Tag Archives: Itumeleng Pooe

Tourism Seasonality in the Cape: it’s getting worse!

Every year Cape Town Tourism and Cape Town Routes Unlimited, both bodies tasked to market Cape Town, tell the tourism industry that Seasonality is a problem unique to the Western Cape, and that they have planned events for the quieter months and scheduled more advertising, to address the problem which swallows up in the winter months the income generated in the summer months.

To evaluate Seasonality for our Whale Cottages, we went back to our Occupancy information as far back as 2007, and found interesting trends:

*   Occupancy for Whale Cottage Camps Bay was at 72 % on average in 2007, 70 % in 2008, and dropped every year, to 63 % in 2009, 56% in 2010 and 41% this year to date.

*   During the period May – August, the Cape winter season, Whale Cottage Camps Bay Occupancy declined year on year, from 54 % in 2007, to 45% in 2009 and 2010, to 28% this year, an almost 50 % decline in Occupancy between 2007 and 2011!  Despite an average Occupancy of 70 % over the World Cup, from 11 June – 11 July last year, the World Cup had no effect on 2010 Winter Occupancy, as the good June and July performance was negated by a sharp decline in Occupancy before (19 % in May, being the lowest Occupancy ever in the five year period) and after (36% in August last year, vastly down compared to previous years) the 2010 Soccer World Cup.

*   Every individual month has seen a decline in Occupancy for Whale Cottage Camps Bay over the past five years, February 2011 showing the least decline in Occupancy (88% in 2011, our best month by far this year, compared to 97% in 2007), and September 2011 showing the most drastic Occupancy decline (28% in 2011, compared to 60 % in 2007).

*  These trends apply to Whale Cottage Hermanus and Whale Cottage Franschhoek too, both towns having seen Occupancy in 2007 (on average around 50%) halve this year for the period January – September.

*   Hermanus recovers from Seasonality more quickly in winter, due to the arrival of the Southern Right whales from May.  However, in the last two winters the average Occupancy was around 10% (despite the World Cup, which made no impact on business to this town), compared to 40 %  on average in 2007).

*   Franschhoek shows a similar Seasonality decline, but is at a far lower level in winter, dropping by half from 16 % in 2007, to 7%  this winter.  The World Cup made no impact on business.  The village has seen a decline in the number and size of weddings, and despite an increased activity in hosting events, which fill up the guest houses for the two days of the event, the remaining 28 days remain close to empty!   The trend is for a vastly reduced Occupancy, from 41 % on average in 2007, to 13% on average this year, for the period January – September.  September has been the month with the most drastic decline in Occupancy in the past five years, but Occupancy declined consistently year on year in each of the months.

*   The Occupancy trends reflect the changed tourism pattern, with more international tourists staying in Cape Town, and not travelling to inland towns to stay over, doing a day trip to Hermanus and Franschhoek at best.  Cape Town Routes Unlimited is responsible for marketing the Western Cape, and it appears to have failed in its work, if our figures are taken as a benchmark.  It shocked me to hear that Cape Town Routes Unlimited has lost both its Marketing Executives David Frandsen and Itumeleng Pooe, and that all marketing is now handled by the CEO Calvyn Gilfellan.  Cape Town Tourism’s Marketing Manager Velma Corcoran has only been in the job for a month, and has not made her mark in any way.  She has no tourism marketing experience specifically, and no marketing experience generally.

Not having a firm statistic as to the contribution of UK tourists to our Whale Cottage business, we checked our country of origin statistics over the past years.  This source market has represented as much as 53 % (November 2007) of our bookings over the past five years, but the average has been at around 33%.  It is this percentage of bookings which we will miss this summer, as bookings from the UK are extremely rare, due to the economic woes of the United Kingdom.  German bookings for Camps Bay have represented as much as 24 % (December 2007), but have seen a steady decline over the past five years, averaging at about 10 – 15 %. Our forward bookings show a strong increase in German bookings for this summer. Not surprising is that the proportion of South African bookings has climbed steadily, as we have lost international business, and this may also be due to our Whale Cottages still charging affordable 2007 rates, and discounting rates by close to half in the winter months.

A Carte Blanche programme on Sunday highlighted the tourism crisis.  Portfolio of Places CEO Liz Westby-Nunn spoke about 52 of her client establishments having closed down in the past year.  She has been in business for about 25 years, and business is so bad that she has consolidated her three Portfolio Guides into one, and has dropped her advertising rate by about 50%, just to hold on to her clients.  Mrs Westby-Nunn has been a feisty business person, who took 20 % advertising rate increases year on year in the past.  Clive Bennett, Managing Director of the One&Only Cape Town, said that “We aren’t seeing growth we should be seeing, and you couple that with the surplus number of beds, sadly there are going to be closures”. Bennett added that the recession had hit South Africa post-World Cup. Shamwari’s Tom Jager said that business for them has seen ‘a big drop’.  SA Tourism’s Chief Marketing Officer Roshene Singh said she would look at the impact of the tourism industry’s poor performance on jobs at the end of this year.  SATSA President Heather Guiterrez was controversial in stating that blaming the recession is a convenient excuse:  “There is 4% tourism growth within tourism worldwide, and we’re not seeing it in South Africa. In fact, we are seeing a huge decline of tourism into South Africa”.  She blames the lack of post-World Cup marketing for the current status.  ‘South Africa went dead. People don’t go to a country that goes dead’, she said.  SA Tourism defended its work, stating that April had seen a 7,5 % increase on the year before.  Ms Guiterrez said that SA Tourism does not have enough marketing money to market South Africa on international TV, and this was confirmed by Ms Singh, stating that their marketing budget is minuscule relative to their main competitors.  Mrs Westby-Nunn was critical of the official arrival statistics, stating that the 8 million figure should be closer to 1 million. The tourism players interviewed said that the impact of the decline in tourism is its effect on job creation, the target of 250000 having been set, and would not be achievable.  Both Bennet and Protea Hotels CEO Arthus Gillis called for more flexibility in the airlines, allowing charter flights, and making SAA the tourism loss leader, to bring as many tourists to the country as possible.  Gillis says his business is predominantly focusing on domestic tourists, being their ‘saviour’.

We received the following response to our latest WhaleTales newsletter from Herbert Henrich, a fellow guest house owner in Franschhoek, and he hits the nail on the head in confirming the poor state of the guest house industry: “Thank you for your most comprehensive ‘Tales’ and the detailed information contained therein. For one, like me, sitting on the hospitality industry outer parameters, your reports provide much insight in what would remain obscure otherwise. Our business suffers. The reasons are probably a) global recession and b) lack of exciting promotion of South Africa as a special tourist destination. The most remote parts of the world are being offered to potential  tourists on TV almost daily. Very little – if anything – from the RSA. But promotion alone will not re-instate what once was a flourishing industry. There will still be the economic millstone around the consumers’ neck. Hence, business will shrink and establishments will close down, bringing about further lack of income and loss of jobs. Our operational cost go up, however, irrespective of the business slowing down. Municipal rates, levies, electricity, taxes – you name it, will be collected whether there is income or not. I would suggest that it is time that the government will consider easing up on us somewhat. Why do we still have to pay inflated rates for business premises which bring no business? Is it not time the government supports those who do not close down in order not to increase the number of job-less ? Those who actually subsidize the government rather than the other way around ? I think the hospitality industry, which has no alternative replacement business option , should make a united appeal to provincial and national government departments to reduce their every increasing fiscal demands and allow some time to regroup and allow the business to come back to some sort of reasonable level”.

We once again call on Cape Town Tourism and Cape Town Routes Unlimited to involve our industry in utilizing our information as a predictor of tourism activity for the season ahead, and to focus on the domestic market, in getting them to Cape Town.  Our tourists are not on Twitter and Facebook, in our experience, and need good old-fashioned advertising and articles in newspapers and magazines to attract them to our beautiful Cape.

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

Cape Town Routes Unlimited does not spend enough on Marketing

A heavyweight delegation from the Western Cape Department of Finance, Economic Development and Tourism, members of the Board of Cape Town Routes Unlimited, and ‘stakeholders’ of the organisation attended a presentation at the Table Bay Hotel last week, to receive feedback about Cape Town Routes Unlimited’s performance in the past twelve months, and its way forward.  Attendees also received a copy of the 2009/2010 Annual Report, a detailed document of the activities of the body which states that its “core business is marketing communications”.  It is a shame that so little of the organisation’s budget is spent on beneficial marketing on behalf of the tourism industry in the Western Cape.

The problem with handing out the Annual Report is that it reveals information which is not always to the benefit of the organisation, even though its “honesty” is commendable and meets accounting procedures.  A greater part (52%) of the R 38,5 million annual budget which Cape Town Routes Unlimited received from the Western Cape province in the past year, supplemented by R 15 million from additional special project income generated, was spent on administrative expenses rather than on marketing, which is bad news for the tourism industry in the Western Cape, which has seen the worst year ever, with most provincial tourism businesses having been detrimentally affected by the World Cup, by the strong Rand, and therefore by a reduced number of bookings. 

The importance of Marketing to the organisation is highlighted by the fact that the CEO, Calvyn Gilfellan, is also the Chief Marketing Officer.   He has three Marketing Executives reporting to him:

David Frandsen: Executive Manager – International Marketing: Europe and the Americas and the Convention Bureau 

Itumeleng Pooe: Executive Manager – International and Domestic Marketing: Africa, Asia, and the Middle East

Romeo Adams: Executive Manager – Marketing and Organisational Support 

In the Annual Report, each of these executives feeds back what their performance has been relative to targets set at the beginning of the financial year.   It is a shame to see how much of their time and action was directed at meeting administrative requirements in the preparation of the Annual Report as well as the financial reporting.   Many of the targets they set themselves seemed rather low, so that it looks good on paper when many are exceeded.   I was shocked to see the declaration of salaries of the Executive Management, and how some of these have increased in the past twelve months.   Gilfellan’s annual income is listed in the financial statements at just under R1 million (up by 6,6 % on the year before).  The Marketing Executives earned between R692000 – R839000 in the past year (close to R58000 – R70000 per month), salaries which seem way above the norm, especially when the industry cannot see much benefit of the work done by Cape Town Routes Unlimited!  Even the directors are paid emoluments, some as high as R26000.

In summary, Cape Town Routes Unlimited lists as its tourism marketing achievements in the past year the following: R20 billion of tourism business generated through international trade shows; organising the ’67 minutes for Nelson Mandela’ birthday celebration; close to 400 media mentions valued at R162 million, reaching 107 million persons – these are very bold claims!; Summer Welcome campaign; regional tourism road shows; organising Tourism Month; hosting VIP delegations; a green tourism initiative; SMME Marketing Support programme; receiving bookings at its Visitor Information Centers (set up in the Waterfront in opposition to Cape Town Tourism) to the value  of R2,4 million; a Google Adword campaign; a campaign with CNN; and an e-mail campaign in the Benelux countries.   Conventions are lucrative for tourism business in the Western Cape, and for Cape Town in particular, nine conferences having been secured for the next three years, to be attended by 5650 delegates, with R55 million in economic impact.

The recent upheaval caused by provincial Minister Alan Winde’s announcement that he wants to amalgamate Cape Town Tourism and Cape Town Routes Unlimited was not addressed by the Minister when he spoke at the meeting.   Cape Town Routes Unlimited Chairman Peter Bacon was critical of the separation between the two tourism bodies in his ‘Chairperson’s Review’: “… following the City of Cape Town’s withdrawal of its financial support and decision to mandate Cape Town Tourism to market the City and provide visitor support services on the ground. This effectively gave rise to the creation of a second Destination Marketing Organisation with the resultant confusion, duplication of effort and wasteful expenditure.”   Bacon does praise the closer co-operation between the Western Cape province, the City of Cape Town (which steadfastly is supporting Cape Town Tourism for the marketing of the Mother City) and municipalities in the province.   Cape Town Tourism is not mentioned by Bacon in this context.  Bacon states that the province is working on:

*  a clear vision for the development of the tourism industry

*  a single strategy with clearly defined roles, responsibilities and deliverables.

*   business plans for Cape Town Routes Unlimited,  Cape Town Tourism and other regional tourist organisations aligned to the goals and strategy of the province,

and this will lead to a Memorandum of Agreement to be signed between the Province and the City in the next twelve months, he writes.     

In his Chief Executive Officer’s Review, Gilfellan writes: “One of our organisation’s greatest achievements during this challenging year was that it established itself as a credible and authoritative voice in tourism”, on the basis of media comments requested from the organisation.   Many will question his claim.  He states that industry challenges are the following:

*   “overcoming the effects of the worse (sic) economic crisis to hit the the industry in 60 years

*   The slow pace of transformation and diversification of the industry

*   Stunted growth in our traditional core markets of the UK, Germany, Netherlands and France

*   Limited marketing resources compromising our global competitiveness, and

*   Institutional disarray leading to the current role confusion, duplication and possible fruitless expenditure.”

Gilfellan also looks to the future in his review, and calls for “a speedy resolution to the protracted institutional calamity”, referring to the problem between his organisation and Cape Town Tourism; Events, Sports and Business Tourism will capitalise on the World Cup; new target markets like Brazil, India, China, Russia, the Middle East and Africa must be targeted; a tourism community in which business, labour, government and the communities unify around a common vision and partnership;  embracing technological advances in marketing; promoting the principle of a ‘quadruple bottom line’, encouraging the tourism industry to pay attention to social responsibility, environmental sensitivity, economic imperative, and climate change.

In providing such detail to the industry, one can request Cape Town Routes Unlimited to connect with its stakeholders more frequently than once a year at a function; to allow stakeholders to ask questions so that a dialogue can be created at such functions; to inform stakeholders about achievements as frequently as possible, so that they can help spread the word about the work of the organisation (Cape Town Tourism is excellent at this);  to address the imbalance in “employment equity” by gender, occupation and population group; to improve its market research techniques, a weakness it shares with Cape Town Tourism; to contain any duplication in its marketing activities relating to Cape Town that is already managed by Cape Town Tourism; to address the non-sensical brand “Cape Town & Western Cape”;  and to speak to tourism leaders about how it can more effectively direct its marketing budget to the benefit of the industry, being Events, Events and more Events in the seasonal winter months. 

I am very impressed with Minister Winde, and how approachable he is – he has no airs and graces, picks up a phone to make a call to a tourism player with an opinion, is embracing social media with a Twitter account (@AlanWinde), and reads and comments on blogs related to tourism.  As an outcome to the presentation, hearing stakeholders reinforce how poor business is, he promised to set up a meeting to address the poor bookings issue, especially given the feedback from World Travel Market held in London last week that our country has priced itself out of the market.

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