price sensitivity | WhaleTales Blog by Chris von Ulmenstein

Cape Town is bursting at the seams, and will get even fuller from today onwards, when international visitors fly into the city after their Christmas celebrations with their families. While the occupancy for the festive season (i.e. Christmas – 8 January) is improved, the overall occupancy for December is on a par with that of last December.

The Cape Argus front page story headline ‘Tourists pour into Cape’ was based on a 4% increase in domestic arrivals in November, relative to the year before, and is therefore sensationalist and incorrect. Expectations of the Table Mountain Aerial Cableway Company (100000 visitors estimated for December) and the V&A Waterfront (3 million visitors expected in December) are optimistic, but comparative 2010 figures are not provided . The newspaper, which also reported a 14% increase in international arrivals on 21 December, relative to the ‘last festive season’, appears to be confused about the definition of the ‘festive season’, seen by the industry as only starting with Christmas, and running until the day before the first working day in January (as early as 3 January, or 9 January for most).

The article also quoted Cape Town Tourism in saying that the arrival statistics were not reflected in the occupancy levels of accommodation establishments in the city, many arrivals staying with friends and family. Cape Town Tourism’s market research methods have been dubious in the past, and do not appear to reflect that many international visitors now own a house or apartment in the Cape. The tourism body spokesperson Skye Grove also blamed price sensitivity for hotels and guest houses not being fully booked, due the ‘current economic conditions’. One wonders how Cape Town Tourism drew this conclusion, without interviewing tourists. She also blames the unfilled beds on the 40 % increased room capacity in the past four years, in preparation for the 2010 World Cup, with a current total bed availability of 60 000 in greater Cape Town, she said. Ms Grove did not mention the feedback about Cape Town having become an expensive destination. She also said that tourists are “looking for added value and expect excellent service. They are, more than ever, prepared to shop around for the best deal when it comes to experiences, food, drinks and accommodation”.

The competing tourism body Cape Town Routes Unlimited provided a different statistic, its CEO Calvyn Gilfellan saying that 20 % more beds had been added in the past two years, and his body expected a ‘slight return to normality’, without a definition thereof. He warned the industry to not overcharge: “Competition is tough, people know they have to be realistic with their rates”. Alan Winde, Western Cape Minister of Tourism and Finance, echoed Gilfellan, in stating that there would be a slight improvement in visitor numbers, but he warned the tourism industry to ‘…don’t expect fireworks’. He added: “The market is tough and is going to become even more competitive, so we have to up our game. Quality and service will set us apart from the rest”.

Whale Cottage Camps Bay is likely to finish December with an occupancy of 70 %, slightly up on December 2010, but a huge drop from the 90+% occupancy of December 2007 – 2009. What is different is that the guest house is fully booked for the Christmas days, which is an improvement on the past years. However, the first two weeks of December were much quieter than in the past. A similar pattern is evident in Franschhoek, although the occupancy level for the month is below 20%, while occupancy in Hermanus is much reduced relative to last December. The Mount Nelson Hotel is not full at the moment, but will fill up later this week, one of the managers told me yesterday.

For Cape Town to be a world class city offering quality service, as per the call by Minister Winde, restaurants should be encouraged to open on Christmas Day, and particularly in the evening. Kloof Street is a restaurant street boasting 35 restaurants, of which only three were open yesterday evening, two of them being franchise restaurants, and Mason’s being filled with tourists staying in the Tamboerskloof and Gardens areas. The service at Mason’s was particularly slow, the owner apologetically saying that all his staff had called in sick, so patrons had to expect a 25 minute waiting time for food (my cappuccino took this long to make too). Poor spelling on their Christmas dinner menu does not give our city a professional image.

Newspaper headlines about the tourism season should wait until the festive season has ended, and should be based on reliable information, journalists having to be responsible in their information sources. Cape Town tourism bodies should be professional in conducting their market research! The increased tourism numbers, mainly domestic tourists, do not seem to be the result of any marketing efforts by Cape Town Tourism or by Cape Town Routes Unlimited. Cape Town Tourism launched its ‘You don’t need a holiday, you need Cape Town’ campaign to huge fanfare at the World Travel Market in London and at its AGM in the past two months, but the campaign seems to have run out of steam, and is not visible in any media.

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

I missed the Cape Town Tourism member presentation by Mary Tebje, Cape Town Tourism’s Trade and Press representative in London, in Cape Town in April, and was alerted to it by Commenters to our blogpost about Cape Town Tourism’s depressing forecast for the tourism industry for the next three years.

The reality is that the UK market, the largest source market for Cape Town, is severely depressed, and this is already making itself felt in extremely poor forward bookings from that country. The high unemployment, increased air passenger duty, fuel price increases, a VAT increase, and an unheard of inflation rate at 4,5 % have created ‘a pessimism not seen since the 1940’s’, Ms Tebje said. This has led to the ‘staycation’, with the British being forced to holiday at home.

The Cape Town Tourism summary of Ms Tebje’s talk is thin, but the bottom-line is that Ms Tebje recommended that tourist packages should be put together for the UK market, and should certainly include cultural experiences. Guests would want to book a number of activities in all-inclusive packages, so that they did not have to worry about extras to pay for whilst on holiday. This requires a collaborative approach between accommodation providers and tour guides. In a discussion at the meeting, the ‘township tour and gum-boot dancing routine’ were felt to not be a worthy representation of Cape Town’s culture.

Miss Tebje profiled the typical UK traveller as being the ‘over 50s market’, a booming one, which has money, and is largely interested in cultural experiences. Day trips are popular, and should include food and wine. “Teach them to braai”, she recommended, as the UK visitors love to bring home their newly acquired culinary skills, and to talk about their cuisine experiences. In 2010, 450000 tourists visited Cape Town from the UK, and a quarter of these came to visit friends and family. Yet Ms Tebje painted a contradictory picture of the UK visitor, saying that they spend three hours per day in the sun, and an hour and a half in the bar, according to a survey undertaken by TripAdvisor! “In fact, we are so busy boozing and bathing that Brits often neglect cultural pursuits, rating the worst in Europe for museum visits and other cultural activities”, she said. Ms Tebje said that the UK tourists are looking for more adventure from their holidays these days, and therefore they are now travelling to Borneo and Bolivia.

Ms Tebje said that Cape Town was competing with destinations such as Orlando and Spain too, and that the Cape Town accommodation prices were not inexpensive. Added to this was the feedback that Ms Tebje had received from tour operators selling the Cape in the UK, feeding back to her the negative effect of the strong Rand, the high cost of flights to our country, shorter booking lead times, poor perception of value for money, and price sensitivity.

The Cape tourism industry will have to look for tourists from Germany and particularly South Africa, to survive the poor coming summer season. It won’t include too many visitors from the UK!

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