Tag Archives: interest rate

WhaleTales Tourism, Food, and Wine news headlines: 23 July

imageTourism, Food, and Wine news headlines 

*   The South African Reserve Bank announced today that it will increase the interest rate by 0,25 %!

*   The Table Mountain Aerial Cableway will close for its annual maintenance on Monday 27 July until 9 August. Maintenance work will be undertaken, and the cable car cabins will be upgraded too. The maintenance work is overseen by Swiss engineers, to meet the global cableway safety standards of the Swiss Governing Body for Cableways.

*   Uber is looking at introducing UberPool, allowing the sharing of Continue reading →

WhaleTales Tourism, Food, and Wine News headlines: 29 January

WhaleTalesTourism, Food, and Wine news headlines

*   The Reserve Bank has left the interest rate unchanged, the repo rate remaining at 5,75 %.

*   The retail trade experienced a ‘fair to middling‘ Festive Season trade, and the projection is that 2015 will be much the same.  Stores targeting the lower income group were impacted by low demand, caused by unemployment and debt.  Woolworths sales growth was lower in the past six months than in the same period a year prior.

*   The International Gay and Lesbian Travel Association has become an ‘association partner‘ for World Travel Market Continue reading →

WhaleTales Tourism, Food, and Wine news headlines: 16 January

WhaleTalesTourism, Food, and Wine news headlines

*   Google has announced that it will launch driverless automatic cars in five years from now.  The company is working with American authorities to test the safety of these cars.

*   The SA economy could grow by 2,1% this year, a better growth rate than that of 2014, with lower oil prices, higher consumer spend, fewer strikes, lower inflation rate, and a small interest rate hike later this year.  Barclays Africa economist Peter Worthington says that the growth rate could be even higher, were it not for Eskom’s loadshedding!

*   Food prices could fall this year due to the decreasing oil and therefore fuel price, reducing inflation, but not by much, it is Continue reading →

WhaleTales Tourism, Food, and Wine news headlines: 29 January

WhaleTalesTourism, Food, and Wine news headlines

*   The first ever African marketing office of SA Tourism was opened yesterday in Lagos in Nigeria, by our Minister of Tourism Marthinus van Schalkwyk.  Not only will this be good for tourism for our country, but it also aims to create greater awareness and to attract more tourists to Africa globally.

*   The Reserve Bank has increased the interest rate by 50 basis points, the first increase in five years, to curb inflation caused by the weak Rand.

*   SAA made a loss of R991 million in the 2012/2013 financial year, an improvement on its previous loss of R1,25 billion in the previous financial year.  It blames the loss on the ‘weakened rand‘, as 60% of its costs are dollar based.  It announced today that had the Rand not weakened, SAA would have made a profit!  Cost-cutting efforts have been cutting the Kigali (to Rwanda) and Buenos Aires routes.  All long-distance routes are loss-making, admitted CEO Monwabisi Kalawe, but have to be retained for strategic reasons, such as Beijing.

*   The USA has close to 8000 wineries, of which just less than half are in California, by far the  dominant wine production state.   South Africa has about one tenth of this number!

*   The 9000 participants in the Travel Weekly’s Readers’ Choice Awards voted South Africa as the best Continue reading →

WhaleTales Tourism, Food, and Wine news headlines: 15 January

WhaleTalesTourism, Food, and Wine news headlines

*   Every day the world’s airlines fly 8 million passengers around the world, a total of 3,1 billion in 2013, breaking through the 3 million passenger mark for the first time.  More than 50 million tonnes of cargo is transported annually, and the airline industry’s direct global economic contribution is $540 billion.

*   South African wines will be represented at the Wine Buyers Forum Windsor 2014, at which buyers with a buying power of $2,2 million each will attend on 10 and 11 March.

*   The International Air Transport Association (IATA) reports that passenger numbers stabilised in November 2013, relative to the same month a year prior, with a growth of only 4%.   The Middle East had the highest growth rate at 10%, while Africa saw a decline Continue reading →

International Tourism scenarios for 2014!

Tourism 2014 trendsAmerican tourism consultant and speaker Dr Peter Tarlow has made some predictions for the tourism industry in 2014.   He believes that not much will change relative to 2013, but has identified some trends that could impact on the tourism industry globally, as reported by eTurboNews:

1.  The economic status of the world in the past few years has placed greater emphasis on the ‘middle class‘, representing the largest number of travellers.

2.   Middle class travellers tend to be more forgiving of tourism mistakes and less perfect service.  They are however sensitive to economic changes, and the cost of credit in particular.  Interest rate increases makes the use of credit more expensive, and can affect travel. As they live on a budget, middle class travellers will be affected by their expectation of taxes and other major cost increases.  Stock market trends influence confidence, even if the middle class does not own shares.

3.   The upper class is more demanding of service when travelling, and less reliant on and believing in marketing.

4.  Security remains an important issue, and global events, such as the Winter Olympics, the Summer Olympics, and the 2014 World Cup will create security challenges, including terrorism, for Brazil in particular.

5.   Airlines will increasingly be disliked, as their service diminishes, as their rates increase, as they merge to save costs, as they Continue reading →

Open letter to Minister of Tourism Marthinus van Schalkwyk

Dear Minister

We have been very happy to have you as our Minister of Tourism, especially when your portfolio became a dedicated one. Since May, however, I sense that our tourism authorities in cities, SA Tourism, and your department are seeing the development of a crisis in our tourism industry, but that nothing is being done about it.   I remember a song Jeremy Taylor once sang about the Ministers that ‘minis’ – I feel that you and your department are ‘minis-ing’, not playing open book with us, and that you are deserting us in our time of need.   Here is why:

1.  You appointed tourism consultancy Grant Thornton, who created fantastic forecasts of how many tourists would come to South Africa for the World Cup.  The recession hit the world in 2008, and at no stage did Grant Thornton revise its forecast for the event attendance.  On the basis of their projections, Cape Town alone saw the addition of 9 new hotels and 1500 beds, not to talk about the numbers of apartments that were hastily vacated and renovated, for letting purposes.  We all painted and polished our guest houses, yet the soccer fans that came to stay were just like all our other tourists in the end.  Home and flat owners, taken by Seeff’s campaign with Gary Bailey as a spokesperson, sat with empty accommodation when they cancelled leases with their existing tenants to make a quick buck.

2.  You allowed us to be ripped off by MATCH, a FIFA affiliate hospitality company, who milked us with unheard-of commissions of 30%, with your blessing!  And then they cancelled the largest part of the booked stock, on their own favourable cancellation terms, just eight weeks or less prior to 11 June 2010. 

3.  You sent the Mickey Mouse team from Disney  to quickly spruce up our service excellence, at a cost to taxpayers of R9 million or so, a waste of time for all that attended.  Our nation is one known for Ubuntu, and we were recognised for it as one of our success factors – we did not need Disney to teach us that!

4.  But it is the current post-World Cup crisis, which Cape Town Tourism confidently tells us a year down the line was predictable, given the 2000 Sydney Olympic Games example, that is getting to all of us.  The Bureau of Economic Research survey results released earlier this week shows us that confidence in the Accommodation sector is at its lowest ever, at 25 % (even estate agents are more confident at 41%, and they are not having a great time!). There has been no growth in confidence since 2007, even though we knew that the World Cup was coming in 2010.

As the most senior official driving tourism in our country, we would have expected that you would guide and lead us, that you would tell us what drastic steps your department and SA Tourism are taking to help us to get international tourists to our country, and local ones to our cities and provinces.  All we hear from you is how successful South Africa has been, and how the World Cup has contributed to this success. For the first time you have acknowledged that things are not going so well, and that “growth in the tourism sector is expected to slow down towards the end of 2011“, reports Eye Witness News about your address to FEDHASA Cape earlier this week.  You are reported to have said at that same meeting that ‘visitor number (sic) still look good following the country’s successful hosting of the soccer showpiece.  The minister replied by stating some establishments invested too much in catering for an influx of tourists prior to the tournament”!  Sir, with respect, it was your consultants that guided us on visitor numbers.  Now the proverbial has hit the fan, and there will be none of us left in this industry if you are saying that it will get even worse towards the end of this year! 

5.  I feel for you, being reliant on those on the ground to feed back to you how bad things really are, and that you are misinformed and misled by some.  I cringed when I read that FEDHASA Cape Chairman Dirk Elzinga put the poor booking situation down to the usual Cape winter seasonality, demonstrating that he is not a hotelier, and does not have a clue about the hospitality industry, having headed up the Cape Town International Convention Centre previously.   I was depressed by Cape Town Tourism’s long-winded acknowledgement that something mustbe done about changing how Cape Town is marketed, as if we have months and years to do so.  Cape Town Routes Unlimited has been the most proactive in talking to our industry via the media, in asking us to slash our rates, but clearly they do not know that we charge rates of up to 50 % less in winter, and have done so for the past 15 years or more.  Many ofus have not increased our summer rates since 2007, yet costs are rising continuously.

6.   Your own consultants Grant Thornton are saying that not enough local and international marketing is being done, especially in the newly opened markets of China, India, Brazil, Mexico and Argentina.  I like that you have addressed the ‘silo’ mentality of the tourism industry, as reported in the Cape Argus, and even see this at our local level.  Cape Town Tourism and Cape Town Routes Unlimited are operating independently, and without apparent collaboration.  High airfares are one of the reasons for the poor tourism performance – please help us to get SAA to price flights realistically, so that we can get the tourists to our country.  Help us to get direct flights to Cape Town, instead of via Johannesburg.  It is interesting that you identified that the power of tourism is in the hands of a small number of powerful operators. Share the tourism pie with all of us.  Please open the doors, and create dialogue between the different sectors that feed and sustain the tourism industry. I was shocked to hear that the Board of Directors of Cape Town Routes Unlimited is now hand-picked by provincial Minister of Tourism Alan Winde- what happened to getting privatesector input, via nominated Board candidates?  All we are getting is the same perpetuation of provincial-friendly players and their thinking, and most Board members that were newly elected in April are unknown to us! 

We are receiving no guidance from your Department, SA Tourism and our local tourism authorities about how we keep our businesses afloat, and how we prevent a bloodbath of restaurant, hotel and guest house closures in the next few months, which has already started.  It does not help to hear that your CEO of SA Tourism, Ms Thandiwe January-McLean, has just resigned, and will leave at the end of August, in a time that we need SA Tourism desperately. 

Sir, we need your help.  Help us with negotiating extensions of bond repayments at the banks; help us by not allowing the Reserve Bank to increase interest rates; help us with better tax breaks; help us by getting electricity increases suspended; help us with loan facilities to help us survive and to continue to offer employment to our staff; help us with an urgent campaign to encourage locals to travel – it has been talked about but we are not seeing its impact; help us by pushing PR internationally, to not allow South Africa, and the Cape in particular, to lose visibility when New Zealand hosts the Rugby World Cup in September and October; and lastly, be honest with us – do not give us false hope by telling us how fantastic our industry is right now.  We are bleeding Sir, and we need your help!

POSTSCRIPT 16/6:  Business Report today quotes the Minister as saying: “Although tourism had continued to grow since the World Cup ended last July, the industry was slowing down worldwide.”  He is also quoted as saying that international tourism growth to South Africa will continue but that we must “be more competitive than our opposition”.   He added: “Our prices and products must remain competitive, and unnecessary cost drivers must be identified.”  He would not be issuing price guidelines, and he confirmed that the traditional source markets remain Europe, the UK and the USA, due to their longer holiday period, but recognises the longer-term value of the Asian market.  He urged that visa applications for tourists be made easier, and even become electronic.   The Minister’s Department of Tourism is to set up a conventions bureau, to spread the business ‘beyond the three main cities’, and he indicated that benefits could flow from the expiry this year of the current system of granting air traffic rights to fly into South Africa. 

POSTSCRIPT 17/6: Southern African Tourism Update  reports that the Minister is to have also said at the FEDHASA Cape AGM that local tourism authorities should not market internationally, as SA Tourism is doing so already, and that they should focus on local marketing instead.  He quoted the example of KZN Tourism, which has a marketing office in Gauteng.  Was he addressing Cape Town Tourism and Cape Town Routes Unlimited? 

Chris von Ulmenstein, Whale Cottage Portfolio: www.whalecottage.com Twitter:@WhaleCottage

Restaurant Trends: Which USA trends apply to South Africa?

Local restaurant consultant Michael Said has evaluated the potential impact of eleven international restaurant trends on restaurants in our country, writing for www.bizcommunity.com.  The trends were documented by Technomic Inc, an American market research company.

1.   More ordering of “retro cocktails and high-end spirits” and craft beers, away from mass-produced alternatives, at fine-dining restaurants, as restaurant patrons want to celebrate their increasing confidence in the year.   Said’s reaction is that the stricter ‘drink/driving’ legislation may counter this trend locally, and predicts a greater focus on non-alcoholic cocktails in general, and cocktails for designated drivers in particular.

2.   Restaurants are becoming mobile, moving location, without a fixed abode.  Said says that rent-free location is attractive, but is still too large a leap for South African restaurants.

3.   A move away from a celebrity chef to the celebrity farmer, who supplied the ingredients, in marketing communication.  Said is sceptical of seeing “Farmer Brown” style advertising in South Africa.

4.   Technology in restaurants, to gain a competitive edge, including iPads with menus and winelists, and hand-held devices for payment at the table, will grow.  Said says that social media marketing, location-based advertising and online reputation management will certainly be replicated in South Africa.   He is however sceptical about the widespread use of iPads, with the danger of them disappearing with the cutlery and condiments!

5.   The ‘Korean Influence’ is forecast for the USA, resulting from immigration, but is discounted by Said for South Africa.

6.   The trend of ‘Tired of being poor’ could see restaurant patrons spoiling themselves with indulgences on higher-priced menu items.  Said says this could apply locally, given that interest rate decreases have put more Rands into customers’ pockets.

7.  Contradicting the previous trend, but not mutually exclusive, is that customers are demanding even greater value for money, and restaurants will have permanent value offers on their menus, a trend Said agrees will apply locally too.   I would like to add that Cape restaurants have recognised the value of value-offerings, and 37 Cape Town restaurants are offering summer specials, a commendable business policy.

8.  Restaurant chains will reinvent themselves with new branding and looks, as customers look for “new and exciting places to celebrate the new found financial freedom”.   Said recommends that restaurants reinvest their greater income back into their businesses.

9.   Comfort food will remain in demand, as will traditional dishes, either as they are, or with a modern interpretation.   Said questions this trend forecast, as he doubts that patrons want to eat more of the same ‘home food’ at restaurants.  He recommends that they be enticed back to restaurants with ‘old favourites, new experiences and plenty of “love”‘.

10.  Supermarkets are increasingly competing against restaurants, offering their customers family value-for-money eat-in ideas and products.   Locally, Pick ‘n Pay and Woolworths “are taking customers out of restaurants and into the aisle”.  Said recommends that ‘warmth and hospitality’ cannot be bought in a supermarket, and are points of difference for restaurants.

11.   Restaurant menus will see a balance of healthy (starters) and indulgent (desserts) items.  Said sees challenges for restaurants caused by menu-labelling requirements, and the Consumer Protection Act, said to be effective from April.   I would like to add my own note to this trend, and call on restaurants to specify the fat content per 100g portion, and the carbohydrate content per serving for diabetics, as it is done on all Woolworths packaging – diabetes is a ‘price’ that is paid by restaurant lovers, and diabetics should be encouraged to eat out healthily without feeling that they are losing out.

Chris von Ulmenstein, Whale Cottage Portfolio: www.whalecottage.comj   Twitter: @WhaleCottage

Interest rate drops another 0,5 %

Governor of the Reserve Bank, Tito Mboweni, caught the market and most economists by surprise today, by cutting the interest rate by 50 basis points, to 7 %, a positive sign that may signal a reversal of the credit crunch.

The interest rate is an indication that the recovery of the economy has not been progressing as speedily as the government would like it, given the previous interest rate cuts since December.  It could also be Mboweni bowing to the pressure from trade union federation COSATU for a cut in the interest rate.   Finally, the cut may be a reflection of the slow but certain decrease in the rate of inflation.

The cut in the interest rate eases the pressure on family and buusiness incomes, and should have a positive effect on tourism.

Whale Cottage Portfolio: www.whalecottage.com

Profit pressure due to price push

The hospitality industry is under severe pressure to survive financially, given the decline in occupancy, and the reduction in rates to attract bookings and to conserve cash flow.

The increase in telephone costs, electricity costs, in the price of petrol and diesel, and in the Minimum Wage, combined with the lack of a cut in the interest rate by the Reserve Bank last week, is a severe blow to the industry, but also affects every South African household, the main source of income for the industry.

The worst shock is the increase in the price of electricity by 31 % from 1 July.   The increase is justified on the basis of new electricity infrastructure that is required, to prevent electricity load-shedding, as was experienced in 2007 and 2008.   Eskom had requested a 33 % price increase.

The price of petrol is set to increase by 40 cents a litre from 1 July, raising the price to R 7,90 a litre in Gauteng, reports Reuters.

TELKOM boasts about a minimal rise in its costs to consumers, but has sneakily left out the call cost increases of 11 %.

For hospitality establishments with fewer than 10 employees, the Minimum Wage increases by 11% to R 1 843,23 per month, R 425,43 per week and R 9,45 per hour from 1 July.   The formula for calculating the annual increase has been laid down by the Department of Labour ( consumer price index + 2 %).   Many staff may be prepared to hold their salaries to ensure that they maintain their jobs, but this flexibility is not allowed by the Department, who could not have foreseen the credit crunch when it introduced the Minimum Wage for the hospitality industry in 2007.