SeaLink sets course to pick up island resorts

SeaLink is taking advantage of positive conditions in domestic tourism.

SeaLink Travel Group boss Jeff Ellison has flagged acquisitions are on the agenda in South Australia and Queensland, prompting some to question whether Kangaroo Island could be within its sights.

At the Macquarie Australia Conference in Sydney last week, Mr Ellison told investors that the company, which operates under the brands SeaLink and Captain Cook Cruises, saw opportunities in Queensland and wanted to invest more in South Australia, potentially buying more facilities.

In March, the group purchased two resorts — Kingfisher Bay and Eurong Beach — on Fraser Island, 300km north of Brisbane, for $43m and the understanding is that more island assets are on its agenda.

Acquisition opportunities are said to exist for the company on Queensland’s Stradbroke Island and Magnetic Island, along with Kangaroo Island in South Australia where it runs ferry services.

The thinking is that the company will spend a year integrating its new Fraser Island assets into its business before then moving to secure other resorts on islands and facilities that accompany those.

SeaLink generates $210m in annual revenue and $13m in net profit, with 80 vessels and 65 coach and touring vehicles operating throughout Australia.

It listed on the Australian Securities Exchange in 2013 and has grown its market value by about three times to $400m.

SeaLink has been on the acquisition trail at a time that positive conditions exist in the domestic tourism industry.

Of the island assets, Hamilton Island, in particular, is said to be a strong performer, where the destination is easy to access and attractive all year round, with its hotel occupancy rates at about 90 per cent and Race Week and the exclusive Qualia hotel making it a popular holiday spot.

Like SeaLink, private equity is believed to be keen on the sector, with a party last year said to be circling SeaLink. Some question whether US-based tourism investor KSL Capital Partners was the suitor, although the company would not comment.

The rationale for SeaLink to own island assets is that it can offer tourists package deals, which can generate greater returns.

It is a concept being adopted by Quadrant Private Equity with its Experience Australia tourism business.

Trips on Great Southern Rail, which operates the Ghan between Darwin and Adelaide and the Indian Pacific between Sydney and Perth, can be broken into multiple stops as more consumers participate in “experience travel”.

Quadrant’s other assets include Cruise Whitsundays and Rottnest Express marine tourism businesses. Quadrant too is on the hunt for acquisitions to lift the size of its tourism operation.