Wellington, Feb 24 NZPA - New Zealand's Tourism Holdings Ltd is tripling a planned investment in the fleet and facilities of its Australian rentals business this year, citing an Australian government stimulus package tax allowance as a catalyst.

The tourism attraction, backpacker and motorhome business operator returned to profit in the six months to December 31. It is paying shareholders a 2c a share interim dividend and is paying the bulk of its staff a 1.5 percent one-time payment when a pay freeze ends in March.

Net profit in the six months to December 31 of $1.4 million compared to a loss of $300,000 a year earlier. Revenue rose 15 percent to $92m. Excluding non-recurring items, net profit was $1.7m compared to a loss of $3.6m for the prior period.

Earnings before interest and tax (ebit) from continuing businesses improved from a loss of $4.4m to a profit of $3.1m. All business units in the group returned increased operating earnings.

The company's share price rose as high as $1.03 today but was down 2c at 94c in late afternoon trading.

The company expects the 2010 year to be a stable one for the New Zealand tourism industry and a "positive" 2011 is envisaged, care of the rugby World Cup. Lead time for bookings shortened during the recession but they appeared to be now returning to more normal levels.

A focus on attracting Australian tourists had benefited the New Zealand market but Australians tended to make shorter visits and tourism operators made lower yields from them.

The investment of $A40m ($NZ51m) in the fleet and facilities of the Australian rental business during 2010 instead of an original budget of $A13m would enable the production of 560 vehicles.

The improved result also reflected the turnaround of the company's manufacturing business, which was expected to return to profitability in the 2011 financial year, Tourism Holdings said.

Trading revenues in the rentals business rose 11 percent to $60m, with Rentals Australia up 15 percent and Rentals New Zealand up 4 percent. The number of hire days was down 3 percent.

Vehicle sales revenue increased $7.8m, or 89 percent, with both Australia and New Zealand seeing a general improvement in the market for second hand private leisure vehicles.

Tourism Holdings' tourism businesses, including activities around the Waitomo Caves and Kiwi Experience, had a 217 percent rise in ebit to $1.9m. While revenue for the tourism businesses was down 6 percent, costs were down by $2.6m, the company said.

Expectations for the second half of the financial year were for a continuing reduction in international visitor demand in line with Australian and New Zealand national tourism forecasts, the company said.

Consequently, the second half performance was not expected to show the same improvement in ebit from a year earlier as the first half did.