Thursday 21st July 2011 - Posted by Chris von Ulmenstein
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