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10 minutes with ... SeaLink CEO Jeff Ellison

Business

SeaLink started running one ferry service to Kangaroo Island and now operates dozens of vessels, tours, commuter services and travel accommodation across the country. Long-time outgoing CEO Jeff Ellison sits down with InDaily to discuss his strategies for growth – and for navigating rough waters.

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Ellison will be leaving the company as it celebrates its 30th anniversary this year.

He joined the company as a finance manager, and was appointed general manager after a South Australian syndicate bought the company from a Malaysian group in 1996.

InDaily: Can you describe the overall strategy behind SeaLink’s growth over three decades?

Jeff Ellison: We had one ferry to Kangaroo Island, so we had to look at other opportunities to grow the business. That’s when we identified tourism as an opportunity. By us promoting a destination or an island – we go to 19 islands – we could actually attract more people to go on our services. We looked for businesses to buy, that would help get people to Kangaroo Island: all businesses like travel agencies and day tour operators. Once we’d actually run that for a while, we actually realised that we had a pretty good business model that we could then develop and do elsewhere.

The first one we bought was a business in New Zealand, a run down one that was losing money. We spent some time getting the fundamentals right. We upgraded the vessels so that they were comfortable, we had access to ports and harbours so we could run that, and then we developed tourism product. We had that business for six years. And then a local investor came along and they were keen to buy it from us, and gave us a lovely premium.

The next one was in Townsville. We bought a business there and developed a tourism business around there to Magnetic Island. Then we bought the Captain Cook business on Sydney Harbour. Then we bought a number of other businesses.

So we believed we had a model where we could grow businesses by acquiring them and then developing the tourism market. Now, we’ve probably got 10 to a dozen people – someone representing America, New Zealand, Japan, China, Hong Kong, Singapore, India and Europe.

We didn’t and we don’t want to just be a bridge to Kangaroo Island, or Magnetic Island: we actually want to work with the community, identify the opportunities and to promote these destinations. A lot of our marketing is around promoting the islands which we service.

Is that the strategy for all of the businesses?

Yeah, pretty well. The SeaLink brand is obviously very important. That’s about safety, reliability, all those sorts of thing. All of that sort of thing is important and we do promote that, but a lot of it is about talking about the experience you’ll have. Kangaroo Island – ‘the zoo without fences’ – with that sort of imagery you can sort of immediately say ‘wow, I want to go to that place’.

If you were starting a business of that sort now, would you do it differently?

I would probably do the analysis of the business earlier. It took a little while to identify.

The first thing we actually did with Kangaroo Island, as well as taking passengers, was to actually buy a boat to do freight. We doubled our costs and had a bit more income, and that really took a while before that would build.

KI’s so big, there’s so many farming pastures, so much freight going there so it was a very good market, a great, underlying market, but it was never going to double our turnover. But we generally transported freight, some passengers and cars together. In some way it adds to the experience – I mean, if you got a boat full of cattle, it’s quite an interesting experience to see the sheep up close.

Can you identify any particular mistake you made during the growth of the business?

I think we made plenty of mistakes. I think one of the things about private business is that you can actually make mistakes and you can change direction very quickly – it’s a new product we try on the market and even with research it doesn’t work. It’s a bit different in government. Government’s about not making mistakes; in business it’s about making mistakes and leading, and moving forward.

Are there any that you can point out?

One we’ve actually got at the moment: we’ve actually gone into a market – I shouldn’t tell you the market, but it’s not in South Australia – and we haven’t been able to build the market to the level of break even. So we’re actually losing money and we’re probably close to making a decision on what we actually do with that service.

But often you can make a decision to cut a service and it can actually reflect better on a company. You’ve actually given it a go, it doesn’t work, you’ve made a decision that’s not working and you get out of it. Often shareholders say ‘good on you for quitting it and making that decision rather than continue to operate at a loss’.

We have been trying to improve it for a while – over 18 months I think. There’s certain triggers that decide when and how we actually deal with that – from continuing it to disposing of it. We like to have a go at things. If someone comes up with an idea and we think seriously it will work we will give it a go.

You’ve been at the company a long time now.

It’ll be 28 years in March. I was in practise as a chartered accountant, and SeaLink was a client of mine and then they asked me to join them. I left the practise and joined the company as the finance manager. I did that for about five years and then a syndicate bought SeaLink – a South Australian syndicate bought it back from Malaysian ownership, and just after that they appointed me as general manager.

Do you think it was fair enough for the government to put the Kangaroo Island ferry service out to tender last year?

From our perspective, we’re looking to invest and we need certainty. We have a licence agreement expiry date and when you’re investing, in each vessel, $15 million, you need certainty, and that’s what we’re really looking for through this process. We’re obviously very keen to tender for it and to be involved for the longer term. It’s a process that we need to go through but at least it will give us certainty again.

The Government is appointing a consultant to help them develop the tender document. We would like to see that sooner or later – in my estimate it will probably be mid-year when the tender will come out. But it’s in the hands of the Government. The sooner the better so we can move on with our investments.

How many staff do you have in South Australia?

 It’s around that 340-350 mark. Every time we buy a business we add in two staff members here.

Those investments you were talking about – what can we expect if you do win the tender?

I’d prefer not to say at this stage because they’ll become part of our tender.

Okay, and in terms of future expansion of the business, is there anything that you can tell me about the strategy?

Generally? Across the whole group? Well I think it’s fair to say that we’re in tourism and transport – we’ll stick to those two industries. I think that’s where our expertise is. So we’ll continue to look at that. It does not necessarily have to be both industries – we’re happy to do more in just the transport industry if that’s what it was.

We purchased Fraser Island resorts – so two resorts – a coach company and the ferry company in march last year. So it’s just coming up to 12 months. That actually gives us the capability to work on this regional resort-style accommodation.

We’re diversifying purely just from ferry operations where we can actually see other opportunities for us.

Why have you decided to retire?

A number of things – I want to do some other business things with my life, is probably part of it. Twenty-eight years at SeaLink, 60 years old, some of these things come into it. I love every day I come in to work. I still enjoy it. I’m probably more fired up than ever in my day-to-day business. But I’d like to get out not necessarily on top, because that’s a silly saying. But I don’t want to be here when there’s somebody tapping me on the shoulder saying it’s time to go. I sort of made that decision. In my mind I’ve got some other business things I’d like to do.

So I won’t go and completely sit on a bench somewhere and also the SeaLink board have talked about inviting me back onto the board, which I’d love to keep up with.

Given that you are stepping down, what has been the strategy for succession planning? Because that’s something a lot of businesses struggle to do well.

I’ve given the board over 12 months notice so they can go through the right process and recruit someone. They have an Australian recruitment company that will look internationally for a replacement and that process is still ongoing. That’s in the hands of the board to decide who, but a long in depth process. This has taken probably six months and we haven’t selected somebody, but it’s an ongoing process.

Do you have an overall read on the South Australian economy?

Australia is having some challenges in growing. Things like property prices are concerning people. We don’t have that problem here in South Australia. And I think there are indications retail sales will be down.

So Australians are probably lacking a bit of confidence in the future, and that may well be driven out of property prices and number of things – government uncertainty, even a number of international things – Brexit, Trump, you could go on. There’s a lot of uncertainty in the world and I think that makes people be a little bit more conservative.

I think South Australia is less prone to that downturn. I think our house prices are good – I don’t think we’re going to see the big falls they’re seeing interstate. So our underlying economy is very strong. From a tourism perspective, I think that there are great opportunities to continue to grow that business.

We have some fantastic assets. Obviously Kangaroo Island, but you can look around the state – events like Tour Down Under – but I think you can look at the Murray – quite unique – the Barossa Valley, Yorke Peninsula, Eyre Peninsula – really interesting things that we could showcase more worldwide and attract more people here.

Is there anything you would say to people starting out in a medium sized business about long-term management strategy?

I think there’s plenty of cases where South Australia is a great base. Probably three of the larger tourism companies are based in South Australia. Discovery Parks are very successful nationally, Journey Beyond and SeaLink. You’d probably find it hard to look into other states where there’s national coverage from three businesses like them.

There’s got to be something in that.

This interview has been edited for clarity and concision.

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