Having done its homework into gaps in the market, KEA committed significant investment into its Australian inventory without first establishing demand. Unfortunately, competitor businesses, which had a more established presence, responded accordingly, resulting in an over-supply of rental motor homes flooding the market.
• Research cultural differences: While KEA benefited from receiving a substantial amount of local knowledge through hiring local managers upon entry into Australia, it has also faced some challenges when working with a commissioned-based payment model and time zone differences with bookings from Europe. 

How has the investment been a success?

Australia has proved a difficult market to gain a foothold and despite returning the same revenues as the New Zealand arm is still less profitable than the owners would like. However, the presence of both arms has helped to reinforce the KEA philosophy and helped consolidate brand awareness among the European market, so from that perspective the investment can be considered a success.

More information:

www.keacampers.com