Family Biz: Full frontal innovation

Geoff McGeary grew APT Group from a single truck with the help of novelties like chicken and champagne meals, pokies tours and the chance to see Reg Livermore in ‘Hair’.

There are many ways to innovate – you don’t just have to make high-tech widgets or smartphone apps. You can also do it by taking elderly voyeurs to a nude stage show, as Geoff McGeary did.

This 71-year-old family business entrepreneur is one of the most innovative people I have ever encountered, a restlessly energetic tourism genius who is still innovating and has no intention of retiring. His two kids will grow old waiting to inherit APT Group.

APT, which stands for Australian Pacific Tours, looks like a travel business, but at heart it’s actually a company that helps baby boomers spend their superannuation.

Geoff McGeary wouldn’t tell me how much money he’s making at this. When I asked whether it is $100 million a year, he replied: “Oh no, it’s much more than that.”

Is it a billion? “No, it’s less than that.” So we’re now playing pin the tail on the donkey.

How about several hundred million? “Yes, that’ll do.”

Geoff’s family trust owns 100 per cent of this phenomenal business but he runs it like a public company, with a mostly external board and a non-family CEO, 35-year APT veteran Barry Matters. Geoff is neither chairman nor managing director – just a director.

But he’s not just any director, of course. There is no doubt who is in charge, and there’s no doubt who he is catering for: retirees, especially baby boomers.

“I couldn’t believe my luck when they brought in 9 per cent compulsory super. That was a bonanza. And then when Julia Gillard increased that to 12 per cent last year, I couldn’t believe it again. Everyone would have plenty of money when they retired, and would be looking to spend it to qualify for the old age pension under the means test.

“And modern medical science is another gift that keeps on giving! New knees and hips, as well as heart stents – especially heart stents – are giving my customers another 10 to 20 years of travelling. And with the Australian dollar so high, they are doing it in droves.”

And it’s not just retirees. Australians have much longer holidays than most other countries (“in America and Japan they think anything more than eight days is sinful”), so a lot of people who are approaching retirement are taking advantage of the high dollar to go on a cruise.

Geoff McGeary inherited a bus company from his father Bill in the early 1960s at the age of about 20 (Bill had contracted Parkinson’s disease).

Bill was a fitter and turner who had moved into the transport business by winning a contract to remove overburden from Melbourne’s great sewerage construction works in the 1910s – by horse and dray to begin with and then by truck.

Then in 1920 came Melbourne’s terrible cable car strike, which left thousands of commuters stranded. Bill fitted a bus body onto the back of his truck and started driving down High Street Northcote in the mornings to pick up stranded tram passengers and take them to work.

That’s when Melbourne’s bus industry got going: after the strike, the bus operators kept running, competing with the trams. The government then moved to protect its tramways business by regulating the buses off the tram routes, so Bill and the other bus operators started feeding the trams. That worked because by that time, Melbourne’s suburbs had spread well beyond the tram routes and people had to travel a long way to catch the tram.

Geoff was born in 1941 and joined the business in 1960, giving up his job as a shipping clerk at Standard Motor Company in Fishermans Bend, where they assembled Mercedes Benz cars and buses. He told them as he left that day that he’d end up their biggest customer in Australia, which actually turned out to be true.

In 1969 Geoff got his first opportunity to innovate, and to show the marketing flair that would become the hallmark of his success. The musical “Hair” opened in Sinful Sydney but not Moralistic Melbourne, so McGeary’s Parlour Coaches came up with a scheme to help curious and frustrated Melbournians get to see a full frontal nude Reg Livermore. He ran buses to Sydney every Friday night.

It would be chicken and champagne on the way up (Kentucky Fried Chicken that is), they would check into a Kings Cross hotel, see Hair on Saturday night and then on Sunday take a tour of “Risque Sydney”, including a session at the pokies at St Georges Leagues Club (there were no poker machines in Moralistic Melbourne then either) and ending with a visit to “Les Girls” cabaret show.

It was a huge success and Geoff had full coaches every weekend for two and a half years. It made the business. He was even able to keep going after “Hair” opened in Melbourne, because south of the Murray Reg’s naughty bits were covered up. Geoff switched his marketing pitch to: “Come and see the real Hair”.

It was around then he noticed that most of customers were senior citizens, so he started offering them longer trips – to Western Australia, Northern Territory and the Barrier Reef.

His main business was school excursions, and he went into partnership with a Jewish coach operator, Mayer Page. Mayer had the Jewish schools covered, Geoff had the Catholic and Presbyterian schools. And then in the late 1970s they sold the school contracts and focused on the elderly.

They upgraded all their coaches to Mercedes Benz and took on the market leader Ansett Pioneer, eventually driving Sir Reg Ansett’s operation out of business (“Reg’s main business was the airline, and that’s where he put all his best people – we just concentrated on the coach business,” says Geoff).

In 1982 their main competitor was AAT King, owned by the other airline TAA. AAT King made an offer to buy Australian Pacific Coaches, as it was then called, but Geoff told them the business was not for sale and instead made TAA an offer to buy AAT King for $7 million cash – which was accepted. And there were $7 million in tax losses which he was able to use up within the seven-year time limit, so AAT King ended up costing him nothing. Business success also requires a bit of luck.

That takeover meant that Geoff McGeary’s business suddenly doubled in size. He kept the two brands separate and was running the number one and two companies in the Australian coach travel market. He bought the No.1 operator in New Zealand, and opened offices in Europe and North America.

When the Australian dollar collapsed in the 1980s, the inbound tourist business grew rapidly, and then when the dollar recovered in the 1990s, the outbound business boomed: Australians developed a taste for overseas travel, so Geoff McGeary was happy to supply them with tours and more specifically, cruises.

To fund the rapid expansion, he sold the entire coach fleet in 1997 and leased it back on long-term contracts, and started buying up other travel businesses, including the aircraft charter operation Captain’s Choice. They own seven wilderness lodges in Australia’s far north with a fleet of 20 four-wheel-drive coaches.

APT’s biggest business now is river cruises in Europe and Russia, using 15 ships that he owns with American partners – “I’m very good at partnering”, says Geoff.

There are also a number of investments outside tourism: “this is a fickle business – after all, people don’t have to take holidays”.

These days the little Melbourne bus company that Geoff McGeary took over 50 years ago is a big, global tour operator still 100 per cent owned by the McGeary family. He was an only child so there are no cousins to worry about, and both of his own children, Robert and Louise, and their partners work in the business, with a Family Charter laying down strict rules around how it works.

“They have to be the best person for the job,” says Geoff. “If it’s equal then the family member gets the job.”

He says Robert and Louise may never run the company, but anyway – the way he talks you suspect he may never retire.

For more family business commentary click here.

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