Fly In, Drive Away: How Australia and New Zealand Built a Big Business Around Holidays on Wheels

There is a familiar sight outside airports and motorhome depots across Australia and New Zealand.

Travellers arrive carrying suitcases.

A few hours later they are driving away with their accommodation.

They may spend the next week beside Australian beaches, travelling through the New Zealand Alps, exploring Tasmania or following a highway through regional Queensland.

They have bought an airline ticket.

They have rented a vehicle.

They have effectively booked a hotel room.

And remarkably, all three components have become part of the same holiday.

Welcome to the Trans-Tasman fly-drive economy.

The motorhome changed the road trip

Hiring a car and booking hotels along the way is hardly new.

The motorhome changed the equation.

The traveller can now hire transport and accommodation simultaneously.

Tonight's destination doesn't necessarily have to be determined when the journey begins.

That freedom is particularly suited to Australia and New Zealand.

Both countries possess spectacular scenery, extensive road networks and tourism attractions spread well beyond their major cities.

The motorhome connects them.

From Auckland to the South Island

New Zealand seems almost purpose-built for the motorhome holiday.

A traveller can fly into Auckland or Christchurch, collect a vehicle and construct an itinerary around the country.

Mountains.

Lakes.

Beaches.

Small towns.

National parks.

Wine regions.

The journey between attractions becomes part of the attraction.

Australia offers the same proposition on a much larger geographic scale.

Visitors can explore Tasmania, travel Australia's east coast, tour Western Australia or use a motorhome to reach regional destinations difficult to experience through conventional packaged tourism.

The vehicle becomes the itinerary.

Major business noticed

Behind the romantic image of travelling wherever the road leads sits an increasingly sophisticated corporate industry.

Tourism Holdings Limited, headquartered in New Zealand and listed on both the NZX and ASX, describes itself as the world's largest commercial RV rental operator.

Across Australia and New Zealand its rental brands include names familiar to travellers such as Maui, Britz, Apollo, Mighty, Hippie and Cheapa Campa.

The company isn't simply renting motorhomes.

Its wider operations have included vehicle manufacturing, recreational-vehicle sales, travel technology and tourism attractions.

This is vertically integrated tourism.

Build the vehicle.

Rent the vehicle.

Sell vehicles.

Help customers plan the journey.

Participate in the attractions they visit.

The motorhome has become the centre of an entire tourism ecosystem.

The Apollo deal showed how valuable the market had become

One of the clearest demonstrations came when New Zealand's Tourism Holdings sought to combine with Australia's Apollo Tourism & Leisure.

Competition authorities on both sides of the Tasman examined the transaction closely.

Australia's competition regulator ultimately permitted the acquisition subject to undertakings requiring a substantial divestment of Apollo's larger Australian rental motorhomes.

New Zealand's Commerce Commission also required divestments.

Why?

Because both companies were major suppliers of motorhomes and campervans to tourists.

The regulators wanted to ensure sufficient competition remained after the businesses combined.

That tells us something important.

Campervan rental had become sufficiently significant for competition between major operators to matter.

One vehicle earns money repeatedly

The rental economics are interesting.

Unlike selling a caravan once, a rental operator can generate income from the same motorhome repeatedly throughout its commercial life.

Monday's customer returns it.

The vehicle is cleaned and serviced.

Tuesday's customer takes it away again.

Pricing can change according to season, availability and demand.

Eventually the vehicle can potentially be sold into the second-hand recreational-vehicle market.

The asset therefore has several economic lives.

It can generate rental revenue.

It can help generate ancillary revenue.

And eventually it can have a resale value.

Scale makes the model even more powerful.

Fly-drive expands the customer base

Perhaps the greatest commercial advantage is that customers don't need to own anything.

No caravan.

No tow vehicle.

No garage large enough to store an RV.

No annual registration.

No maintenance.

They simply arrive.

That dramatically expands the addressable market.

An Australian can fly to Christchurch and become a motorhome traveller for ten days.

A New Zealander can fly to Brisbane and do the same.

A European, American or Asian visitor can arrive in either country and immediately begin a road holiday.

The recreational vehicle has effectively become a hotel room available for temporary ownership.

Airports become road-trip gateways

That creates an unusual relationship between aviation and road tourism.

Airlines don't necessarily compete with the motorhome.

They feed it.

A traveller from Sydney isn't going to drive their own caravan to New Zealand.

They fly.

A visitor from Auckland wanting to explore Tasmania does the same.

The aircraft delivers the customer to the road-trip economy.

That makes airport-adjacent rental depots important pieces of tourism infrastructure.

The flight is merely the first leg of the road trip.

Tasmania demonstrates the model

Tasmania provides an excellent illustration.

Tourism Tasmania's caravan and motorhome visitor research found that a majority of these visitors flew to Tasmania and hired a campervan or motorhome.

That is pure fly-drive tourism.

Visitors arrive without their own accommodation or transport.

They rent both simultaneously.

Then they disperse around the state.

That dispersal is economically valuable because expenditure doesn't remain concentrated around the airport or major city.

The vehicle carries the visitor — and their wallet — into regional communities.

New Zealand understands regional dispersal

The same principle is particularly important for New Zealand.

International visitors may arrive through Auckland or Christchurch, but the tourism product extends far beyond those gateways.

Motorhomes allow travellers to reach smaller communities while maintaining control over their itinerary.

Every additional night creates economic activity.

Holiday parks.

Fuel stations.

Supermarkets.

Cafes.

Restaurants.

Tourism attractions.

Equipment suppliers.

Ferries.

Local experiences.

The rental company captures only part of the traveller's expenditure.

The journey distributes the rest.

Australia offers scale

Australia's opportunity is different.

Distance itself becomes part of the experience.

The east coast alone offers thousands of kilometres of potential road travel.

Tasmania provides a compact touring circuit.

Western Australia offers enormous distances and extraordinary landscapes.

Queensland combines beaches, tropical destinations and inland routes.

The Northern Territory offers perhaps the ultimate Australian road-trip proposition.

That diversity allows operators to sell completely different holidays using essentially the same product.

The holiday park completes the ecosystem

The motorhome industry and holiday-park industry consequently depend upon one another.

A rented motorhome needs somewhere to spend the night.

Holiday parks need customers.

The growth of one strengthens the economics of the other.

And modern holiday parks increasingly provide the facilities motorhome travellers expect: powered sites, water, dump points, camp kitchens, laundries, pools and recreational facilities.

The motorhome rental business therefore doesn't exist in isolation.

It sits inside the much larger leisure economy.

International visitors are particularly valuable

Fly-drive holidays can also help solve one of tourism's perennial problems: getting international visitors beyond the gateway cities.

A conventional visitor might arrive in Sydney and remain in Sydney.

Give that visitor a motorhome and the economic geography changes.

They may visit the Blue Mountains.

Then regional NSW.

Then Queensland.

Or they may travel south towards Victoria.

New Zealand experiences the same effect.

The motorhome transforms a visitor to a city into a visitor to a country.

Freedom has become the product

There is an interesting contradiction at the centre of the industry.

The customer is purchasing freedom.

But that freedom is delivered by increasingly sophisticated corporations.

Online bookings.

Dynamic pricing.

Fleet management.

Vehicle manufacturing.

Maintenance systems.

Insurance.

Digital travel planning.

Loyalty marketing.

International distribution.

Behind the image of somebody sitting beside a remote lake drinking coffee from a campervan is a substantial tourism infrastructure making the experience possible.

Australia and New Zealand have natural advantages

There are few places better suited to this industry.

Both countries are politically stable.

Both have established tourism industries.

Both have extensive road networks.

Both possess extraordinary natural attractions.

Both have cultures comfortable with camping and outdoor recreation.

And both have large numbers of destinations outside their principal cities.

The geography itself supports the business model.

The Trans-Tasman opportunity

There is also considerable potential in marketing Australia and New Zealand together.

A long-haul visitor from Europe or North America has already travelled an enormous distance.

A combined itinerary becomes conceivable.

Fly to Australia.

Tour by motorhome.

Fly across the Tasman.

Collect another motorhome.

Continue through New Zealand.

Two countries.

Two road trips.

One extended Australasian experience.

The rental companies already operating on both sides of the Tasman are particularly well positioned to participate in that market.

The Australasian View

The motorhome represents something much larger than recreational transport.

It has become a tourism distribution system.

Airlines deliver visitors to gateway cities.

Rental companies put them behind the wheel.

Holiday parks accommodate them.

Regional businesses feed, entertain and service them.

Then the traveller moves on and the process begins again in another community.

Australia and New Zealand possess an extraordinary natural advantage in this market because some of their greatest attractions aren't found in their cities.

They're found along the road between them.

The commercial genius of the fly-drive holiday is therefore remarkably simple.

Sell the traveller the freedom to explore.

Then allow thousands of businesses along the journey to participate in the proceeds.

The open road has become big business.