Tourism’s tenacity

Intrepid’s comeback

Unfortunately, tour operator Intrepid Travel wasn’t as lucky. The scope of its business couldn’t save it from the downturn, and it was forced to dramatically cut costs in order to survive.

Chief financial officer Matt Beard says the company asked its staff whether they would participate in taking a voluntary pay cut in order to see the hard times through.

“One of the initiatives we took was telling all of our staff what we were doing, and we asked for a voluntary salary sacrifice between 5-25%. Many staff took that on board. This came after a pretty solid drop in demand, and a strong weakening in the Australian dollar which impacted our margins pretty hard. That was pretty common across the industry.”

“I think the main challenge we had was getting that cost structure lined with the low level of activity. Intrepid is a high, fast growth business, and we needed to look across the whole company and our operating cost to keep that growth as high as possible.”

For many companies, this would have caused a number of staff to flee for the hills. But Beard says a number of other employees who had been through hard times with the company helped boost morale, and ultimately all staff were compensated.

Like Wotif, Beard says Intrepid wanted to keep as many staff on board as possible in order to keep confidence high and make sure when the recovery came around, they could hit the ground running.

“We’ve come back since then, and we’ve actually put people back to full pay mid-last year. And then in September we actually repaid everyone their lost income, and they got a 25% bonus on top of that.”

“I think it’s important for all companies to do this, because there is so much knowledge in your staff. It helped us pull together. And of course the older guys, who have been through the downturns such as 9/11 and SARS, they were able to reinforce those positive messages. The outcome is that you retain strong, high levels of staff when business recovers.”

The decision paid off. Intrepid managed to reach 22nd on the list, with revenue of $115 million, up from $101 million.

Beard also says demand is increasing, with the company confident about its prospects. Recent acquisitions, and plans for an IPO, have also given Intrepid good indications of the year’s performance.

“Our demand is very strong in the Australian marketplace, as well as in Canada, Britain and New Zealand. Having the downturn made us look through our business to find some improved costing methods and allowed us to make it through without too much of an impact.”

“We are moving forward this year with strong demand. We’re seeing an ongoing shift from the short-term holiday to more experiential travel, and that’s a fantastic opportunity for us.”