Rovos jumps back on track

[Derek Walker]

Interesting interview with Rohan Vos in todays Sunday Times

http://www.timeslive.co.za/business/art ... k-on-rails

Newsmaker: Rovos jumps back on rails
Rohan Vos: Founder, Rovos Rail
May 2, 2010 12:19 AM | By Chris Barron
Luxury train has been running for 21 years but it is a daily battle to keep going, writes Chris Barron. Running a private train company is not for the fainthearted as Rohan Vos, who started the luxury Rovos Rail 21 years ago, will tell you.
He survived the first five years of the operation by the skin of his teeth and only pulled through by selling everything he could, including some profitable businesses he'd spent 20 years building, a plane and the yacht in which he'd done the Cape Town-to-Uruguay race.

In the past year Rovos has been hit by the global financial crisis, the World Cup, a volcanic ash cloud and now, of course, a train derailment that killed four people and critically injured a couple of others.
It is too early to tell how this will impact on bookings, he says, but the pressure on him since the accident from agents and passengers has been "relentless".
The rail safety regulator is doing him no favours, he says, by dragging out the release of a report or at least a statement clearing his company of culpability

Vos, 64, fell in love with trains while commuting between De La Reyville in the old Eastern Transvaal where his father was a family doctor, and Cape Town, where he was a boarder at Bishops school.
It wasn't just a romantic, poetic thing for him, though. He's a mechanic at heart and the second business he started was a spare parts company. The first, just after he left school, was a discotheque.
He loves and has an encyclopaedic knowledge of the mechanics of trains and electric locomotives and steam engines.
His company owns 100 carriages, seven steam engines and nine electric locomotives, and he personally scoured old rail yards and sidings to find these derelict veterans of the track, bid for them at auctions and renovated them.
Friends and business associates thought he'd been hitting the bottle too much when he said he intended starting the country's first privately-owned luxury train company.
The first lesson he learned was that assembling the rolling stock was the easy part.

"Once it's done, the biggest cost is running the schedule."
What this means is that the trains have to run on schedule, regardless of how many passengers you've got.
For him to break even they need to run at 50% of capacity - which is 72 passengers per train. Anything less and he's losing. He ran at a loss for the first five years.
All the money he had earned in the first 20 years of his business career was "frittered away" running the schedule.
"Even if I had no passengers booked, I had to run the schedule.
"Those first five years I had to sell everything, all my businesses. This is why people thought I was drinking. Selling a cash-generating business to keep a loss-making business going must have seemed pretty foolhardy.
"But I knew it could work and I suppose I'm pretty persistent."
In 1994 he broke even and "never looked back".
But there's no such thing as an easy ride in this business.
"Running the schedule" remains a killer because so much that can go wrong is beyond his control.

Although he's working towards the point where Rovos will do all its own maintenance, for now he depends on Spoornet to maintain the critical running parts underneath the carriages - handbrakes, wheels, bearings and so on.
Every carriage must be "lifted" for this purpose every second year.
"It's the bane of our lives, actually, because they're often too busy, they can't do the coach today and the bloody thing's got to travel on Saturday."
The fact that his suppliers also own his main competition, the Blue Train, doesn't make him any happier.
On the upside, "having the railways' stamp of authority" on each carriage "allows one to sleep at night".
If there's a derailage because of a critical maintenance fault "it won't be my head on the block", he says.
Running his trains on time is dependent on Transnet maintaining the infrastructure.
It's a 24-hour, 360-days-a-year battle. Delays are a constant, mostly caused by maintenance failures on infrastructure, particularly cable theft. "The moment that happens, the whole system comes to a grinding halt."
He can't afford to be too rude to Spoornet because they're his most important supplier. "It's a partnership which has to work - in order for them to get money from me, which they do (about R20-million in the last financial year), and for me to make money."
At any one time he has three or four different trains running - to Cape Town, Durban, Pretoria, Victoria Falls, Namibia, Dar es Salaam. Sometimes as many as five. He lives from one train manager's report to the next, informing him that "everything's okay and on time". Or not.
If you're looking for an easy way to make money, this is definitely not it.

"We don't make terribly much because it's a high-risk, low-return business and very capital intensive."

About 90% of all his passengers are in fact foreigners.
"We're totally dependent on incoming tourism. Every political event affects that."
The effect of the financial crisis was "huge". His trains ran at an average 37% last year, from 57% the previous year.
"It just robbed us of any profit at all during the last year. In fact, we went into a loss situation."
Then there was the ash cloud.
"We had a total train cancellation because of a group that couldn't get out of London. That was the day before the Pretoria crash. It's a tough business," he says in a quiet, matter-of-fact voice.
"It's very erratic. We've had some good trips and some shocking trips, even at the height of the season - January, February, March."
June is bound to be a "disaster" because of the Soccer World Cup.
"Right through to the end of the World Cup we're in serious trouble. People have not been able to get flights and couldn't get hotels."
Prices were inflated "left, right and centre", although not by Rovos Rail, he says.
"I didn't change any of our pricing at all, or our schedules.

"What blew it away were the block bookings or the blanket control of flights and hotel rooms by Match and whoever else."
SAA dropped 45000 flights back on the market a few weeks ago, but "it's too late", he says.
The overheads of an operation like this are sizeable, of course.
"When business is growing 30% a year, you can absorb your overheads. It's when you stop growing and have a bit of a downturn that you separate the men from the boys."
That's where Rovos is now.
"Luckily, we have no debt. If it wasn't for that we'd be in trouble."
Within hours of the Pretoria accident the rail safety regulator threatened to close down Rovos (which uses Transnet drivers as well as its own) if there was the slightest evidence of fault on its part. Vos finds his aggression puzzling.
"Our trains have been running smoothly. This was not the result of poor maintenance, this was human error. And not ours, I'm pleased to say."
A statement to that effect "needs to be made", he says. That aside, he finds it odd that the regulator should be so ready to close a business that provides 300 full-time, skilled jobs and brings a steady stream of wealthy tourists to South Africa and millions in foreign currency.

"If there could be a thousand of us in South Africa, the country would be well away," he says.

[Stefan Andrzejewski]

Long live Rovos Rail.

[Adelbert Stigling]

Amen and Amen