Tag Archives: Tourism Business Index

Tourism Business Confidence continues downward slide!

The Tourism Business Council of South Africa FNB Tourism Business Index continues its downward trend, the reading for the second quarter showing a decline to 74,5, from 79 in the first quarter of 2011, and 89 in the last quarter of 2010, the first time that the Index was introduced, reports Business Report.  An Index of 100 is one of normality.

What is scary is that the tourism industry representatives interviewed in the first quarter of this year anticipated an increase in the Tourism Business Index for the second quarter of 94 – instead the Tourism Business Index fell by 20 points!   May and June were two extremely depressed tourism months, and a slight pick-up in accommodation bookings is being experienced at the moment, in part linked to the almost spring-like weather that the Cape experienced in the last two weeks.

The Tourism Business Council said that “Business in the travel and tourism sector continued to operate under heavy strain in the second quarter of 2011.  “When compared to the expected industry performance index of 94,1 for the second quarter, the industry performed significantly worse than expected …”.  The Council blames low international arrival numbers, low domestic leisure and business demand, the strong Rand, rising costs, changing travel patterns, high fuel prices, and the large number of public holidays “that failed to deliver the expected travel spend on domestic travel” as the major reasons for the poor confidence in the Tourism Industry. We wrote an Open Letter to national Minister of Tourism Marthinus van Schalkwyk last month, to share with him how poorly the tourism industry is doing, when he was communicating information that reflected the opposite! 

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.   Looking ahead, the Index ‘forecast’ for the third quarter of this year is 81.  However, accommodation establishments forecast the Index at only 74, meaning that they see no improvement in business between the second and third quarters.  The Southern African Tourism Update writes that it is hotel groups who hold the particularly negative view of business performance in the next quarter.

It is sad to see how out of touch the Tourism Business Council is in not recognising the negative impact of international and domestic airfares on tourism to the Cape.  After sending out our WhaleTales newsletter last week, we received numerous responses from our past guests about the high airfares to Cape Town, and these were cited as the reason why past guests will not return to our city.  We passed this information on to provincial Tourism Minister Alan Winde, Cape Town Tourism CEO Mariette Du Toit-Helmbold, and FEDHASA Cape Vice-Chairman Rey Franco, but have not received any acknowledgement of receipt or comment in terms of intended communication with airlines from any of these tourism body representatives!

At a joint meeting of Cape Town Tourism, FEDHASA Cape, SACCI and SATSA yesterday afternoon, to address the poor tourism industry performance in the Cape, it was astonishing to hear that the Cape Chamber of Commerce, which has indices for manufacturing, construction, agriculture, and mining in the Western Cape, has no measure of the performance of tourism in the Western Cape.  When asked about the provincial performance of Tourism, the national Tourism Business Index was referred to.  Given that Tourism is the largest business sector of the Western Cape, one would hope that the Cape Chamber of Commerce will address this information shortcoming urgently.   Cape Town Tourism’s presentation at the meeting was disappointing, as it was about ‘Brand Cape Town’ yet again, despite many industry stakeholders having seen it already.  Even more surprising is that Cape Town Tourism is sticking to its new positioning of ‘Inspirational’ for Cape Town, when this positioning is already owned by Edinburgh and Korea, even more surprising when Mrs Helmbold emphasised that differentiation is key in marketing, especially in tough times! 

POSTSCRIPT 21/7: A very frank letter is addressed to the tourism industry today, by Tony Romer-Lee, the GM of The Collection by Liz McGrath, on the Hotel & Restaurant online site.   He spells out how shockingly bad business is in the tourism industry.

POSTSCRIPT 21/7: The headline of the Cape Argus this afternoon shouts: “Cape Tourism: ‘We are bleeding’, quoting from our Open Letter to the national Minister of Tourism Marthinus van Schalkwyk.  The article also quotes Tony Romer-Lee’s article mentioned in the Postscript above, in asking why “…occupancies across the board are the worst they have ever been?  That thousands of waiters, room attendants, middle managers and hospitality graduates are unable to find work and losing their jobs?”  Why is that owners are closing their businesses and banks are calling in their debts.  Why is that speculators like Protea hotels are announcing that they are looking to buy hotels in distress?  Without doubt every single hotelier or restaurateur will tell you that they have never seen it so bad.  They will also tell you that the outlook for the next couple of years also looks bleak”.  Provincial Tourism Minister Alan Winde is quoted as saying: “Definitely there is a sombre mood out there – there’s no doubt we are really feeling the pinch in all tourism-related industries.  But then again, we’re feeling the pinch in all industries”. Winde suggests three ‘urgent remedies’: more aggressive marketing of the good value Cape to Gauteng – the Cape used to be second largest domestic market, but has dropped to 4th place; more aggressive marketing to core markets to counter Greece attracting business from the UK, USA, and Europe away from South Africa; more work on seeking the benefit of now being part of the BRICS alliance.   Naively FEDHASA Cape Chairman Dirk Elzinga clings to his belief that the problem experienced in the tourism industry is merely one of seasonality.  He says: “But, yes, occupancies in hotels are very low. Most hoteliers are saying they have not experienced such low occupancies for a very long time.  It is not happy times out there”.  Elzinga referred to the joint tourism association meeting which was held yesterday afternoon, and said that the industry expressed its criticism of the lack of co-ordination between Cape Town Tourism, Cape Town Routes Unlimited, and SA Tourism in marketing Cape Town ‘to the world’!

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

Tourism takes a massive knock at start of 2011

The results from the second measurement of the Tourism Business Council of South Africa’s/FNB’s new Tourism Business Index shows a dramatic fall in confidence amongst business leaders in the tourism and travel sector for the first three months of 2011, reports Business Day.

From a measurement of 89 % for the last quarter of 2010, the Index has dropped by a massive 10 percentage points to 79 %.  An Index of 100 % reflects normality, and any score above it would reflect a positive tourism scenario.  Particularly hard hit within the tourism industry is the Accommodation sector, the Index shows, reflecting not only oversupply but also poor demand. The Index is an indication of the current and likely future performance of businesses in the travel and tourism sector. 

The Tourism Business Index is a sad reflection of the state of affairs in tourism and hospitality, given the hosting of the world’s largest sporting event in our country less than a year ago, the World Cup having promised business for years to come.  The reality is that the world is still suffering the recession, and South Africa seems worse hit by it this year compared to any of the recession years since 2008.  The strong Rand and the ailing UK economy have been serious knocks to our tourism industry.

The current Easter weekend and extended holiday period due to a number of public holidays has been a welcome boost for the tourism industry, yet accommodation establishments have not been as fully booked as one would have expected for the 11-day stretch, demonstrating that times are tough for locals too.

The restaurant industry is showing early signs of hardship, ahead of the dreaded winter start next week, with restaurants closing down.  The latest restaurant to close is Hout Bay-based Wildwoods, owned by Pete Goffe-Wood, a chef who has operated for many years, and who has been an Eat Out  Top 10 Restaurant judge for a  number of years – he of all chefs should have been able to keep a restaurant going and make his restaurant a success.  So too Mezzaluna, Jardine, the Green Dolphin (which has been trading in the V&A Waterfront for more than 20 years), Blonde, Cheyne, and Liquorice and Lime on St George’s Mall have closed in the past few months.   In less than a year, about fifty restaurants have opened in Cape Town and the Winelands, and about 25 have closed their doors.  One of Cape Town’s oldest hotels, the Alphen Hotel, also recently closed its doors.  Restaurants are fighting back, and are offering specials, not just in winter, but many have done so throughout the past summer, the first time that the restaurant industry has done so.

With no special events lying ahead for winter in Cape Town, and only the Franschhoek events in May (Franschhoek Literary Festival), June (Cook Franschhoek), and July (Bastille), a long dreary winter is certain to lie ahead.  However, the report states that an Index score of 94 % is expected for the second quarter of 2011.   It is hoped that SA Tourism’s investment in a marketing campaign to encourage locals to travel in their own country will pay off, in stimulating domestic tourism, to improve matters not just for the tourism industry, but for the economy in general too, given the knock-on effect of tourism.  Tourism Minister Marthinus van Schalkwyk said recently that 79 % of all tourists travelling in the country are South Africans.

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

“Tourism still in doldrums”, say experts, and will be for rest of year

A newly launched TBCSA FNB Tourism Business Index shows conditions in tourism to still be depressed, and there is little confidence that trading conditions will improve for the rest of 2011, reports Business Day, with the headline “Tourism still in doldrums – new index”.

Initiated by the Tourism Business Council of South Africa, and sponsored by FNB, utilising the advisory services of tourism consultancy Grant Thornton, the Tourism Business Index was developed to “provide a clearer picture of the performance of the tourism industry for investors”.  “The index will keep the business community at large well informed on the current and likely future performance of the sector”, said Mmatsatsi Marobe, the CEO of the Tourism Business Council of South Africa.   Seventy tourism business leaders were polled in the last quarter of last year, in order to develop the index result.   

The first Tourism Business Index scored 89,4 %, and is expected to have a similar score for the second quarter of this year.  An index of 100 would signify ‘normal trading conditions’, signalling that the tourism ‘business environment is negative’, the report says.   The accommodation sector was particularly negative and depressed about future trading conditions.  The performance of the last quarter of 2010 was weaker than the two quarters preceding it, the Tourism Business Index showed, reports Southern African Tourism Update.

The Tourism Business Index is aimed at providing not only an update of business sentiment in the tourism industry, but also to position the tourism industry as an important sector of the economy, said Gillian Saunders of Grant Thornton, the consultant who vastly over-predicted the number of international visitors to South Africa during the World Cup.   FNB says its role is to help the tourism industry ‘become world class’.

From a research perspective, one hopes that the Tourism Business Index will expand its sample size, will include non-Tourism Business Council members, smaller accommodation establishments such as guest houses, and also will include more respondents from other tourism sub-sectors. 

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