Tag Archives: GDP

Germans love travelling to South Africa and drinking its wines!

Whilst our tourism authorities and wine producers are actively chasing the BRICS markets, and thereby neglecting the traditional source markets of the UK, USA and Europe in their marketing, it was a welcome surprise to read in the past week that German tourists are loving South Africa as a tourism destination, as well as enjoying drinking its wines.

Cape Business News reported that the number of German tourists increased by 10% between January and November 2011 to reach 211000, Minister of Tourism Marthinus van Schalkwyk stating that Germany is the third largest tourism source country, ‘contributing 9% of GDP through tourist spend’. The Minister also said that 40 % of the German visitors had been to South Africa before, a high repeat visitor number and ‘testifies to the attractiveness of our destination’.

The Minister was speaking at the 46th ITB (Internationale Tourismusbörse), the world’s largest travel trade show with 170000 leisure visitors and 108000 trade visitors exposed to 10000 exhibitors from around the world over a five day period.  He added that the German tourist market ‘is one of the most valuable in the world’.  German tourists are increasingly price sensitive in their choice of travel destination, and seek meaningful holiday experiences, in not only seeing beautiful scenery, but to also leave a lasting legacy through their visit.  SA Tourism is working hard at marketing our country in Germany, having signed 17 joint marketing agreements with all the top German tour operators, and trained more than 2000 trade operators to encourage sales.

At ITB a number of tourism trends were evident, reports Cape Town Tourism, including:

*   International travellers are taking shorter holiday trips, for nine days on average.

*   ‘Germany is the most economically optimistic country in the Eurozone and German travelers (sic) are positive in their travel prospects’, says the oddly worded media release. Given zero growth in the UK travel market, Germany may overtake the UK as South Africa’s major source market this year.

*   ‘Travel bloggers are gaining recognition as one of the most credible sources of online travel information’, and the organisation writes that it will host the four most influential international travel bloggers later this year.

*   Half of all bookings are made on-line, with travel agents making up less than one-third

The Drink Tank reported last week that South African wine exports to Germany reached the number one slot in January, for the first time overtaking the UK market.  South African wine exports to Germany reached 81 million litres, a 13 % increase, now slightly ahead of the UK’s 80,9 million litres.  UK wine imports dropped by 23 % internationally in the past year.  China showed the largest increase in South African wine sales, by 17% in total, and by 66% in bottle sales, and has reached the 10th position in wine imports.  South African wine sales to Kenya and Nigeria are also showing good growth.  Bulk wine imports (for bottling in the import country, usually to save transport costs) have increased generally, by 19% in Germany, and by 91% to Denmark, 56% to Sweden, and 8% to UK.  South African bottle exports have decreased across the board,  with the UK showing the sharpest decline of 42%, even though it remains in top position.  We wrote about Oldenburg Wines from Stellenbosch, and their popularity in Oldenburg Germany, recently.

Germany is the strongest European country and traditional tourism source market economically, and we would like to encourage SA Tourism to increase its marketing spend in this valuable tourism source market, given its above average tourism growth, and linked South African wine drinking, based on the wine estates and brands they experience on their South African holidays.

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

International tourism slows down, growing Social Media marketing focus

The latest Euromonitor International report on the global tourism industry predicts that international arrivals will ‘slow down 5,8%’, according to Cape Town Tourism, yet will see arrivals exceed 1 billion persons by 2012.  The forecast is that this figure will increase to 1,8 billion by 2030.

The report is based on a prediction of a ‘double dip recession’, in Europe in particular.  GDP is expected to grow by 4% globally this year, down by 1,1 percentage points from 2010, caused by higher fuel prices and taxes, and political and social unrest.  ‘Across all markets, online marketing is considered to be the most significant growth area in the long term, with applications on social media and mobile devices very lucrative in the medium-term’, writes Cape Town Tourism.

The report also contains a number of global travel trends, highlighting how different countries and regions are adapting to the international downturn:

*  Mystery trips:  In America the need for affordable yet exciting travel has led to the development of mystery trips, whereby tourists bid on packages with an unknown destination.  A Smartphone reveals a daily itinerary, based on a pre-determined budget.  Prices are 50 % lower, as the travel products offered are excess stock, heavily discounted.

*   Rent a garden: In the UK the outlook for travel ‘remains bleak with a stagnant economy’, as we reported yesterday. This market is seeking greater value, and alternate affordable accommodation, including campsites and hostels.  Campsinmygarden.com lists sites renting out their gardens for camping.  Overcharging by London hotels for the 2012 Olympic Games is noticeable, and travellers are avoiding these.  UK hotel growth fell by 5% last year, is expected to remain stable this year, and grow by 2 % next year, showing the small effect that the Olympics is likely to have on the UK hotel accommodation industry, an experience similar to that during the World Cup in South Africa.

*   Luxury without guilt:  European travellers are focusing on ‘responsible and sustainable travel’, and travelers are expecting own produce to be grown by hotels and involvement in community produce growing initiatives.  Europe’s collective GDP is estimated to fall slightly from 1,8% in 2010 to 1,4% in 2012.

*   Branding and Rebranding:  Given the political turmoil, the Middle East is looking to rebranding, to change perceptions about the region, which has seen a 6% drop in arrivals this year, compared to 12 % growth last year.

*   Mobile commerce:  Kenya is focusing on booking travel via mobile phones, its M-PESA system enabling Kenyans without bank accounts to pay for travel and other purchases via their phones.  GDP growth in Africa is estimated at 5% for this year.

*   Growing influence of Asia: China will become increasingly dominant as a source market, with a 20 % growth  in travel anticipated in the next five years. International hotel brands are partnering with Chinese companies, and customising their brands to suit the market, both in China, and also in other regions, to make them attractive to Chinese travellers.  Inter-Asia travel is growing too.

*   ‘Gamification’:  Started in the USA, consumers are encouraged to enter competitions, sharing their travel experiences, photographs and videos, in exchange for points, badges and gifts.  The ‘Ireland Town’ game on Facebook, by Tourism Ireland, is expected to attract 60 million potential travellers.

*   Global village: Increasingly hotels are using Social Media to gain followers and friends, to create awareness, build loyalty, and generate bookings.

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

World Cup anniversary: South Africa was ‘ripped off’!

It is interesting that a review of the advantages and disadvantages of South Africa hosting the World Cup, which started on 11 June last year, and particularly the downside of this world event, is only emerging now.

Yesterday we wrote about the tourism slump that has been caused by the World Cup. In yesterday’s Weekend Argus, a very critical article was published, summarising the book to be published in September and to be entitled “South Africa’s World Cup: A Legacy for Whom?”, written by Eddie Cottle, ‘regional policy and campaign officer for the Building and Wood Workers International, a global trade union federation’.

Cottle is given a prominent space in the paper, and in summary he argues that “…the promises made about the benefits of hosting the soccer World Cup were nothing but ‘bald lies'”!  His introduction is complimentary and gentle, praising the benefits of the event, in there being few technical hitches and little crime. The negatives far outweigh the event, he writes, and he says that South Africa fell for the ‘sales pitch’ of the positives of a mega-event, despite “…the volumes of academic studies on the negative impact of mega-sporting events such as the World Cup”.  He says that the promises made about the financial benefit that was the drawcard for South Africa hosting the event, with its resultant contribution to the GDP, tax revenues and job creation, which was promised by the government, FIFA, the local organising committee and tourism consultancy Grant Thornton,  were “…bald lies, wrapped up in the haze of developmental spin. There was no serious study of the opportunity cost of the investment to be made by the government; the impact on the environment; nor the contribution of the event towards the country’s debt position or the social costs of hosting the event.”  He adds that the official economic report was kept secret, and not open to public scrutiny, because of the flaws it contains.

Grant Thornton made many projection errors, not just in overestimating the number of international visitors to the country for the event, but also in the expected expenditure of tourists while in the country, which was only 16 % of the estimated R55 billion. 

The cost to the government for hosting the event was initially estimated in 2003 to be a ‘mere’ R2,3 billion, but given an estimate of R7,2 billion tax revenue, the event was packaged as generating profit.  In reality, the event cost R39 billion. This figure may not reflect the final cost tally.  The Reserve Bank estimated the cost to the state on capital formation to have been just under R130 billion, creating a deficit of R 63 billion.  What is causing a large income hole is that FIFA took R25 billion profit made by the event out of the country without paying any tax! It was the largest profit that FIFA has ever made out of a World Cup, Cottle states.

South Africa was also misled by projections of the employment benefits of the World Cup, 695000 jobs to have been created, of which just less than half were estimated to be retained after the World Cup.  This scenario proved to be incorrect, in that employment decreased by 5 % in the second quarter of 2010.  The losses of jobs in the construction sector was even higher, at 7 %.  Cottle says that as only a handful of construction companies, including Aveng, Murray & Roberts, WBHO, Group Five and Basil Read, built the insfrstastructure for the World Cup, their quotes were higher than required, a ‘grand theft’, he says.   

South Africans were caught up in the spirit of the World Cup, and went on a spending spree using their credit cards, which they are feeling the after-effects of now, partly as locals were led to believe that things would be better financially as a result of the World Cup.  Informal traders were moved out of their normal trading locations, on the basis of FIFA’s rules of a non-trade zone around stadia, impacting on the incomes of such traders.

Cottle concludes: “Indeed, a considerable negative impact has been left through higher levels of both public and individual indebtedness, the high opportunity costs associated with the event, the displacement of local spending and the reinforcing of already high social inequalities in income among and within cities.”  He states that the government’s decision to not bid for the 2020 Olympic Games ‘surely is a wise decision’!   

POSTSCRIPT 14/6: Southern African Tourism Update  reports today that the Department of Sport and Recreation will request the government to re-consider the Olympic Games bid for Durban for 2020, before the bid deadline of September.

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

Earth, Wind and Fire and all that jazz blows at Cape Town International Jazz Festival!

The 12th Cape Town International Jazz Festival, taking place in Cape Town from tomorrow, is estimated to inject R475 million into the economy of Cape Town, to contribute R685 million to the GDP of South Africa, and has created 2000 jobs, reports the Cape Argus.  The headline act is Earth, Wind and Fire, and 42 artists will perform at the Jazz Festival, half of them from Africa and the rest from other countries.

Last year the International Jazz Festival attracted 34000 jazz lovers over two days, making it the single largest event in Cape Town, said Joey Pather, the CEO of the Cape Town International Convention Centre, inside and outside of which the Jazz Festival takes place.  President Jacob Zuma acknowledged the economic importance in terms of income and job creation of the Cape Town International Jazz Festival during his State of the Nation address in February. 

The attendance is expected to grow when the Convention Centre expands its capacity.   Sponsorship of the Jazz Festival has been under pressure, especially last year, due to the World Cup, but 95 % of the tickets have been sold to date.   More visitors to the Jazz Festival are from Gauteng, with the Western Cape surprisingly having the lowest number of Jazz Festival attendees.   About a quarter of all attendees are from overseas.

The spokesperson of the Western Cape Department of Tourism said that the direct benefit of the International Jazz Festival is R 43 million, spent on flights, hotels, restaurants, shopping and other expenditure. The CEO of S A Tourism, Thandiwe January-McLean, praised the contribution of the Jazz Festival: “South African Tourism takes great pride in supporting this world-class event that has helped showcase our country as a (sic) unique lifestyle and musical destination”.

Some of the acts performing at the International Jazz Festival include Youssou N’Dour, Gang of Instrumentals, Chad Saaiman, Mathew Moolman, Lloyd Jansen, Hugh Masekela, Larry Willis, David Ledbetter and the Clearing, and Bebe Winans.  Some ‘concept bands’ will be created especially for the Jazz Festival, such as the ‘Tribute to Oscar Peterson’ concept band, which will consist of Jack van der Poll, James Scholfield and Hein van de Geyn, and play Peterson’s repertoire.  Guitafrika is another concept band, and consists of beloved local guitarist Steve Newman, Eric Triton from Mauritius, and Alhousseini Mohammed Aniviolla from Niger.   The Cape Town Tribute Band will be put together to do exactly that, paying tribute to the many jazz musicians who passed away in the past year, including Tony Schilder (‘Montreal’), Winston Mankunku, Robbie Jansen, and Hotep Galeta (‘Harold’s Bossa’).   The fourth concept band includes bassist Victor Masondo, and will see him perform live – he was recently invited to perform at the Duke Ellington Jazz Festival in Washington.   The ‘concept bands make the festival unique.  People have the opportunity to see bands that they are unlikely to see somewhere else or in their lifetime” said Rashid Lombard, the creator and Festival Director of the Cape Town International Jazz Festival.

Cape Town International Jazz Festival, Cape Town International Convention Centre, Cape Town.   www.capetownjazzfest.com  25 -27 March.  Book at Computicket.

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