Despite a warning e-mail sent to members of Cape Town Tourism the day before its AGM held at the Cape Town International Convention Centre last night, it appears that the news that the City of Cape Town has established a new Directorate of Tourism, Events and Marketing, and will be taking over ‘Destination Marketing’ from Cape Town Tourism, accompanied by a Budget cut, was confusing to most attending the AGM.  The new City of Cape Town T (Tourism) E (Events) A (Arts and Culture) M (Marketing) directorate, under the management of Executive Director Anton Groenewald, will take over the marketing of Cape Town, and therefore reduces the Budget of Cape Town Tourism, which will now focus on Visitor Information Services and ‘Tourism Marketing’!

This was not the only shock of the evening, which was preceded by the election of three new Board members, which according to the Cape Town Tourism constitution all had to be ‘Black’ (defined as Black African, Coloured and Indian) it was explained by the election auditor Achmat Toefy.  Nine nominations had been received for the three Board seats, and whilst the female quota of two has already been met by the incumbent Directors, there were no existing ‘Black’ Directors, and therefore members had to vote for 3 out of the 6 ‘Black’ nominees, despite excellent candidates such as ‘white’ Guy Lundy, now at Future Insight Consulting.  One wonders how many members refused to vote, or spoilt their ballot!  Ian Bartes, the diplomatic Chairman of Cape Town Tourism, has not made himself available for another term, probably realising how tough the year ahead will be, in negotiating a role for Cape Town Tourism and sufficient Budget to continue its work.  The interesting question is who of the ‘German Troika’ will be elected as the new Chairman: Sabine Lehmann, CEO of the Table Mountain Aerial Cableway Company has been the Deputy Chairman, and could be a tough Chairman for the City to negotiate with, although she may need to stay on the right side of the City for her business.  Nils Heckscher, GM of the Winchester Mansions, and ex-Chairman of FEDHASA, is a known Yes-man, and would be an ideal push-over for the City.  Susanne Faussner-Ringer, owner of Greenways, would be a very tough negotiator too but is disliked.  Existing Board members Pierre du Plessis, a ‘Friend’ of Cape Town Tourism and not from the tourism industry, and Sarah Struys of Kirstenbosch, as well as the three newly elected Board members marketing consultant Craig Kensley, Enver Mally of African Eagle Daytours, and Jonathan Jacobs of Tourism Enterprise Partnership would be less likely to be elected Chairman.

Then there was the oddity of a number of changes to be made to the Constitution, no copies of the resolutions being sent to members prior to the AGM.  Slide after slide of the resolutions, not readable to most the audience in the 1000 seater hall, were rushed through by Toefy.  He seemed to indicate that the resolutions only related to some typing errors in the Constitution, the re-appointment of the auditors, and the 14% increase in the Directors’ emolument from R350 to R400 (period not specified), all contained in one resolution, and not separated.  No one voted against the adoption of the resolution, most not knowing what was going on.

In his Chairman’s address, Ian Bartes spelt out the impact of the City’s decision on Cape Town Tourism, reminding the audience of the member resolution in 2008, giving Cape Town Tourism the mandate to add Destination Marketing to its portfolio, responsible for the full tourism destination management and marketing service, due to the City’s unhappiness with the marketing role of the then Cape Town Routes Unlimited, the City placing its 50% contribution into Cape Town Tourism, at around R40 million.  Anton Groenewald was appointed to head up the directorate of Mayoral Committee Member for Tourism, Events, and Marketing Grant Pascoe late last year.  He informed Cape Town Tourism in August that its role would change, and its Budget would reduce, the figures only supplied last month, a decrease in the budget to R 36 million, from R42 million the year before.  The Budget reduction means a loss of R2,1 million, due to commitments which had already been made with suppliers.  To prevent a qualified audit and any instability in the operation of Cape Town Tourism, Chairman Bartes had been mandated to sign the City’s Service Level Agreement ‘in good faith’ , he said (we read this as meaning ‘under duress’).  When asked, Bartes did not deny that the implication could be job losses at Cape Town Tourism.  He also ominously wished the new Board ‘good luck’ for the new journey with the City of Cape Town!  He did not present Financials, a fundamental part of an AGM!  A sign of the tough times was the very thin ‘goody bag’, only containing the list of Board nominees, and a packet of Europcar mints!

The CEO speech by Mariette du Toit-Helmbold was a short and sweet presentation without many gimmicks, only a few slides representing their broad categories of work, very understated compared to the normal glitz and glamour, and mainly focusing on their new ‘MyCapeTownHoliday.com’ Facebook competition.  She spoke in her usual ‘Digital Nomad’ speak, using the same concepts of previous talks, praising her organisation’s Facebook fan statistics and R45 million media coverage value, trying very hard to sound confident and unaffected by the City’s devastating news to her organisation.  She praised her staff, but did not call them up to the stage as she did in the past, only acknowledging the soon-to-depart Cathy Alberts, who has been at Cape Town Tourism for years and is leaving to head up St Helena Tourism (her role will be taken over by controversial Communications Manager Skye Grove, a first sign of money-saving).  She said that they have an ‘innovative marketing strategy, but uncertainty about the funding’.  The National Geographic campaign will be funded from their own income, she said. She could not talk about any future plans for the year ahead, which the AGM has been a platform for in the past, because she and her team have no idea where the City will be taking them. She did confidently state that Cape Town Tourism is ‘the best agency to deliver Tourism Marketing and Visitor Services’.

Mrs Helmbold was followed by Mr Groenewald, and he explained his new TEAM concept, having taken a top executive (Rory Viljoen) with international marketing experience at Distell and Coca Cola on board to market Cape Town. They will retain the focus on ‘established markets’ USA, the ‘European Union’, Scandinavia, the UK, and some African countries. Almost a third of their spend will be on new markets, mainly BRICS countries.  There will be an increased focus on Arts & Culture, with a Cape Town Carnival planned for 16 March, and to be held on the Fan Mile.  There will be greater co-operation with the private sector to gain greater revenue out of the City’s assets (the Cape Town Stadium, City Hall, and Grand Parade).  His justification of the Turkey trip did not really go down, calling Istanbul the ‘gateway to an untapped market of 40 million’, and making it sound as if their trip had led to an increased number of Turkish Airlines direct flights per week between Istanbul and Cape Town. Sport brand collaboration will increase, as per Manchester United’s visit, and information about the economic impact thereof will be released soon, and the soccer team is set to return.  The City wants to make money out of such events. An Arts Festival is to be established.  We have heard it so often, but it was said again: more events will be focused in the May – October period.  Talks are underway with Western Province Rugby about Newlands Stadium/Cape Town Stadium.  Revenue sharing in the acts coming to Cape Town (Lady Gaga, Red Hot Chili Peppers, Linkin Park), and sports events like Kaizer Chiefs, the J&B Met, Argus Pick ‘n Pay Cycle Tour, ABSA Cape Epic, and more will be the focus in using the Cape Town Stadium and in generating income for the City.  The naming rights for the Cape Town Stadium cost R20 – R40 million.  ‘Pouring rights’ per event will cost R1 – R1,5 million.  Advertising space will be sold to generate income.

When asked what the difference between Destination and Tourism marketing is, Mr Groenewald did not really clarify, only saying that Cape Town Tourism would still represent Cape Town at tourism exhibitions such as ITB and WTM, and that his organisation would be negotiating with soccer teams!  The McGrath Collection GM Tony Romer-Lee quite rightly asked why this decision had been made mid-year.  Mr Groenewald said that the City had given Cape Town Tourism the marketing role four years ago, due to the poor execution by Cape Town Routes Unlimited.  As Wesgro has taken over this duty now at a provincial level, the City has decided to take back the marketing role, in using its assets to promote Cape Town. Whereas the City and Cape Town had one year Service Level Agreements renewed annually, the City plans to make it a three year one ahead, allowing both parties ‘to work collaboratively’.

The new heads of the City of Cape Town TEAM directorate are Rory Viljoen (Marketing), Events (Teral Cullen), Zaid Minty (Arts and Culture), Lesley de Reuck (Cape Town Stadium), and Freddie Prins (Strategic Assets), while the Research and Strategy position is still vacant.

The City’s shock moves were not discussed, as promised by Mrs Helmbold in the e-mail she sent to her members the day before the AGM, even though ten questions were allowed:

“We look forward to seeing many of Cape Town Tourism’s members and stakeholders at Thursday’s Annual General Meeting. We felt it would be expedient to send out an important communication prior to the event so that you are fully informed on the status of Cape Town Tourism’s mandate and funding from the City of Cape Town. At the end of 2011, the City of Cape Town established a new directorate called Tourism, Events and Marketing. The Directorate consists of the following Departments: Tourism, Place Marketing, Events, Arts and Culture and Strategic Assets. A delay in the implementation of the City of Cape Town’s new directorate and budget finalisation subsequently resulted in a delay in the confirmation of Cape Town Tourism’s funding and mandate for 2012/2013. The Board was informed at the end of May 2012 that the new directorate would have an impact on Cape Town Tourism’s mandate, in particular its destination marketing mandate, which would be limited to tourism marketing. Subsequent to this notification, the Board of Cape Town Tourism has been in discussion with the City to clarify the impact on the organisation’s budget and programmes delivered. In the meantime, the organisation, as agreed with the City, continued delivery of visitor and tourism marketing programmes as outlined in its original 2012/2013 business plan and budget in good faith. Confirmation of the City’s grant funding allocation for the year was finally received in mid-September 2012 (Cape Town Tourism’s financial year is aligned with the City’s, i.e. July -June), which were reduced from the budgeted grant funding of R42 million to R36 million. In effect, this means a reduced operating budget from R48million to R39million for 2012/2013. A new Service Level Agreement was received from the City of Cape Town on 12 October 2012. It specified that Cape Town Tourism would now be responsible for tourism marketing in conjunction with the City and no longer destination marketing – a role that will now be managed internally by the City of Cape Town as part of its Place Marketing directorate. Due to the delay in confirmation of the City’s grant funding for the year, revising operating budgets and concluding a new SLA, Cape Town Tourism will be unable to deliver on its full marketing plan and is at risk of a qualified audit due to its going concern status. Due to the budget and mandate changes some of our future plans will also be affected. The City will address the industry on its new structure, proposed place marketing activities and future partnership with Cape Town Tourism at the AGM. Cape Town Tourism is committed to a continued positive partnership with the City of Cape Town and the Board is working with the City leadership to resolve the impact of these changes on the organisation and the tourism industry in the short term whilst negotiating a new long term agreement between the City and Cape Town Tourism. We wish to remind you that all guests are required to register for the AGM to ensure an enjoyable experience for all attendees. If you are unsure of the status of your registration for the AGM, this can be confirmed via e-mail to agm@capetown.travel. The AGM will be an opportunity for Cape Town Tourism to share successes of the past year, unpack the revised budget, discuss the implications thereof and share the best strategy to mitigate the risks associated with the reduction in funding. Please send through any questions or comments that you might have on the matter to elana@capetown.travel in order for us to address it.”

Poor marketing of Cape Town by Cape Town Tourism, which we have criticised over the past two years, will soon be something of the past, the City clearly agreeing that it has not been good enough, and that Tweeting and ‘100 Women 100 Wines’ competitions alone will not bring tourists to Cape Town.  We have experienced Anton Groenewald in a ‘previous life’, as a Board member of the previous section 21 Cape Town Tourism, which was bled dry financially at the end of 2003, when we as a Board resisted the call to amalgamate into a united Cape Town Tourism consisting of all Visitor Information Centres in the Cape Town metropole, thus forced to do what the City demanded.  This may be the case again if Cape Town Tourism were to resist.

The tourism industry should be concerned about this turn of events.  For seven months we have been waiting to see action from Wesgro, the new provincial Tourism marketing body, without a Tourism head and not having done anything for tourism other than a provincial stand at Indaba in May!  Of greater concern is that it was stated that it will take the next six months for the City and Cape Town Tourism to thrash out the detail of who does what in terms of their new split roles of Destination Marketing and Tourism Marketing, respectively.  Surprising was how poor the understanding was amongst Cape Town Tourism members at the AGM, those that I spoke to referring to Wesgro as the new body doing the marketing for Cape Town.  Mr Groenewald did not appear to be impressed with his provincial colleagues’ performance to date either!

Speaking to Mr Groenewald after the AGM, one senses an energy and a determination, and a charming and welcome honesty in acknowledging that there is a lot to fix at Cape Town Tourism.   He welcomes critical feedback from the industry, because that helps to reinforce his observations (he supported our criticism of the Blogger Tweet-Up impression count, proudly PR-ed by Cape Town Tourism).  He wants to move Cape Town Tourism back into its predominant role of Visitor Information Services, and specifically to make money for itself from commissions on bookings, seeing a role for the organisation of being the official accommodation supplier for all major events in Cape Town, and even to official City of Cape Town accommodation requirements, but then at a reduced commission. He blatantly shared: ‘The more they make (from accommodation booking commissions), the more we can take from them’!

The months ahead will be most interesting as we observe this development, and we will report back what we see and know.  There will be follow-up blogposts about the AGM, as we are awaiting further information, and we will meet with Mr Groenewald, and Rory Viljoen, the new Director of ‘Place Marketing’ in the new City of Cape Town TEAM, shortly.’

POSTSCRIPT 20/10: News24 has a similar take on the events at the AGM last night, its implication for the marketing of Cape Town, and in its interpretation of it being a vote of no confidence in Cape Town Tourism!

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