25 Jul 2013
Words Tim Admin

Stella Deal Comes as Domestic Tourism Lifts

Big news on two fronts greeted me when I returned refreshed after two weeks holiday in Bali – fund manager MFS’s sale of half its Stella travel and accommodation business, and the release of figures confirming the continued revival of domestic tourism in Australia.First to the Stella deal. Congratulations must go to our own Gold Coast based MFS, which announced the massive sale of a half-stake in its travel and accommodation assets for a reported $1.2 billion. This is quite likely the biggest deal ever in this part of the world.MFS has grown remarkably from its origins as a small legal practice in Southport to become one of the biggest fund managers in the Southern Hemisphere. Resort Brokers Australia has done some business with MFS, and we are certainly excited by its achievements.Though MFS did not identify its new business partner, nor confirm the sale price, national newspapers The Australian and Australian Financial Review (14 June), named private equity group CVC Asia Pacific, which recently took control of the former Packer-led TV and magazine group, PBL Media.MFS spent around $2 billion assembling Stella, billed as the largest integrated travel group in Australia and New Zealand. It includes the S8 accommodation management business, Harvey World Travel, BreakFree, Saville Hotel Group, Outrigger Resorts, Sunleisure and Europe-based Golden Tulip.Industry watchers will keep an eye on the ramifications of our domestic travel sector coming further under the control of private equity groups. According to AFR, Flight Centre is now in discussions with Pacific Equity Partners over a deal similar to the MFS-CVC transaction. Clearly they are chasing our assets because of their quality. We do it so well.The deal came to light just a day after Federal Tourism Minister, Fran Bailey, released figures showing domestic tourism is on the rise, with 5% growth in the number of overnight holidays for the year ending 31 March, 2007. Domestic tourism expenditure rose by 7% to $55.9 billion for the 12 months, with 54% of this spent in regional Australia.As Minister Bailey acknowledged (and we have repeatedly reported in the tourism informer), domestic tourism has faced still competition in recent years from plasma TVs and overseas holidays. “But in recent times there has been a strong resurgence in holidaying at home,” she said.Domestic air travel also increased by 15% in the 12 months. “With healthy competition in the domestic aviation market, this trend can only continue into the future,” Ms Bailey said. “The challenge for the tourism industry is to promote more fly and drive packages, to ensure regional Australia enjoys the full benefits of cheap airfares as well.”We would urge accommodation operators to also rise to the challenge, exploring every opportunity for innovative marketing, holiday packaging and value-add attractions to capitalise on the positive market activity.I hope you find more inspiration in the following pages of this month’s edition.Please send your feedback to:thetourisminformer@resortbrokers.com.au or PO Box 854, Indooroopilly Q 4068.