Tourism Adventure Group battles though administration in hopes of backpacker boom

The pandemic and the end of JobKeeper has pushed one of Australia’s biggest hostel groups into administration but the directors are hopeful the business will thrive after it’s restructured.

Tourism Adventure Group (TAG), which went into voluntary administration at the end of June, had its second creditors meeting on Friday. In the meeting, landlords, employees, St George bank, the Australian Taxation Office and trade suppliers voted in support of the company’s deed of company arrangement (DOCA), including a proposal to restructure.

The only vote against the DOCA was from the landlord of two Melbourne properties, United Backpackers and St Kilda Coffee Palace.

TAG operates Nomads, United hostel and Base networks across Australia and New Zealand, as well as Fraser Island tour groups, Mojo Surf Camps, Sydney Iconic Tripz and several bars.

TAG managing director Dan Bunning said the COVID-19 pandemic, including the loss of backpacker trade and JobKeeper support meant the business had no choice but to enter into administration.

But Bunning predicts a strong rebound in youth travel once more people are vaccinated and international travel ramps up.

“We think that when borders open the youth will be the first to travel, and they will be keen to make up for the gap years they have missed and to spend the money they have saved under lockdown in their home countries,” he said in a statement.

“We are expecting a strong rebound in the post COVID-19 environment.”

When administrators from the Sydney-based firm Ankura were appointed on June 25, TAG had about 130 employees. However, lockdowns in Sydney, Melbourne and Queensland have since affected the business’ headcount.

TAG’s properties that are continuing to trade include those in Noosa, Airlie Beach, Sydney, St Kilda, Brisbane, Magnetic Island and Queenstown in New Zealand.

‘Literally no inbound customers’

Liam Healey, managing director of turnaround and restructuring at Ankura says while the business has faced unique challenges, it’s committed to continue operating after international travel resumes.

“This business has done as well as it could with literally no inbound backpacker customers,” Healey tells SmartCompany.

“There’s been no inbound backpackers from overseas which had a big effect on this business that was performing very well before COVID-19.”

The DOCA proposes TAG will continue operating free of debt and rental arrears as trading conditions normalise over the next 18 months.

TAG’s directors have raised capital to fund the restructure, including a payment to fund staff entitlements, a dividend to unsecured creditors and a payment to St George bank for the release of its debt and security. The amount of the payment to the bank has not been disclosed.

According to Healey, what the company will look like after the restructuring process is complete will be clearer in two weeks.

TAG directors Daniel Bunning, Michael Ebert, Tom Cooney and Dean Walsh have 15 business days to sign the DOCA which is currently in the proposal stage.