Tag Archives: rip-off

Restaurant Review: Cabo Beach Club schizophrenic mass dining, with second Violet Restaurant, better than Shimmy !

 

My friend Gary Peterson invited me to choose a restaurant at which to celebrate my December birthday. I was eager to try Cabo Beach Club, the former Shimmy, in the Waterfront, as I needed a sounding board as I was not expecting much in respect of its food offering, despite knowing that Chef Ryan Cole of Salsify at the Roundhouse is in charge of the restaurants at Cabo. I had a feeling that this restaurant visit might become similar to the one to the renovated The Winchester Hotel and its disappointing Shoreditch Restaurant, a previous outing with Gary.

Cabo Beach Club is similar to Shimmy in its layout, but different in many other respects. Continue reading →

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

World Cup accommodation pricing to be investigated

The Minister of Tourism, Marthinus van Schalkwyk, has announced that he has contracted Grant Thornton to conduct a survey of accommodation prices during the June/July World Cup period, and to benchmark these against the prices of accommodation in countries that previously hosted FIFA World Cups, reports www.iol.co.za.  The survey is to be conducted, despite the tourism industry body Tourism Business Council of South Africa and FIFA’s MATCH accommodation agency denying that World Cup prices are excessive.

The survey comes amidst international criticism that accommodation pricing is excessive and deemed to be “rip-off”.   Van Schalkwyk said that “the survey would help safeguard the reputation of the South African tourism industry, since South Africa is a ‘value-for-money destination’  Price-hiking could damage the reputation of our tourism industry”, he said.

Van Schalkwyk did make it clear that tourists could not expect to pay normal low-season rates during the World Cup : “……June and July 2010 will be high season in South Africa”.

The Grant Thornton survey will only be conducted amongst professional accommodation establishments, and will exclude private homes.

The Tourism Business Council of South Africa (TBCSA), which claims to be ‘the official umbrella body for organised business in the South African travel and tourism industry’, and MATCH, FIFA’s accommodation agency, have made a joint statement that the industry pricing is not rip-off nor excessive, reports S A Tourism Update.  The TBCSA chairman Mmatsatsi Marobe praised the tourism sector for not charging “exorbitant prices as they understood the long-term effect on tourism into South Africa, but it was the doing of a few small suppliers that put South Africa in a bad light”, she said.   The MATCH Chairman, Jaime Byron, came with the following brilliant logic about pricing: “…the 2010 FIFA World Cup was expected to be more expensive than previous tournaments because it was a long-haul destination.  This makes South Africa inherently more expensive”, he is quoted as saying!   It was noted by them that the media should be careful about attacking the World Cup pricing, as it had to be accurate about what exactly was included in the prices quoted in such media reports (e.g. accommodation, tickets, transport).  

The TBCSA/MATCH statements are ironic, as MATCH has been blamed for excessive “rip-off pricing” since it started recruiting accommodation for the World Cup four years ago, demanding a 30 % commission from accommodation establishments initially, and now just adding this commission percentage on to the already high accommodation rates! 

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

2010 World Cup MATCH-fixing!

As a small operator, it has often felt like David versus Goliath when WhaleTales has criticised MATCH, FIFA’s accommodation agency, in its terms and conditions of wanting to do business with small accommodation establishments for the 2010 World Cup.

Whale Cottage has been vindicated for its brave public stand against the MATCH terms, which it first wrote about in a WhaleTales newsletter dated June 2007, soon after MATCH did its first presentation to the Cape Town hospitality industry at the Cape Sun.  

An in-depth article in the Sunday Times of 13 September says what Whale Cottage has been saying for the past two years – that MATCH is a rip-off as far as accommodation for visitors to South Africa is concerned in 2010, and that many other accommodation establishments are saying so too, and are not contracting with MATCH.

Initially MATCH set very stringent criteria for hotels, and for small accommodation establishments, the latter being an accommodation category not previously utilised by MATCH, but necessary due to the 55 000 beds required for the FIFA officials, the media, VIP visitors, and package purchasers.

The major complaints from small accommodation establishments related to the setting of the rate, initially dictated by MATCH as being the 2007 rate + 16 %, of which MATCH would take 30 % commission.   There was to be one uniform cancellation policy, despite the poor track record MATCH has in cancelling hotel rooms in Germany in 2006, without compensating the establishments.  MATCH dictated that 80 % of an establishment’s rooms were to be made available to MATCH.   Payment would only be received on the day of arrival of the guest, by means of a sealed cheque, which the accommodation establishment could only bank the following day.   No deposits were to be payable upfront.   Whale Cottage tried to reason with the MATCH authorities whilst it was a member of the FEDHASA Cape Board, but little attention was paid to the needs of and feedback from the small accommodation sector, given that FEDHASA is an hotel association looking after its large hotel member needs first and foremost.

Regular criticism of MATCH and its terms, and the company’s inability to sign up the required number of beds – it is still about 15 000 beds short of its target – led MATCH to relax its conditions, in that the cancellation policy has been relaxed somewhat, in that establishments may set their own “fair” accommodation rates, and that MATCH will take 30 % on top of this rate as its commission.   From the outset MATCH, and FIFA’s PR machine, has stated that 30 % is an average rate of commission paid by the accommodation industry, which is blatantly untrue, given that the norm is 10 %, and at most 20 % for operators with whom one has done business for a long time.

Accommodation establishments in Cape Town, especially along the Atlantic Seaboard, are receiving a steady flow of 2010 bookings, and therefore do not need MATCH to sell their rooms.   The accommodation rate norm is to use the summer rate for 2009/2010 and to add 10 % to set the 2010 World Cup rate.   These establishments are receiving the cashflow benefit of 50 % deposits at a time when the credit crunch is still making itself felt.

What is most interesting about the Sunday Times article is that it stated that one of the directors of MATCH Hospitality shareholder Infront Sports and Media is Philippe Blatter, nephew of FIFA President Sepp Blatter. MATCH Hospitality was contracted in 2007 to sell tickets and suites for FIFA matches, for the 2009 Confederations Cup and the 2010 World Cup in South Africa, and the 2014 World Cup in Brazil.  MATCH Hospitality is said to have paid $ 120 million for the rights to provide hospitality services at the FIFA events.

MATCH Event Services belongs to Byrom PLC, a British company, says the Sunday Times, selling 55 000 rooms, transportation and tickets as all-in-one packages, which will make it far more difficult for soccer fans to see how badly they are being ripped off.   In the Sunday Times article, for example, angry Kruger National Park regulars state that they cannot book the Kruger Park accommodation, as it has all been contracted to MATCH, at prices 400 % above the normal rates.

The Sunday Times article contains quotes from the CEO’s of Southern Sun, City Lodge and Protea Hotels, all praising and supporting MATCH, and downplaying the size of the MATCH commission.   Given that these are the largest hotel groups in the country, which will benefit greatly from its MATCH bookings, they cannot but sing the praises of MATCH. 

What has also been confirmed by the Sunday Times article, and is something Whale Cottage has been concerned about, is that the bulk of the commission which MATCH will be making, plus FIFA’s profits generated from the Word Cup, will leave South Africa.    On the accommodation side alone this could easily amount to R 330 million at a most conservative estimate.

Whale Cottage Portfolio: www.whalecottage.com