Vacation trade showing improvement

Press, 25 March 1980, Page 18

Vacation trade showing improvement

■PA " Wellington i The downturn in the proifit earned by Vacation Hotels, Ltd, in the year to .October 31, was attributed; to the drop in the number of; Australian visitors to News Zealand by the chairman, I (Mr J. T. Sheffield) speaking I (at the company’s annual' meeting. Australians had been iwooed to other international ; destinations by airlines ■ offering cheap fares, and it. I was Australian tourists who ; ■ had traditionally provided: ithe bulk of the South Island I tourist traffic, he said. ; In addition, increases in ioverheads — particularly! ■interest charges — made the' [maintenance of profits at (previous levels impossible. I “Interest charges are now; [at substantially higher levels; than they were a year ago, and this, taken into account) with the present level ofbuilding costs, must restrict; considerably the devel-i opment of new hotel accom- _ modation.

“A new hotel room costing $60,000 (and this is not a high cost on today’s rates) on a 60 per cent occupancy would require $4l a day to meet interest charges at 15 per cent,” he said. In the three months to January 31 the company’s profit was down by 22 per cent on the same period last vear. It was still showing the effect of a downturn and of higher costs. “However, in February total gross turnover was up 13.5 per cent, and the position so far for March shows that this upturn is continuing.” said Mr Sheffield. Vacation was hopeful that the rising cost of fuel, which is causing substantial rises in air fares, could again make the Australian traveller prefer the shorter trip to New Zealand — particularly if fares to other destinations were increased to cover their true costs, and additional airline capacity ivas available across the Fasman.

I “Our market research in America ' has shown that in; many cases tourists are notcoming here because of mis-; information, and lack of information about the New) Zealand tourist scene,” Mr Sheffield said. “We are confident that; this traffic can and will con-i siderably expand, but any substantial increase may be from one to two years away. ■ “Despite increasing air; .fares, and other costs of (travel, all indications are; (that the number of travellers; [around the world is steadily] increasing. Our job is to at-: tract more of them here,” he. said.