Cape Town loses numerous events due to lack of bidding budget!


 Cape Town StadiumThe City of Cape Town has lost 12 bids for new Events for Cape Town in the past six months, and has lost two existing events to other cities, said Anton Groenewald, Executive Director of the City of Cape Town Tourism, Events, and Marketing Directorate, at the Annual General Meeting of Cape Town Tourism two weeks ago.

According to Southern African Tourism Update, Groenewald blamed the ‘City’s limited bidding budget‘ and the stronger international currencies of other bidding countries for the poor track record. The weaker Rand this year affected the costs of bidding for international events, he said:  ‘Exchange rate fluctuation impacts on our ability to bid because almost all competitive bids are in euros, pounds or dollars. This means that at the time of bidding earlier this year, the exchange rate was such that events and concerts at that time became financially unviable because the dollar or euro equivalent was more than we could absorb. Secondly, events and global brands are asking higher and larger fees because other city destinations are paying larger upfront fees to secure their participation. So a fee last year of R3,5m for an event has now increased to US$1,5m (R9,9m), because that is what another destination paid this global brand. We simply cannot compete at these rates.  While Cape Town seems to enjoy international recognition and awareness as a destination, what we do not have is an increase in enquiries and how to convert this into purchases’.

Groenewald’s Directorate has a massive budget at R560 million, out of the City of Cape Town’s total budget of R27 billion.  No breakdown has ever been provided to the tourism industry of how this money is spent, other than that R37,5 million is a grant to Cape Town Tourism to offer tourism information services. Last year Groenewald’s Directorate removed the role of destination marketing services from Cape Town Tourism with a resultant decrease in its grant, and incorporated the role of marketing Cape Town into his Directorate, but no marketing of Cape Town by the Directorate has been visible in the past 18 months since its establishment.

The City is also funding the running costs of Cape Town Design NPC, the company which is managing Cape Town’s implementation of World Design Capital 2014, R40 million being budgeted on 85 design events which are planned for next year. His staff and other operational costs will drain a large part of  Groenewald’s budget, and his biggest headache is the loss-making Cape Town Stadium, which his Directorate has been tasked with filling by means of revenue-generating events, and in having the Stadium rezoning changed to allow the commercialisation of the building.

Sorely needed events which were proclaimed by the City and its Tourism, Events and Marketing Councillor and Mayoral Committee member Grant Pascoe for the past winter just did not happen, without explanation.   Councillor Pascoe is a big soccer fan, and has attempted to plug some of the cost holes of the Cape Town Stadium by bringing soccer matches to the Stadium, none of which have made any impact on Tourism in our city, other than a few more hamburgers and beers being sold on the Fan Walk on the way to the Stadium.

Half of Cape Town Tourism’s total income of more than R40 million is spent on salaries (it has a massive staff of 80) and operational costs, which means that less than R20 million is available for expenditure of Tourism Marketing, which is mainly spent on its presence at trade shows (World Travel Market in London, Indaba in Durban, and ITB in Berlin), the stand and manning costs already shared with Wesgro to save money.  New Cape Town Tourism CEO Enver Duminy has already shown his financial responsibility, by not replacing his post, nor that of the former PR and  Communications Manager, and the former CEO secretary. Social Media communication frequency has slowed down too.

Given the boasting by former Cape Town Tourism CEO Mariette du Toit-Helmbold about the Social Media ‘success’ in achieving Facebook likes, Twitter followers, Blog readers, and website clicks, it was shocking to hear Groenewald share that of the 3,2 million visitors to Cape Town Tourism Visitor Information centres and to its website, ‘booking enquiries represented only 1% of all enquiries‘.  We have written regularly that Cape Town Tourism’s Social Media activities were focused on Capetonians, hardly the target market for Cape Town Tourism!  To address this grave situation, Groenwald suggested that tourists need to be better understood, corporates and the City need to collaborate, the Cape Town Stadium needs to be commercialised, and more arts and cultural events need to be created.  The City of Cape Town sponsored 40 events in the past year.  It also processed 14000 film permits, generating R3,5 billion for the film industry, Groenewald shared.  The Volvo Ocean Race returns to Cape Town in January. Part of the World Triathlon Championships, the African Nations Championship (CHAN) Football Tournament, and the first World Travel Market Africa Travel Week will take place in 2014.

Surprising was the article in The Argus two days ago about an alleged cancellation of a branding tender: ‘The City of Cape Town’s branding at major events is at risk, amid claims from senior municipal officials that a three-year, multimillion rand tender may have been cancelled just weeks before it was set to be awarded.  And while the city denied the speculation, saying only that the tender had not been cancelled, the Cape Argus has seen official city correspondence to the contrary‘, the newspaper report said.   The branding could affect the sponsorship of the CHAN Football Tournament, the article speculates. What made the article confusing was the finger pointing by various parties interviewed for the article. Priya Reddy, the City of Cape Town spokesperson, said: ‘… the tender was for a service provider to help the city with its branding. One staffer said the city did not own its branding content and used agency materials belonging to and branded as Cape Town Tourism and Wesgro‘.

We asked Wesgro to respond to the article, and its CEO Nils Flaatten replied promptly: ‘The Wesgro position is simple. This relates to a procurement process by the City of Cape Town regarding a FUTURE brand for the City. The events, currently being hosted in the City, are by no means at risk’ (his emphasis)

Duminy, as CEO of Cape Town Tourism, was on the ball with a speedy and very politically correct reply to the claims made in the article: ‘Cape Town Tourism (CTT) delivers tourism marketing and visitor services on behalf of the City of Cape Town since 2008. The content and materials created and produced along with associated Intellectual Property, by CTT in support of our mandate, resides with the City as governed in our Memorandum of Agreement.  We cannot comment on the internal mechanisms and tender processes of the City, however the Brand of Cape Town is a valuable asset for the destination with all stakeholders contributing collectively to its success.  Using major events as a catalyst to stimulate tourism growth is a key strategy of the Tourism, Events, and Marketing (TEaM) directorate of the City, and CTT supports their plans by delivering tourism marketing campaigns, messaging and destination knowledge to inform visitors to our City.  CTT focuses on tourism marketing and our colleagues at WESGRO provide Trade and Investment Marketing and Promotion on behalf of the City, different yet complementing services as part of the value proposition of brand Cape Town’.

It is a surprise to see how the new  Board of Cape Town Tourism, with three new members elected at the AGM,  is dominated by big tourism businesses, including the Table Mountain Aerial Cableway Company, the V&A Waterfront (with its customer-unresponsive Executive Manager of Strategic Marketing Chantelle Cole), Durban-based Thompsons Africa (Linda Pampallis has a romantic interest in Cape Town, I was told, and must be the first ever non-Cape Town based  Cape Town Tourism director; her company Thompson Tours is a dominant accommodation and other travel services supplier to Cape Town Tourism, so there may be a conflict of interest in her position on the Board), and Tsogo Sun.  There is no longer a small hospitality business representative on the Board of Cape Town Tourism.  It was not surprising to hear that Councillor Pascoe is a Board member of Cape Town Tourism, but rarely attends Board meetings!

While we applaud Groenewald’s honesty with regard to his Directorate’s poor performance in bidding for events for Cape Town, it is a huge concern that Cape Town is not able to add new events to its offering, sorely needed during the winter months in which Cape Town hospitality industry bleeds badly, having so little business that it has to dip into its summer savings to survive.  Hearing SA Tourism admit at its ‘Power of One’ workshop at the V&A Waterfront yesterday that its Domestic Tourism ‘Shot’s Left‘ campaign is Johannesburg-focused, and our industry feedback that the campaign is not Western Cape friendly nor relevant, should make the Tourism industry in Cape Town worry about what if anything  is lying ahead for the industry!

POSTSCRIPT 28/10:  We wrote to Mr Groenewald last Thursday, requesting a comment from him about the newspaper branding article. Uncharacteristically, he has not yet replied!


Chris von Ulmenstein, Whale Cottage Portfolio:  Twitter: @WhaleCottage

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