Qld hostels caught up in backpacker group collapse

Backpacking hostels in some of Queensland’s hottest tourism centres have been caught up in the financial collapse of one of the country’s largest budget accommodation and bar groups.

Popular Queensland backpacking hostels have been caught up in the financial collapse of one of the country’s largest budget accommodation and bar groups.

Tourism Adventure Group (TAG), which operates the Nomads and Base hostel networks, called in administrators last week to salvage the business in the midst of ongoing international border closures and another spike in local Covid-19 cases.

TAG has 14 venues across Australia and New Zealand, including the Nomad hostels in Noosa, Airlie Beach and Brisbane.

It also operates adventure tours on Fraser Island, runs Mojo Surf camps along the east coast and in Bali and Portugal, and launched beach festivals Full Moon Down Under on Magnetic Island and Spring Break Australia in Airlie Beach.

Liam Healey and Quentin Olde of restructuring specialist Ankura were on Friday appointed administrators of the company’s Australian operations, which will continue to trade as they work through a potential restructure. The New Zealand business is not in administration.

In a statement, TAG managing director Dan Bunning said the sustained impact of Covid-19, including the collapse of the backpacker trade and the winding back of JobKeeper in March, left the company with no alternative but to attempt to “right size the business.”

“We are working with key stakeholders including landlords, employees and trading partners to accept the current circumstances and face the reality of having to reset the business in the midst of this pandemic, to ensure it is well positioned,” he said.

Backpackers in Noosa before the pandemic. Picture: Megan Slade.

A staff member at Nomad Noosa said the business was continuing to operate as usual. According to its website, the property is offering a weekly rate of $170. Nomad Airlie Beach said it was “busy” due to school holiday bookings and was trading normally.

Mr Bunning said TAG was highly profitable prior to the pandemic, operating 25 venues, employing more than 600 full-time equivalent staff and turning over $150m during its pre-Covid peak in 2019.

Mr Healey said the administrators were in talks with the company’s directors, shareholders and other stakeholders to assess the business and consider the options available.

“In the meantime we are continuing to trade the businesses and negotiate support from key stakeholders in these difficult trading conditions,” he said.

“TAG and its directors have support from its bankers and other stakeholders, and are working with the administrators on restructuring proposals which are focused on keeping the group together and operating into the future”.

The first meeting of creditors will be held virtually on July 7.

Broken Hill hitchhiker Richard McLeod originally founded Nomads as an affiliate marketing program in 1994. Mr Bunning bought into the business in 2003 and was later joined by business partners Michael Ebert and Tom Cooney.