Growing tariff challenges for Tourism Holdings

Friday, 11 April 2025

Tourism Holdings has confirmed Canadian retaliatory tariffs will be imposed on its North American business.

Tourism Holdings is caught in the crossfire of the retaliatory tariff trade war unleashed by the US, and is one of the New Zealand companies most exposed to negative impacts, a financial analyst says.

The NZX-listed campervan company is the world's largest commercial RV rental operator, and has significant interests in both the US and the Canadian markets.

Since US President Donald Trump announced worldwide tariffs on April 2, Tourism Holdings has issued two notices to the NZX acknowledging the tariffs and potential challenges.

Late last week the company said there was uncertainty about the extent to which the tariffs imposed by the US, and any retaliatory tariffs imposed by Canada might impact on the North American RV industry.

But it also said the tourism industry had seen a decline in interest in travel to the US in recent weeks, and that had resulted in a slowdown in international booking intakes for the upcoming peak season.

Facing a global market meltdown, President Donald Trump on Wednesday abruptly backed down on his tariffs on most nations for 90 days but raised his tax rate on Chinese imports to 125%.

“Typically, around 50% of thl’s RV rentals in the US are from domestic bookings, which have a shorter lead time compared to international bookings,” it said.

“As a result, it remains too early to determine if the current slowdown will have a lasting impact on the US high season performance.”

The company was monitoring the situation as it evolved, but did not expect to have more certainty on vehicle sales until later in the year.

But on Thursday Canada announced it would impose a 25% tariff on the non-Canadian and non-Mexican content of vehicles imported from the US.

That tariff would impact on the campervans that Tourism Holdings imports from US manufacturers for its Canadian fleet, and an effective tariff rate of about 22% would apply, the company confirmed on the NZX.

It had been taking measures to mitigate the impacts, including accelerated deliveries of new builds into Canada and relocating a portion of its US fleet to Canada ahead of the tariffs, it said.

The company was also working to seek relief from the tariffs, although it was not able to comment on the likelihood of getting relief.

Craigs Investment Partners portfolio manager Mohandeep Singh said Tourism Holdings could see negative impacts from tariffs on several levels, which made it one of the more exposed NZX companies.

Campervan sales are likely to be the big problem for Tourism Holdings, financial analyst Mohandeep Singh says.

On the rental side of the business, there had been a huge drop in inbound tourism to the US since the beginning of the year, but domestic demand was a big driver of campervan hire in the US, he said.

“That might mitigate the damage, but international bookings tend to be done six to nine months in advance, so there is a lag and bookings could dry up further, or they could normalise. It’s uncertain.”

The bigger problem for the company was campervan sales, even though the value of used campervans was likely to increase, he said.

“That’s a bit of a silver lining, but given the economic backdrop - with inflation likely to rise and growth likely to slow - are consumers going to feel positive enough to buy a campervan? I don’t think so.”

Campervans were discretionary purchases, not staples, and they were a luxury item, and such big ticket items were not selling now, Singh said.

“It’s like the flip side of Covid when people were buying campervans right, left and centre to travel around their own countries. Campervan sales helped shore up Tourism Holdings’ balance sheet back then, but it’s different now.”

When the company reported its results for the six months to December 31 recently, it announced a 36% decline in after tax profit on the previous financial year.

It said a contributing factor in the decline was that it had been the most difficult period for camper van sales in decades.

Singh said that in moving to build up its fleet inventory in Canada, Tourism Holdings had bought three to six months time to weather market turbulence and decide how to approach any tariffs that were imposed.

“But the chickens will eventually come home to roost because they will eventually run out of inventory, and need to address the new market reality.”

The company had been one of the biggest laggards in share prices since April 2, he added.