Tourism Adventure Group calls in administrators

One of the country’s largest hostel operators has called in administrators as border closures continue to cripple the tourism industry.

The Nomads Brisbane Hostel. Picture: Richard Walker

The crippling effects of Covid-19 on the global tourism industry have been blamed for the financial collapse of one of the largest budget accommodation and bar groups in Australia and New Zealand.

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

Liam Healey and Quentin Olde of global 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 arm of the 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 and restructure the property assets it operates”.

“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 and on a strong footing for the future,” he said.

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.

The business currently employs 145 FTEs and operates 14 venues across Australia and New Zealand, including hostels, nightclubs and bars in Sydney, Melbourne, Byron Bay, Noosa and Airlie Beach.

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.

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.​

According to TAG’s website, 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.