Tag Archives: Tourism Business Council of South Africa

Tourism industry enjoys good 1st quarter 2013!

Both the Bureau of Economic Research and the Tourism Business Council of South Africa (TBCSA) FNB Tourism Business Index reflect that the first three months of this year showed an improvement in the confidence level for the South African tourism industry. While Cape restaurants would agree, the confidence may not have been shared by the Cape accommodation industry, who still cannot see a significant improvement in their occupancy levels, and dread the early arrival of the winter season.

The Bureau of Market Research released its results for the first quarter of this year last week, and showed a 7% growth in the volume of Accommodation business, with a very positive expectation of an 11% growth rate in the second quarter – this contrasted strongly with the 16% decline reported for the last quarter of 2012. Since 2009 the Bureau had measured declining volumes of Accommodation business, the first sign of a turn around being measured in the first and third quarters of 2012, but with declines in the second and fourth quarters of the same year, demonstrating how variable the growth is and how susceptible it is to global recessionary influences.  Business confidence in the Accommodation sector increased to 52 (an index measured out of 100) in the first quarter of this year, a significant increase from 38 the quarter before. In contrast, the real estate and business services industries showed minimal business confidence growth in the same period.

The TBCSA FNB Tourism Index was introduced in 2010, and is based on a study of tourism confidence conducted quarterly by Grant Thornton. The Index is measured and compared against a score of 100 reflecting ‘normality’.  For the third consecutive reading the Tourism Business Index has exceeded the score of 100, a positive step given that most of the scores since 2010 lay below the 100 mark.  The latest index measurement is 111, just below that measured at the time our country hosted the World Cup, the highest score ever achieved, before the scores slid.  Respondents are asked to quantify their expectations for the quarter ahead, and the actual first quarter confidence score far exceeded the anticipated score of 102,5.

Grant Thornton’s Gillian Saunders said that the survey results were split, with 30% reporting strong demand and another 30% reporting it as weak. ‘Playing in different geographic markets may impact this; for instance in 2012, Asian markets saw a huge growth in tourist arrivals and businesses targeting those markets have no doubt benefited’. One hopes that Mrs Saunders is not referring to the SA Tourism statistics for China, which appear to include transit passengers!  More likely could be a geographical difference, in that Gauteng and Durban may have been more positive in the past quarter due to the AFCON Cup of Nations which took place in Johannesburg and Durban in January – February, while Cape Town missed out as a host city for the soccer event due to the City of Cape Town’s mismanagement of the bid process, and therefore Cape Town’s tourism industry may not have been as confident as a result!  Durban has hosted a number of top conferences and events, including a meeting of the BRICS country presidents, and an Indian tour operator conference.  Saunders emphasised that there is still concern about the impact of the recessionary problems of Europe.  While tourism confidence may have improved, the TBCSA CEO Mmatšatši Ramawela stated that the petrol price, cost of sales, electricity prices, municipal tariffs, and labour issues negated the confidence levels of tourism players.

Grant Thornton, the company that got the estimate of the World Cup 2010 attendance so badly wrong, is to conduct a three year study of the Cape Town tourism industry, to measure the value of its tourism industry. A 2009 survey had put a value of R17,3 billion on our City’s tourism industry, a 6% increase on the 2008 value of R16,3 billion.  The study results will become a benchmark to measure the economic value of Cape Town’s tourism industry, said Mayoral Committee member for Tourism, Events and Marketing Grant Pascoe. The study will use national data (read highly criticised) SA Tourism statistics and tourism surveys to measure the spend by tourists whilst in the city. Tourism businesses will be interviewed, to establish their turnover and employment figures.  One can be sceptical about the co-operation that the researchers will receive from the hospitality industry in extracting turnover figures!   Councillor Pascoe said that collecting the tourism industry information could be used to assess the infrastructure requirements for Cape Town, and could be used to motivate infrastructure upgrades to benefit the tourism industry!  One wonders how many millions the Grant Thornton Cape Town tourism study will cost, and how reliable its results will be, given the sensitive information sought!

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

Tourism Business confidence index reaches normality for first time!

For the first time since its introduction in 2010, the Tourism Business Council of South Africa FNB Tourism Business Index has reached its highest score and exceeded 100, the norm level, for the second time, with a score of 104 measured for the last quarter of 2012, a significant improvement on the 89 score at its inception two years prior.  Tourism business confidence for 2013 is forecast to be similar to 2012.

The Tourism Business Index (TBI) was introduced in the last quarter of 2010, and its 89 score, against the norm of 100, confirmed what we all knew, namely that the tourism industry was in serious trouble just three months after the 2010 World Cup. The lowest TBI was measured in the second quarter of 2011, with a score of 75, the tourism industry at that time operating at only 75 %  of its potential!  The latest score of 104, marginally up from the 101 measured in the third quarter of 2012, hints at a small upward movement in tourism business confidence.  The increased index was reported to come from the increase in domestic tourism, rather than from international tourist bookings.

Tourism Business Council of South Africa Chairman Mavuse Msimang commented on the most recent index, stating that ‘the latest index results provided relief for a sector that has been through two very tough years….. and is a clear indication of the extent to which business is recovering from the recessionary impact and excess of supply it suffered post the 2010 Soccer World Cup’.  One would have thought that it was the low demand rather than accommodation oversupply that has been responsible for the poor tourism performance in the past two years!

The Tourism Business Index is a national measure of current and future performance of the tourism and travel industry, and sub-sectors within the sector.

One hopes that the forthcoming winter will not be as devastating as the last two have been.  It is too early to forecast the winter performance.  Cape Town and the Western Cape are still experiencing summer seasonality, with two good weeks and two average weeks per month since October.  Only February looks close to fully booked, while March looks very quiet to date!  A TBI at around 100 only indicates that the tourism industry is still far from the good times it last experienced in 2007!

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

Tourism performance: why is tourism industry being misled?

Increasingly the tourism industry is seeing information that informs it about its successful performance, but this information does not tie in with actual business experience.

Yesterday on Twitter Guy Lundy, CEO of Accelerate Cape Town and Board member of Cape Town Tourism, created a PR gaffe (accommodation establishments make up a substantial proportion of Cape Town tourism members) by writing disparagingly:  ‘So if the airport & Table Mountain had a record December, why are the hotels crying? Because people want bargains & they’re too expensive’. When challenged on his statement, Lundy quoted the record 813000 arrivals at Cape Town International in December, and its best ever year in 2011, and the record Table Mountain Aerial Cableway 142000 ticket sales from mid-December – mid-January, attributing this success as follows: Positive legacy of 2010 World Cup; increased profile & awareness’. Few tourism businesses would agree with Lundy about the tourism benefit of the 2010 World Cup.

The Tourism Business Council of South Africa also described its 4th quarter Tourism Business Index of 87 as a ‘marked improvement in business performance for the last quarter of 2011’, correct relative to last year’s 3rd quarter (70), 2nd quarter (74,5), and 1st quarter (79) Index measurements.  What the Tourism Business Council media release neglected to point out is that the 4th quarter Index of 2011 is below that of the 4th quarter of 2010, which was at at 89.  The improved performance was attributed to the COP17 Climate Change Conference and the better than expected festive season.

The Tourism Business Index is sponsored by FNB, and compiled by Grant Thornton, the tourism consultancy that got the 2010 World Cup tourism estimates so badly wrong. Pieter de Bruin, Head of Industry Sales at FNB, said that the results showed that there are ‘different cycles in business, such is the importance of South Africa being an events destination and having a healthy domestic tourism market. We trust that this may be the first sign of the industry making a turn into positive territory’. Tourism Business Council CEO Mmatšatši Marobe commented: “When we launched the TBI (Tourism Business Index) project in 2010, one of the key objectives was to develop a business tool which would produce relevant information that will assist us to map out a clear picture of general ‘health’ our (sic) industry.  At this point the index is showing positive signs of progress; however it also highlights the important role that the domestic and regional markets can play in boosting tourism trade”.  The Tourism Business Index is a national measure of current and future performance of the tourism and travel industry, and sub-sectors within the sector. A score of 100 is the norm, reflecting that the tourism industry is still operating below par.  The industry has predicted an Index of 82 for the first quarter of 2012.

Durban bragged about its excellent performance over the past two years, claiming to have ‘outperformed other major SA cities’, reports The Mercury, due to the COP 17 Conference, achieving near 100 % occupancy for about a month, and the excellent local visitor numbers over the December school holidays, with hotel occupancy of around 80%, according to the local FEDHASA branch.

FEDHASA Cape Chairman Dirk Elzinga would not admit to a tourism crisis last winter, blaming the poor hospitality performance on the Cape scapegoat of Seasonality.  Eventually he had to admit that it was the worst season ever. Elzinga has deplored the cancellation of direct flights to Cape Town by Malaysia Airlines and Etihad Airways, stating that Cape Town’s tourism fortune is reliant on ‘direct access’.

Once again we would like to encourage the tourism authorities to be honest and realistic in reporting tourism successes, and to be correct in defining the summer season being from October, which showed poor performance with November too, and runs until April. The Cape is currently experiencing a ten-day dip, and yesterday’s J&B Met was the poorest ever for the hospitality industry.  Very encouraging is the almost fully-booked February, due to the Mining Conference taking place in Cape Town, as well as Valentine’s Day, with a welcome increase in British tourists too.

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

Tourism Service Excellence standard an excellent initiative to enhance SA tourism competitiveness!

The national Department of Tourism has embarked on a welcome Tourism Service Excellence drive, and has released a draft document for comment from the industry until the end of February in developing a tourism service excellence standard and code, to enhance the tourist experience in South Africa.

The development of a ‘National Standard’ for Tourism Service Excellence by the South African Bureau of Standards (SABS) results from a 2008 National Tourism Skills Audit Report recommendation that customer care training in the tourism sector should be improved, when South Africa ranked 61st of 133 countries in The World Travel and Tourism Competitiveness Report of 2009, coupled with inconsistent service delivery in tourism, ranging from very poor to very good.  The reason for this was stated as being the lack of ‘integrated standards and norms that can be used as a guiding tool in terms of customer service’. To improve customer service, it was deemed necessary to develop a set of policies, guidelines and programmes, to ‘ensure a holistic approach and collective ownership’ for customer service, thereby improving service excellence throughout the tourism ‘value chain’.  Such a standard would be developed for all businesses which come into contact with tourists, including the Immigration officials (criticised in the past for their unfriendliness), transport services, accommodation establishments, financial institutions, shops, and any other businesses and authorities which deal with tourists when they make bookings for their trip, when they arrive, and interact with them during their stay.

‘South Africa should be seen as the country that offers the best service, diverse experience and value for money.  The overall purpose of this document is to emphasize the importance of the spirit of “Ubuntu” in ultimately achieving the vision of tourism growth and development in South Africa’, states the draft Service Standard document.

According to the Service Standard draft, tourism businesses would be required to support the principles of accessibility, accountability, accuracy, capacity building, commitment, consistency, continual improvement, courtesy, responsiveness, safety and security, value for money, and visible marketing in displaying the logo for the new Service Standard, in running their tourism businesses and operations.  It is not only written for South Africa, but incorporates neighbouring countries such as Botswana, Mozambique, and Zimbabwe, as if they are service extensions of our country’s tourism product.

The Service Standard document identifies government departments, as well as associations and groupings of tourism businesses which should adopt the service standard, and encourages its usage amongst its staff and members, including the Department of Home Affairs serving tourists on arrival and departure at airports; SA Tourism and the International Marketing Council in marketing the country; provincial tourism authorities; municipalities in providing visitor information services, signage, and infrastructure; telecommunication companies providing cellphone services; SARS for customs clearance; airports; the Banking Association; the Tourism Grading Council of South Africa, the industry quality assessment body, not mentioning FEDHASA, the industry hotel association, and the guest house association; the Banking Association; the Restaurant Association of South Africa (although not all restaurants belong to it); the Tourism Business Council of South Africa; and shopping centres.

Tourism businesses are expected to introduce a quality policy, to make service their focal point, to train new staff in service, to offer friendly and professional service, and to review their quality and services regularly.  In running their tourism businesses, they are encouraged to focus on the following:

*   Product: it should offer quality, choices and alternatives, ensure that there is enough staff to assist the tourists (this is the biggest challenge to the tourism industry, and would require a complete work ethic culture change amongst staff), offer value for money (a very relative term), universal accessibility for the disabled, ensure the safety and security of their clients, ensure guest information confidentiality, be environmentally friendly in its operation, and not discriminate against any types of clients.

*   Service: should be friendly, professional, guest focused and driven, and offer an effective service recovery.

*   Marketing: should have a consistent message, be accurate, be updated regularly to create realistic expectations for tourists, be truthful and honest, and not be offensive.

Although written in an academic form, the draft National Service Excellence standard is an excellent step forward for tourism service excellence.  One is surprised that it has taken the Department of Tourism so long to work on the standard, and that it was not prepared in time for the 2010 World Cup.  Most (commercial) tourism businesses would argue that they already apply the principles of service excellence in running their businesses, our country receiving praise for its friendliness and for walking the extra mile, and that it should be the government departments and bigger corporates who have a secondary tourism involvement that should be adopting the new service standard.  The document contains a Tourism Service Excellence code for companies to use as a framework to design their own service excellence codes.  As with most such documents, it has not been widely exposed to the tourism industry in terms of the input and feedback the SABS is seeking.

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