crisis | WhaleTales Blog by Chris von Ulmenstein

Shakespeare asked what is in a name! He must have been referring to the heads of both Cape Town Tourism and Cape Town Routes Unlimited, in both bodies denying that the Cape tourism industry is in ‘crisis’, naively countering that it is only in a little bit in trouble, in facing a ‘tourism slump’!

Cape Town Routes Unlimited sent a ‘CEO Update’ e-mail to its stakeholders a week ago, and wrote that “some captains of industry are theorizing about the ‘crisis’ in the tourism industry”. The poorly written letter also stated that the ‘global economy is mulling over a new potential US debt induced recession’ (my underlining in both sentences)! It then questions (defensively) if the ‘alarmist inclinations’ are in fact accurate, yet lists a number of aspects about the current state of tourism in the Western Cape and South Africa that support exactly what the industry is saying: the tourism industry in the Cape is in crisis!:

* compared to 2008, the current winter performance ‘is perfectly normal’ – this is not supported by any occupancy statistics, and everyone in tourism says that it is the worst winter ever experienced

* there is 20 % more accommodation stock, causing lower occupancy

* the strong Rand makes it more expensive to come to Cape Town

* 70 % of international tourists coming to Cape Town are from ‘recessive economies’, explaining the decline

* Tourism is a ‘luxury item’, and ‘under recessionary economic conditions people tend not to travel’

* High airfares and airport taxes inhibit travel

* Bookings are last-minute, and stays are shorter

* the cost of running tourism businesses has increased, especially in respect of electricity, labour, food, and municipal costs.

* International tourist arrivals are at their highest in 10 years – this is a beauty, and everyone in tourism would disagree!

* SA Tourism statistics for the first three months of this year show growth, but with tourism ‘buy-down’, which is not explained

* ‘Domestic travel, which is very much dependent on the state of the local economy is on the decline; but fortunately we can and are doing something about it’.

Cape Town Routes Unlimited CEO Calvyn Gilfellan summarises patronisingly that all of the factors are ‘partially the product of international economic forces and a correction of supply and demand structure of our tourism industry. I remain optimistic that the tourism industry will begin to show an upward trend closer to the end of the year’! I do not think that any tourism player will take comfort in Gilfellan’s prediction, which is not explained nor justified, and contradicts that of our national Minister of Tourism, Marthinus van Schalkwyk, who said that things will get worse by the end of this year! Once again, the stakeholders are spoken to patronisingly, advising them to price our products ‘responsibly and competitively’, package experiences ‘in a creative and appealing way’, to add value to our tourists’ experiences, and ‘leverage existing partnerships’ (unexplained)! He supports some of what he writes by the greater presence of special offer advertising in print and on-line; and that the industry is marketing to the local market, as well as to Europe, the USA, the Middle East, Africa and Asia. The key sentence, that contradicts everything else he writes is: “Everybody is doing their bit to counter the effects of the slump”. OK, so we have a ‘tourism slump’, and not a ‘tourism crisis’!

Reporting on the recent stakeholder Cape Town Routes Unlimited breakfast held at Sante Hotel, Southern African Tourism Update said that Gilfellan denied that the tourism industry in the Western Cape is in a ‘post-World Cup crisis. ‘It is serious but we should not be alarmist and call it a crisis’ he told the stakeholders. ‘There are people who are doing well and there are people who are struggling’, he added naively. He was reacting to COSATU Western Cape General Secretary and City of Cape Town Councillor Tony Ehrenreich’s recent criticism that the tourism industry is in crisis, as tourists are being overcharged. What is interesting in the report is that Gilfellan told the stakeholders that a slump was to have been expected after the World Cup, but the tourism industry was not told this, and new hotel operators were not warned about the ‘slump’ potential, given the experience of other cities hosting big events, such as ‘South Korea and Germany’. Gilfellan clearly was just grasping at straws, as Germany never suffered a post-World Cup slump! He also told the stakeholders that the government could not interfere in the ‘market-led correction of market forces’. Not mentioned in his stakeholder letter, but emphasised at the breakfast, was that twelve airlines are flying to South Africa this summer and he asked the audience:”Why would they invest if we were doing so badly? They know the situation will correct itself”!

Gilfellan focused the rest of his stakeholder letter on the newly planned Western Cape domestic campaign ‘esCape to the Cape whatever the weather’. We say it is too little, too late. We are in our last winter month. The campaign does not appear to have been launched yet, as the letter says its next edition will provide a ‘complete update on the campaign’. A number of the problems identified by Gilfellan should be addressed by a tourism body such as Cape Town Routes Unlimited: airport taxes (the Airports Company’s Cape Town International head sits on the Cape Town Routes Unlimited Board!), airfares, special deals for tourism players re municipal costs, and more accurate and realistic tourism arrival information!

Cape Town Tourism CEO Mariette du Toit-Helmbold countered the recent Cape Argus front-page article about the Cape Tourism crisis, by denying that things were as bad as depicted, also playing with semantics. Interestingly, the Southern African Tourism Update article headline reporting on the new ‘strategic plan’ for Cape Town, ‘Cape Town Tourism meets slump head-on with new tourism drive’, uses the same ‘slump’ word as does Cape Town Routes Unlimited, and says that its proposed “brand positioning and destination marketing campaign…(will) counter the current slump that has already seen 118 tourism businesses in the Cape to close shop in the past two years and 18000 jobs lost due to lack of growth in the industry since 2007″ ! At the Cape Town Tourism ‘strategic plan’ presentation last week, its Australian strategy consultant Ian Macfarlane told Cape Town Tourism members that there is no correlation between the exchange rate and travel!

It is embarrassing to see Cape Town Tourism and Cape Town Routes Unlimited being so out of their depth that they are just throwing clichés and patronising platitudes at the industry, in an attempt to defend themselves against criticism that they should have predicted the ‘tourism crisis’, and done something proactive about it. It appears far too little too late right now! Cape Town Routes Unlimited continues to be seen as playing a meaningless role in the local tourism industry by most, and its most recent stakeholder letter confirms this perception! The defensive drivel by both Cape tourism bodies once again emphasis how divided they are, seemingly duplicating marketing actions, and what a waste it is to have two bodies marketing Cape Town!

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

It is interesting to see how the Western Cape government, and even Cape Town Tourism, have reacted to the feedback that the Cape Tourism industry is in crisis, stated in a Cape Argus front page story featuring information from our blog as well as referring to an open letter to the tourism industry by Collection by Liz McGrath GM Tony Romer-Lee. Alan Winde, Minister of Tourism in the Western Cape, has announced that the BRICS (Brazil, India, China, Russia, and even locals from South Africa) are the tourism market of the future.

Without spelling out the exact details of what is planned, a Cape Argus report earlier this week highlighted what the Western Cape is planning:

* ‘Escape to the Cape – Whatever the Weather’: this campaign is to be aimed at Gauteng, KwaZulu-Natal and the Eastern Cape. The name is clumsy, another way of saying Green Season, but there has been no sign of the campaign actually having been launched, as claimed in the article.

* attending trade shows in Brazil and Argentina in September, organised by the South African embassies in those countries

* a road show to China, Korea and Japan by Cape Town Routes Unlimited CEO Calvyn Gilfillan. Cape Town has just been awarded the Preferred Tourist Attraction 2011 by the World Broadcasting Union in China, beating the Great Barrier Reef, Australia, Spain, Germany, Italy, and Paris. Sun International has also been on a marketing expedition in China in the past month.

* market to the west coast of Africa, rich in oil, with huge numbers of wealthy individuals. Clive Bennett, CEO of the One&Only Cape Town, told me at a recent function that Nigeria has a population of 160 million, of which 20 % are hugely rich, yet most have not heard of Cape Town!

* Exhibiting at the FILDA International Trade Exhibition in Luanda, Angola, last week, and the Western Cape was the only South African province to exhibit. Minister Winde will be visiting Angola in September. Cape Town Routes Unlimited’s Debbie Diamant, who headed the exhibition, said that Angola is an important growth market, but marketing material must be prepared in Portuguese. Obtaining visas to South Africa is one of the greatest barriers to tourism.

Adding to this, CEO of Cape Town Tourism Mariette du Toit-Helmbold said the (now amended) positioning ‘Inspirational, value-for-money destination’ will be ‘branded’ (it appears she does not understand that ‘Cape Town’ is the brand, not the positioning!) for Cape Town. She plans to ‘leverage events’ (held in summer!) like the Cape Town International Jazz Festival and the J&B Met, but exactly what she plans to ‘leverage’ is not stated! A joke is that she seriously states that the new “100 Women 100 Wines’ competition to be held in Cape Town next month, and run by Spill blog with TOPS, will ‘stimulate domestic tourism arrivals’! Cape Town Tourism is marketing the event heavily, as if it has nothing else to do!!

The same Cape Argus report contained same political point-scoring from ANC ex-Premier Lynne Brown, blaming the DA for the ‘tourism crisis’, saying that it was due to ‘funding cuts, the distress of thousands of workers who may lose their jobs, and adverse elitist perceptions deterring visitors from other provinces”! Minister Winde reacted to the criticism, countering that it was not only tourism, but that all business sectors in the Cape that are struggling.

An interesting e-mail from S A Tourism, written by its Trade Manager, provided interesting insights into the Chinese market: 68000 Chinese tourists visited South Africa in 2010, a 62% increase. They stay for 10 days on average, and are most likely to visit Gauteng, and then the Western Cape. They enjoy wildlife and the scenery, and visiting the soccer stadia. She also provided hints and tips to the hospitality industry, in dealing with Chinese tourists: they love green tea, sausages, fruit, yoghurt, eggs and bacon for breakfast; they eat ‘2-minute’ noodles in the morning; they prefer Chinese food but are interested in trying local food; they like our seafood, especially abalone and lobster; they enjoy a braai; they do not like sweet desserts; they like our fresh fruit; they enjoy going to the casino and to see a live show; they enjoy karaoke bars; they enjoy receiving small hand-made gifts; they like seeing the clouds in our clear skies, and the stars at night; wireless internet is important, and an adaptor for their plugs, so that they can charge their camera, laptop and phone; they prefer 4- and 5- star hotels, and guest houses too.

We have always been told that Cape Town is unique in suffering seasonality of business in winter. I was surprised therefore to speak to a Johannesburg tour operator, who called to express his surprise about our recent newsletter spelling out the doom and gloom about the Cape Tourism industry. He believed that the Cape receives almost all the tourism business in the country, and therefore should be flourishing relative to other parts of the country. He told me in what dire straits the Gauteng tourism industry is in, and this was confirmed by the shock news that The Grace hotel in Rosebank, Johannesburg, will be closing at the end of August, as it is no longer financially viable to operate it.

While it is commendable that the Western Cape’s Tourism department is acknowledging the tourism crisis, we worry about Cape Town Tourism’s ability to react to the it, still being without a Marketing Manager, and not spelling out its immediate plans to address the crisis. The tourism body will be doing a road show to share its Marketing Plan with its members on 10 and 11 August.

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