READY FOR THE JOURNEY - JSE MAGAZINE

READY FOR THE JOURNEY

Michael Tollman, CEO of Cullinan Holdings, attributes the travel and leisure group’s success to a diversified portfolio and commitment to performance and service quality

READY FOR THE JOURNEY

The long-term outlook for SA’s tourism and leisure sector is very positive. In the short-term, however, there are a couple of niggling issues of concern that seriously affected the country’s tourism figures last year, says Michael Tollman, CEO of Cullinan Holdings, which controls a diversified portfolio in the travel and leisure sector. ‘2015 was one of the toughest years ever experienced in the industry. There was clear miscommunication between the Departments of Labour and Home Affairs regarding new visa regulations and policies regarding the carrying of children’s birth certificates when travelling.’

The effect of the new visa announcements negatively impacted the tourism sector. ‘Things went from bad to worse thereafter [due to] the Ebola crisis, as a result strangling the market and largely causing the Asian inbound tourism sector to drop between 50% to 80%, particularly that of China and India, with drops from other destinations also,’ he says. ‘At that time we had recently invested in opening an office in China, given it was forecast as one of the largest growth opportunities for tourism. So in effect our efforts were wasted last year.’

The visa issues around birth certificates for minors has yet to be resolved despite a decision taken by the government in December last year to eliminate the requirement for birth certificates for minors entering SA. ‘As this has not materialised, we are concerned about what this lack of clarity says to the rest of the world about South Africa as a welcoming destination,’ he says. ‘We require policies that are tourism-friendly, for these are the tools that the industry can use to take the message to the global market that South Africa should be a preferred destination.’

This, argues Tollman, is currently critically important for a number of reasons. ‘The exchange rate is obviously in our favour, but in taking a global view of tourism, South Africa can now be seen as a safe haven, particularly when compared to many regions around the globe. This is a great opportunity that should not be missed.’

A safe haven is exactly what Cullinan Holdings has also applied to its own performance strategies. Five years ago, the group focused on improving its service levels, internal efficiencies and quality of service to customers. Two years later, satisfied with the results, it switched its strategy to acquisitions, expanding on its already reputable businesses – including Pentravel and the six Thompsons brands – by acquiring equally well-known Springbok Atlas and Grosvenor Tours among the mix of new pedigrees.

In a bold move Cullinan Holdings also diversified its portfolio outside of tourism and touring, marine and boating, and into financial services. ‘Already established as a leader in travel services, further expansion opportunities in that market for the group became limited,’ says Tollman. ‘At the same time we felt, in our experience globally, financial services related to currency hedging can have a positive impact on results. This thinking stimulated a genesis in that we could employ our excess capital reserves for our financial services businesses. It certainly helped in terms of our profitability last year, and is anticipated to continue to do so in the forthcoming five years.’

Ready for the Journey PQ

Consider that coming off one of the highest levels of profitability of the group (2014), and the industry’s downward spiral last year, Cullinan Holdings’ results dropped well within the tourism trend in 2015 despite the material impact from Asia. This is directly attributable to its diversified portfolio and, more importantly, the way in which Cullinan staff dealt with industry challenges, says Tollman. ‘Being listed historically on the JSE has also been very useful for the group, allowing it to use share issues as an acquisition tool.’

The Cullinan group plans to be exceptionally bullish over the next five years as it returns to an acquisition phase, while the country seems to have turned a positive corner where tourism is concerned, says Tollman. But the mission for the group, as applied over the past five years, continues: to remain the leader in the provision of travel services by concentrating on excellence in delivery.

A chartered accountant by training, Tollman has devoted his career to acquisitions as well as financial, legal and operational issues in the travel industry globally. He takes a decentralised management approach by placing trust in the CEOs and their teams in each of the Cullinan Holdings stable of businesses. He believes ‘less is more’, and that with 1 500 employees selling brand SA globally, their high level of professionalism and driving passion is the reason for the company’s success.

‘We have a superb group of people, and we try to ensure that we are living our values,’ he says. ‘We are committed to not just the group but to the industry and country as a whole.’

By Kerry Dimmer