Tag Archives: UK economy

World Cup anniversary: focus on ‘CapeAbility’- infrastructure benefit, tourism loss!

Today the World Cup 2010 started a year ago.  While many may remember the wonderful 30-day period nostalgically, the hard reality of this largest world event is attracting criticism in its impact on the hospitality and tourism industry, which has reached its lowest low, something other mega-event cities have experienced before.  The event was commemorated yesterday with the launch of a new coffee table book ‘CapeAbility: Stories and Successes from the 2010 FIFA World Cup’.

The infrastructure benefits of the World Cup cannot be denied : Cape Town has a renewed station building, a world-class airport, and far improved access into and from the city on its N1 and N2 highways. It has a beautiful Cape Town Stadium, which has become a tourist icon for the city in itself.  It has a most wonderful Green Point Park, which was developed next to the Stadium, as well as a general upliftment of the Green Point and Mouille Point area.  It led to the roll-out of the recently completed and far improved public transport MyCiti service.  It added more international hotel brands to the city’s five-star hotel portfolio.  It created an Ubuntu amongst Capetonians and the city’s visitors, on its festive flag-decorated Fan Walks.  It positioned Cape Town, and South Africa with it, as a safer country than had been perceived before.

But the downside appears to outweigh the benefits a year down the line: there is no operator for the Cape Town Stadium since SAIL Stade de France reneged on its contract with the City of Cape Town.  Cape Town ratepayers will have to carry the cost of operating the Stadium, not making ends meet with the few events that have been hosted in the venue since July last year.   The tourism industry suffered poor pre- and post-event bookings last year, and  was led to believe that it would benefit from a tourism boom that would last for years to come.   The industry was conned by MATCH, the FIFA accommodation booking agency, with massive cancellations just days before the start of the Wold Cup.  Surprisingly, the industry is experiencing its worst ever year, and even more surprisingly, Cape Town Tourism told its members yesterday that it was to have been expected, given the Sydney experience – a 5-year slump after the 2000 Olympic Games, largely because the city tourism authorities assumed that no marketing was required after the widely publicised event.  Cape Town appears to have made the same mistake, an error which is compounded by the poor UK economy, the largest tourism source market for the city, the strong Rand, and high airfares.

Not unsurprisingly, tourism consultants Grant Thornton, who badly overestimated the World Cup tourism numbers, praised the R40 billion national capital expenditure on the World Cup, the consultancy’s Gillian Saunders saying it was money “well spent, with some areas still to be leveraged”, reports the Cape Times. She states that the infrastructure benefit had ‘significant legacy value leading to a better quality of life and provided long-term valuable assets’.  She admitted that the slow recovery from the global recession was responsible for the lack of the tourism boom which had been predicted.  Yet she said that “a large number of tourism businesses would not have survived the economic slump if it weren’t for the event”.  She reminded the industry that R3,6 billion revenue had been generated and that just more than 100000 tourists had visited the Western Cape, and just more than double this number visited Gauteng.

Cape Town Tourism has blamed SA Tourism for focusing too much on wildlife and the natural beauty of the country, and too little on its cities, in its marketing of the country.  The World Cup had created a greater city focus, but this has not been sustained by SA Tourism in its post-World Cup marketing, Cape Town Tourism says.  To strengthen brand Cape Town, Cape Town Tourism proposes that the “city’s urban identity, innovative outlook, entrepreneurial spirit, academic excellence and pioneering medical and science sectors must be added to the brand palette in order for it to effectively compete in the domestic and global market”, in addition to its leisure tourism positioning, it is reported in BizCommunity.com.

The Cape Argus yesterday ‘shouted’ in a headline:”Post-World Cup tourism boom ‘non-existent'”, stating that the benefits have been the international performers who held concerts in the Stadium, the city’s improved infrastructure, and the survival of a number of tourism businesses.  It quotes Cape Town Tourism as saying that Cape Town is in a ‘brand vacuum’.  The annual operating cost of the Stadium is quoted as being R57 million.  Two concerts have been booked, and a further two are in the pipeline, according to the city’s new head of Tourism, Grant Pascoe.   Talks with Western Province rugby continue, he said.   He added that the city is receiving more event applications than it did prior to the World Cup. Developing the Fan Walk into a 24/7 facility is also being considered.  The oversupply of hotel accommodation can be attributed to nine new hotels with 1500 rooms in total, which were built for the World Cup, says Dirk Elzinga, Chairman of FEDHASA Cape.  He naively states that many hotels have already received repeat World Cup business, and that the ‘extremely low occupancies’ of some hotels ‘was normal for the off-season’!

Launched by Premier Helen Zille and Mayor Patricia de Lille, the ‘CapeAbility’ book documents the ‘planning, delivery and effect’ of the World Cup on the Western Cape, says BizCommunity.com.   The book “makes every effort to extract honest lessons to understand the hosting of such mega-events better.  It is designed therefore not as a memento of the event, but a review of what worked, what didn’t and what could be done better and become a guide to hosting future events”.   “The book is meant to play a marketing role and points out that it is crucial that opportunities, such as the World Cup, are converted into more than just short-term profits for a small tourism and events sector, but into huge brand building opportunities for a country”. 

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

European weather puts a freeze on Cape accommodation industry

The Arctic freeze that has hit the United Kingdom and Europe in the last three days is placing a further damper on the already depressed accommodation industry in the Cape.   Passengers making their way to Cape Town for their summer holiday are struggling to get onto planes at Heathrow in particular but also in Frankfurt.  This could cost Cape Town R 10,5 million per day in lost revenue, estimates the City of Cape Town’s Mansoor Mohamed, Director for Economic, Social Development and Tourism, reports the Cape Argus.

As if the delayed or non-arriving guests is not a bad enough blow, this summer is seeing one of the poorest occupancy levels.  The Times reports that such Cape Town’s top 5-star hotels as the Mount Nelson Hotel, Cape Grace and Table Bay Hotel are seeing occupancy levels decreased by 10 – 20 %, according to Cape Town Routes Unlimited CEO Calvyn Gilfellan.   He attributes the reduced occupancy to the opening of twelve new hotels in the past one and a half years.  

Gilfellan is quoted as saying that big events are needed for the city, to fill hotel beds.   He also said that the positive effect of the World Cup was overshadowing the recent tragic event in a township.   He said that bookings were more last-minute, and that tourists were trading down, into camping sites and staying with relatives.    A price shake-up could be on the cards, Gilfellan added.

Bed & Breakfasts and Guest House have not been spared the poor booking scenario, which has been impacted upon by the strong Rand and the poor UK economy.   Cape Town has not been booked out for the festive season period.

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