foreign investment | WhaleTales Blog by Chris von Ulmenstein

A concern about the future marketing of the tourism industry in the Western Cape, given the closure of Cape Town Routes Unlimited and its incorporation within Wesgro, and the departure of its CEO Calvyn Gilfellan on 31 March, motivated me to call Wesgro and request an appointment with its CEO Nils Flaatten. Despite the busy and short week prior to Easter, he made time for the interview on 5 April.

The hurdles put in my way to meet Mr Flaatten were considerable, and demonstrated the personality of the organisation and told me more about the company than the time I spent with Mr Flaatten. It also demonstrated how far removed Wesgro, the Western Cape Trade promotion and Investment agency, is from the Tourism industry, if ‘customer service’ is anything to go by. When I called to set up the interview, Mr Flaatten’s secretary insisted that I follow ‘protocol’ and e-mail her the meeting request, and tell her who I am. I had done this telephonically, and it became a power struggle, with constant interruptions from her, before she accepted my meeting request telephonically. She indicated that it would take a considerable time to get an appointment date, which she would e-mail me! A Tweet to express my dismay about this lack of approachability by our province’s new tourism head, combined with an e-mail to Alan Winde, Western Cape Minister of Economic Development, Finance and Tourism, led to a call directly from Mr Flaatten, offering a meeting for a few days later at 11h30, or so I heard. Mr Flaatten called at 7h45 on that day, asking where I was, having expected me at 7h30! As a late night blogger and guest house owner I would never have accepted such a time slot, which seemed very ‘Johannesburg’ to me! Mr Flaatten said he would be out of town for two weeks, and could only reschedule a meeting thereafter. Yet his secretary called later in the morning, and offered me a midday meeting, which I accepted with gratitude. For the first time, she offered parking, and took all the relevant details telephonically. I arrived at the building half an hour early, wanting to make sure that I arrived on time, but I was not allowed into the building as Wesgro had not alerted the parking garage staff at the boom! They refused to let me in, and traffic problems were caused with other garage users wanting to enter. I had to call Wesgro to ask them to let me in. However, all the staff were in a meeting, and Mr Flaatten’s secretary could not be contacted. I was told that I would be called back. No such call came, and I had to call again after 20 minutes of being trapped at the boom, and having been threatened by the parking staff that the traffic department would be called if I did not move my car! I was given a bay number by the Wesgro switchboard and relayed this to the boom operator, but it was refused because it had not been sent to them on the prescribed form! Needless to say, this incompetent stakeholder-unfriendly introduction to Wesgro twice in one week made my heart sink, and realise how much smarter and visitor-friendly the Western Cape tourism industry is.

I was shocked when I saw the reception area in which I had to wait for Mr Flaatten, which doubled up as an office, with two ugly red chairs. Mr Flaatten’s office did not look much better, the same style ugly red chairs serving as visitor chairs with a rather nice blue desk, but the blue not matching Wesgro’s corporate blue, the functional office having no warmth or professionalism. Mr Flaatten seemed professional but distant, not giving one the feeling that one could ever have a collegial relationship with him in his new role as provincial tourism head. He has headed up Wesgro for the last two years. I was surprised when he asked me to tell me who I am, not what the interview was about, and he made it appear that he knew nothing about me at all! I at least had Googled his name, and had found out that he went to school in Stellenbosch, served in the South African Navy, and had worked in investment banks in the United Kingdom and Hong Kong.

I told him that other than its name, and having only a broad idea of what Wesgro does, I knew nothing more, and that I wanted to know what its role will be in taking over the duties of Cape Town Routes Unlimited. Wesgro is governed by the Wesgro Act, and has three duties according to the Act:

* to attract and retain foreign investment in the Western Cape

* to grow exports

* to increasingly attract business to the city and the province

Wesgro is funded by both the City of Cape Town (R10 million) and the Western Cape government (R18,4 million), the R25 million which Cape Town Routes Unlimited received from the Western Cape government being added to give a total of R53 million, larger than the budget of Cape Town Tourism. The organisation services the province, ultimately reporting to Minister Winde. It also works with the City of Cape Town’s Mayoral Committee member Belinda Walker, doing strategy planning. The organisation’s operations include:

* hosting inward trade missions, at which they try to ‘matchmake’ the visiting delegation members with local businesses via ‘speed dating’

* outward missions travel overseas, promoting trade with the Western Cape, benefiting from sponsorships for flights and other travel costs from the Department of Trade and Industry.

Any Western Cape business is seen to be a ‘member’ of Wesgro, although one does not take out or pay for a membership. The organisation also looks to stimulate the setting up and development of ‘SMME’s’ (small businesses), including entrepreneurs, emerging entrepreneurs, and start-up businesses. They also look to grow sectors of Western Cape businesses, and a number of such sector development agencies have been developed, for IT, Craft and Design, etc. Geographically, Wesgro is concentrating on the ‘West African Trade Corridor’, which includes Nigeria, Cote d’Ivoire, Ghana, Cameroon, Namibia, Angola, and the Democratic Republic of Congo. “The Headquarter for African business should be Cape Town”, Mr Flaatten said. He shared that a trip to Accra the week before had seen distribution agreements signed with 20 companies represented in the trade delegation. It was at this point that Mr Flaatten justified his organisation’s take-over of Cape Town Routes Unlimited, saying that Wesgro already has links to the chambers of commerce and influential players in these West African countries, so in the same way they can engage with the leading tourism players in these countries to attract more West African tourists to Cape Town and the Western Cape. He added that the Northern Hemisphere countries of the UK, the USA, Europe and Japan would only show a 1,5 % growth, labelling them as ‘concentration risk’. Currently most of the Western Cape exports go to the UK, to the Netherlands, and to Germany, in that order. Mr Flaatten also said that 73% of South Africa’s foreign direct investment in Africa comes from Cape Town businesses, mainly being in the financial services, real estate, and hospitality sectors. He added that by 2030 there would be more middle income earners in Africa than in India. He also emphasised the potential of the BRICS countries. Further high growth high income countries are Saudi Arabia, Singapore, Argentina, and the United Arab Emirates. Inward missions coming to Cape Town are from the USA, the United Kingdom, Germany and France, and they offer marketing services, sales support, and call centre services.

Mr Flaatten gave his views of our tourism industry by saying that it has a number of outspoken characters in it, implying that this would be something he would have to get used to! Wesgro has taken over the 25 Cape Town Routes Unlimited staff, who were in the same building, and will be assimilated into his team, retaining the benefits, and terms and conditions at which they were employed originally. Wesgro will ‘capitalise on the Cape Town Routes Unlimited’ marketing knowledge, Mr Flaatten said, but I was concerned that he could not tell me the name of the most senior marketing executive (we think it is Debbie Damant, not known to most) that he has ‘inherited’, especially given that the marketing of Cape Town Routes Unlimited had been strongly driven by its then CEO Calvyn Gilfellan. The Board of Cape Town Routes Unlimited, now led by ACSA’s Deon Cloete due to the move of its previous Chairman Peter Bacon to Mauritius, will oversee the activities that are in the Cape Town Routes Unlimited Annual Performance Plan, until the organisation with its Board is dissolved when the Western Cape Tourism Act of 2004 is repealed. Similarly, the Wesgro Act must be amended, to allow it to additionally manage destination marketing for the Western Cape.

Mr Flaatten requested the industry to give him a month, so that he can get to know his new staff, and what the capacity requirements are, not wanting to be irresponsible in becoming unnecessarily large. First he must stabilise the staff situation, and then they must focus on planning for the following financial year. They have already hosted a workshop with 100 regional and local tourism bureaus, seeing them as ‘subject matter experts’, and not wishing to duplicate their work, he said. He will also engage with industry representative bodies such as FEDHASA Cape, SATSA, etc, but I left him with a reminder that the tourism industry consists of a large number of small businesses, many not belonging to the big tourism associations, and that their voices should be heard too. Listening to the tourism industry will be the biggest challenge for him currently, Mr Flaatten said. He realises that the ‘Cape Town & Western Cape’ brand is a problem ‘which will not be easy to fix’.

The Board of Directors of Wesgro raises interesting questions. Board members Cape Town Tourism CEO Mariette Du Toit-Helmbold, its Board Vice-Chairman and CEO of the Cape Town Partnership, Bulelwa Ngewana, and Board member Guy Lundy, CEO of Accelerate Cape Town and Wesgro Vice Chairman, may prevent duplication of marketing activity between Wesgro and Cape Town Tourism, but ideally should remain independent tourism bodies, so that the industry benefits from the best of both bodies. Ravi Naidoo, organiser of the Design Indaba, is well-known and highly regarded. Interesting too is that Alderman Belinda Walker is on the Board, but does not deal with Tourism matters in the City of Cape Town, which could lead to duplication of tourism management within the City. One could be concerned about two Boards of Directors managing the duties of Wesgro, until Cape Town Routes Unlimited is closed down legally, and about the incestuous duplication of Board members of Wesgro and Cape Town Tourism.

For an organisation that had a number of months warning of taking over Cape Town Routes Unlimited, and that had taken over its operations four days prior to my visit, I was concerned about the general lack of marketing insight, terminology (other than the branding issue), and discussion that I heard from Mr Flaatten during our lengthy interview. He did not mention Cape Town Tourism, and how Wesgro will avoid duplication of marketing activities with the city tourism marketing body. The Wesgro website only shows an amended logo, in that the new duty is incorporated in its descriptor underneath it: ‘The Western Cape Destination Marketing, Investment and Trade Promotion Agency’, and contains a block of information to state that it has taken over the duties of Cape Town Routes Unlimited, with a link to the now defunct tourism body’s website! I was concerned about the very business-like Wesgro culture, which does not appear ‘customer friendly’ nor service-orientated in simple requests of setting up a meeting and honouring a parking arrangement, which does not auger well for our tourism industry. The offices are functional but unattractive, not matching the tourism industry image. I was concerned that Mr Flaaten did not seem to know anything about Minister Winde’s EDP, which I thought would reside in Wesgro, and would eventually become the home of most Western Cape industry development bodies, the products and services of which Wesgro appears to market. Mr Flaatten was very responsive in providing the Cape Town Routes Unlimited Annual Performance Plan which they will be working to achieve. The 27 page Plan lists the mission as marketing the Western Cape as a desirable leisure, business and events tourism destination, and its main goal is to ‘position Cape Town and the Western Cape as a premier leisure, events and business tourism destination in Africa’. However, none of the defined goals are measurable. The budget breakdown is disconcerting, with about 50% going to staff salaries, and only 24% going to marketing expenditure. Much of the performance is measured in terms of the number of meetings held, the number of convention bids presented, and the only tourism related measurement targets are the number of international arrivals (1,6 million) and domestic arrivals (3,2 million) for the current financial year, Cape Town Routes Unlimited only expecting to generate 5% of each kind of tourist through its marketing efforts, which begs the question as to why it existed in the first instance!

We will give Wesgro the month that has been requested, and await the way forward for the marketing of the Western Cape with trepidation.

POSTSCRIPT 18/4: In a media release sent out by Wesgro a week ago (but not to contacts on the Cape Town Routes Unlimited media list!), Nils Flaatten said that he would continue to report to the Wesgro Board of Directors, and to the Cape Town Routes Unlimited Board on a quarterly basis about ‘expenditure and performance against predetermined objects’. “Flaatten assured tourism industry stakeholder (sic) that there would be no ‘disruption to the delivery of the tourism destination function in our province'”, the media release added. It also stated that Cape Town Routes Unlimited and Wesgro will continue to occupy their respective offices in their current building, and that the telephone and e-mail details of the Cape Town Routes Unlimited staff ‘will remain in operation until further notice’.

This Tourism Week asked some critical questions about Wesgro’s new role in handling the Tourism marketing responsibility for the Western Cape in its newsletter on 13 April.

Wesgro, Waldorf Arcade, 80 St George’s Mall, Cape Town. Tel (021) 487-8600. www.wesgro.co.za Twitter: @Wesgro

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

The U2 360° concert in Cape Town on Friday evening will have contributed largely to the R 4 billion the City of Cape Town estimates is generated annually for the local economy from live performances, with 72000 spectators having attended a visually stunning and extremely well organised concert at the Cape Town Stadium.

Writing in the Sunday Argus, the City of Cape Town’s Executive Director of Economic, Social Development and Tourism, Mansoor Mohamed, states that films and events are the largest contributors to the Cape Town economy, the film industry generating R5 billion, and conferences and live events R4 billion each. Mohamed writes that it is not only income that is generated, but jobs are created too. The services and products required to host such events go into the pockets of mainly Cape Town-based businesses, which in turn will pay for rates and taxes, and thus share the burden of payment of these to generate income for the city, but they will also share the benefit of the use of these monies (an excellent example is the wonderful new Green Point Park).

Writing about the contribution of the film industry to Cape Town, Mohamed mentions the two movies currently being filmed in Cape Town – ‘Safe House’ wrapped up filming on Kloof Street over the weekend, and stars Denzel Washington and Ryan Reynolds, who have been seen eating at Cape Town restaurants, and hanging around in Camps Bay, another location for the movie. ‘Judge Dredd’ is another movie being filmed, and the two movies combined have a production budget of R400 million, going to two Cape Town companies (Moonlighting and Cape Town Film Studios, respectively), and their suppliers. In addition, still productions, and print advertising and TV commercial shoots contribute to the economy. Mohamed requests Cape Town residents to be tolerant of road closures and other inconveniences linked to these, in understanding that every R1 billion income allows 15000 jobs to be sustained in the city.

The Cape Town International Jazz Festival generated R685 million to the local economy, and created 2000 jobs, mentioned by President Zuma in his Station of the Nation address ten days ago. It attracts 35 000 attendees, and runs over ten days, incorporating local art, culture and heritage, and local musicians blended with international stars such as George Benson. Some of the local musicians performing at the Jazz Festival have received bookings on international stages as a result of their performances at the Festival.

The Pick ‘n Pay Cape Argus Cycle Tour contributes R650 million to the local economy. It has attracted the attention of international VIP’s such as Matt Damon and Lance Armstrong, who have participated, and this has been recorded in the world media, having a tourism benefit too. This year executives from top companies such as RIM (manufacturers of Blackberry), Sainsbury in the UK and Vodafone Europe will participate in the event. Some Cycle Tour lovers are said by Mohamed to have bought houses in Cape Town, and they pay their rates and taxes annually and in advance, he writes! “They create tomorrow’s tourists and South Africa’s future foreign investment”. He added that events such as the Cycle Tour, the Jazz Festival and the U2 concert play an important role to ‘start, facilitate or help to close deals’.

The recent Mining Indaba, which was held at the Cape Town International Convention Centre, filled up all surrounding hotels, created a taxi shortage in the city, and filled up restaurants in Cape Town on a scale not often experienced in the city. Delegates attending were from Africa, Brazil, Russia, India and China, amongst others. Similarly, the Design Indaba taking place at the moment as a Conference, Expo and Film Festival, is staging top international designers, such as Alberto Alessi, Michael Wolff, billionaire Mark Shuttleworth and trend forecaster Li Edelkoort, with about 37000 delegates attending, according to Cape Town Tourism. The Design Indaba attracts them to Cape Town, the city enjoying the most glorious weather currently, and therefore making future tourists out of these delegates, one can confidently predict, and more business deals benefiting the city could flow from this event, contributing R 232 million per annum. At the Design Indaba the latest updated Cape Town Design Route map will be launched, marketing some of the city’s top design artists and their businesses.

In September the World Veterinary Congress takes place in the Cape Town International Convention Centre, and will be attended by 3000 delegates, and contributing R30 million to the economy. Other conferences to be hosted this year include the 4th Pan African Pain Congress (500 delegates), the World Congress of the World Federation for Mental Health (800 delegates), the Global Forum for Health Research Forum 2011 Meeting (1500 delegates), World Conference of the International Association for Educational and Vocational Guidance (600 delegates), The Southern African Association for Learning and Educational Differences Conference (500 delegates), and the World Economic Forum on Africa (2000 delegates).

The 20th Cape Town Pairs, the largest sponsored open bowls event in South Africa, was held at the Glen Country Club in Clifton last week, and attracted 36 teams from around the country, as well as from the United Kingdom, Namibia and Zimbabwe. The gale force Southeaster almost forced a change in venue, blowing over 100 km/hr! We congratulate our Whale Cottage Camps Bay guests Phil Downs and Greg Bingham from Johannesburg for having won the hotly contested tournament.

The Cape leg of the Cell C Tour of SA 2011 takes place over the weekend, and covers Gordon’s Bay, Grabouw, along the Theewaterskloof Dam, Franschhoek, the Helshoogte Pass in Stellenbosch, and finishes in Paarl, 120 cyclists participating in the race, reports the Cape Argus.

The J&B Met and the Cape Epic have an economic impact of R 200 million each, and the Two Oceans Marathon R223 million. Mohamed has estimated that the city’s events and the film industry jointly add more than R 15 billion to the local economy.

The benefit of these events reaches the hospitality industry too. Six out of our 20 guests staying at Whale Cottage Camps Bay this past weekend flew down from Durban, to attend the U2 concert, and they made a three-day ‘weekend’ out of it. Three of the U2 band members ate at Pierneef á La Motte last week, each visit widely reported (Bono and The Edge’s visit at La Motte even made the Sunday Times), which will attract more business to this wonderful Winelands wine estate. Cargo Carriers has booked out Whale Cottage Camps Bay for the Argus Cycle Tour weekend, to accommodate its team over three days. Delegates attending the Mining Indaba stayed at Whale Cottage Camps Bay too.

And a final note on the U2 concert – it was a ‘must attend’ concert, with amazing lighting effects on The Claw and the 360° screen ensured that every attendee saw the band on the relatively small stage, no matter where they were sitting or standing. Many did not know most of the U2 music performed, but the performances of Amazing Grace, Stand by Me with Yvonne Chaka Chaka, and Without You were real crowd pleasers. I did not pick up sound distortion, but read complaints about this on Twitter. The quick and easy in and out of the stadium was commendable, and the event was run by Big Concerts without any hiccups, it was reported. Replacing the Stadium pitch for the concert cost Big Concerts R803000 alone. Taxis were in good supply before and after the concert, and the R50 per trip between Green Point and Fresnaye was the best money I have spent in a long time! The long sit, from 7.30 – 11.30 pm, was the only off-putting part, as the seats are not the most comfortable. Neil Diamond is the next big name performer at the Cape Town Stadium, his concert taking place on 11 April.

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