Entries tagged with “airfares”.
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Wed 21 Sep 2011
When one reads a headline “Destination South Africa is doing well” in the Cape Times last week, one cannot help but wonder how two senior tourism personalities can attempt to tell tourism players specifically, as well as Capetonians in general, that all is well, when it is generally known that it is not, most tourism players having experienced the worst ever winter. The summer season ahead looks gloomy, with a substantial absence of UK tourists.
Calvyn Gilfellan is the CEO of Cape Town Routes Unlimited, whose organisation is going into a strong PR offensive, issuing media releases almost daily, a welcome change in that this tourism body, marketing both Cape Town and the Western Cape, is now telling the tourism industry what it is doing. Cape Town Routes Unlimited appears to have identified an opportunity to out-PR Cape Town Tourism, which now spends most of its communication energy on Twitter, and rarely issues media releases. Dr ‘Nicklaus’ (actually Nikolaus) Eberl is MD of Brandovation, a branding and marketing consultant who was particularly visible during the 2010 Soccer World Cup, in guiding South Africa’s branding during this world event, having been a consultant to the 2006 World Cup in Germany too. It is interesting that Gilfellan and Dr Eberl have got together to write a lengthy tome on how well we are doing in tourism, denying that there is a tourism crisis, but then justifying why there is a ‘current cyclical slump’!
The authors of the article deny that the Western Cape tourism is in ‘crisis’, but acknowledge that ‘our industry is currently under severe strain’! As we have written before, we ask what’s in a name. One cannot help but think that both Cape Town Tourism and Cape Town Routes Unlimited do not want to be held responsible for a tourism industry that appears to be suffering more than in any other part of South Africa. Interesting is that the authors do not mention how poorly the Garden Route is doing, for example, which saw the auction of three hotels in Mossel Bay last week, and a letter addressed to a local newspaper confirmed the desperate conditions in this region of the Western Cape. Having a guest house in Plettenberg Bay, which has been temporarily closed for business since January due to a lack of business, we can confirm how serious the tourism crisis is in this once-popular region of the Western Cape.
Correctly the authors state that due to global changes, tourism marketing and operations require change. But stating that the Japan earthquake, the northern Africa revolution, the terror in Norway, the London riots, and the ‘turbulence in our own society’ (not explained) influence tourism to our region is not understandable. The ‘enduring American and European debt crises’ must be the most important factor to blame, coupled with the high cost of airfares, airport taxes and the strong Rand. ‘Blaming games’ (what could they be referring to?) are ‘counter-productive’ , they write, yet the authors themselves try to justify why tourism in the Cape is doing so poorly, citing low occupancy, hotel closures, accommodation oversupply, increased operating costs, and travel being a luxury. Seasonality is blamed as well, and has been the prime complaint of tourism players over the years. Promises are made year after year by both Cape Town Tourism and Cape Town Routes Unlimited that this Cape-specific problem will be addressed with events and marketing campaigns during winter months. Instead of getting better, seasonality has become even more pronounced, and reached its peak, in our experience, during the past winter, meaning that tourism players have had to dip into their scarce savings generated in summer, to stay alive financially.
Quoting the Statistics South Africa first quarter 2011 tourism arrival increase of 7,5%, they write that ‘destination South Africa is doing well’! While the past summer season was not as good as experienced in previous years, the real impact of the tourism crisis only hit the industry in May. The industry rejects the arrival statistics anyway, in counting cross-border shopping visits from residents of our neighbouring countries. Added to this, our industry is ‘doing well’, they write, as seven new airlines are to fly to Cape Town, the BRICS countries offer big tourism potential (and percentage increases in arrivals are quoted, off low bases), the World Cup offered excellent exposure for the Western Cape (we would argue that it was for Cape Town at best), and interest in information about our region is good in Brazil and Argentina.
To help tourism businesses with ideas to ‘thrust us into the next decade’, the authors suggest the following:
* marketing techniques must change, to adapt to the changed world around us
* tourism development and promotion must be ‘responsible, environmentally conscious’
* the industry must ‘take full ownership’ of the establishment of the Western Cape Economic Development Agency, led by our provincial Tourism Minister Alan Winde, of which much has been talked about but little concrete information has been seen.
* ‘we need to be really clever, and creative, with our pricing strategies, adding extra value wherever possible’. There can be few tourism businesses which have not already slashed their rates, many to pre-2007 levels, for the forthcoming summer season.
* Social Media must be more widely adopted by the tourism industry (ironically Cape Town Routes Unlimited has not done so yet!).
The authors’ over-optimism about the future of our tourism industry is not convincing. They write:“Tourism has proven to be one of the most fickle, but also most resilient sectors of our economy and will overcome the current cyclical slump. We therefore remain optimistic that together we shall overcome this and future hurdles in our quest to create a better tomorrow for all our people”. Our response to this is as follows:
* Stop defending the existence of a ‘tourism crisis’, and use the time to get on with marketing Cape Town and the Western Cape. Business has NEVER been so poor!
* Stop duplicating marketing Cape Town by Cape Town Tourism and Cape Town Routes Unlimited. This is a costly overlap, and little joint marketing appears visible to the industry. Ironic is that Cape Town Tourism is working with SA Tourism, Gauteng Tourism and the Durban tourism authority, yet the two Cape Town-based tourism agencies are not appearing to co-operate!
* Continue informing our industry about what you are doing for us, but please do not patronise us with information that is different to what we experience at grass-roots level. Use us for information (accommodation bookings are a good indicator for the coming tourism season), so that your predictions can be more accurate and realistic. We can share with you, for example, that there is a minimal number of UK tourist bookings for the coming summer, a massive loss for our industry, and worthy of ‘crisis’ status in itself, having been our major source of business over the past years. We can also share that we are seeing a most welcome increase in bookings from Germany, a country still relatively buoyant in economic and travel terms, despite being increasingly under pressure to support the economy of Europe and the Euro. But the German tourism gain will not make up for the UK tourist loss.
* Lobby for more accurate arrival statistics
* Lobby SAA and ACSA for more reasonable airfares and airport taxes, respectively, especially as there are ACSA representatives on the Cape Town Routes Unlimited and Cape Town Tourism Boards.
* Cape Town is receiving marketing support from Cape Town Tourism. The rest of the Western Cape is suffering, and needs urgent marketing by Cape Town Routes Unlimited.
* Employment is not mentioned in the article at all. Surely the benefit of a booming tourism industry is to maintain, and ideally to grow, employment of our local population. Help us with directing young interns to our industry, and help us to educate staff about the important role that they play in tourism.
Chris von Ulmenstein, Whale Cottage Portfolio: www.whalecottage.com Twitter:@WhaleCottage
Wed 17 Aug 2011
Shakespeare asked what is in a name! He must have been referring to the heads of both Cape Town Tourism and Cape Town Routes Unlimited, in both bodies denying that the Cape tourism industry is in ‘crisis’, naively countering that it is only in a little bit in trouble, in facing a ‘tourism slump’!
Cape Town Routes Unlimited sent a ‘CEO Update’ e-mail to its stakeholders a week ago, and wrote that “some captains of industry are theorizing about the ‘crisis’ in the tourism industry”. The poorly written letter also stated that the ‘global economy is mulling over a new potential US debt induced recession’ (my underlining in both sentences)! It then questions (defensively) if the ‘alarmist inclinations’ are in fact accurate, yet lists a number of aspects about the current state of tourism in the Western Cape and South Africa that support exactly what the industry is saying: the tourism industry in the Cape is in crisis!:
* compared to 2008, the current winter performance ‘is perfectly normal’ - this is not supported by any occupancy statistics, and everyone in tourism says that it is the worst winter ever experienced
* there is 20 % more accommodation stock, causing lower occupancy
* the strong Rand makes it more expensive to come to Cape Town
* 70 % of international tourists coming to Cape Town are from ‘recessive economies’, explaining the decline
* Tourism is a ‘luxury item’, and ‘under recessionary economic conditions people tend not to travel’
* High airfares and airport taxes inhibit travel
* Bookings are last-minute, and stays are shorter
* the cost of running tourism businesses has increased, especially in respect of electricity, labour, food, and municipal costs.
* International tourist arrivals are at their highest in 10 years - this is a beauty, and everyone in tourism would disagree!
* SA Tourism statistics for the first three months of this year show growth, but with tourism ‘buy-down’, which is not explained
* ‘Domestic travel, which is very much dependent on the state of the local economy is on the decline; but fortunately we can and are doing something about it’.
Cape Town Routes Unlimited CEO Calvyn Gilfellan summarises patronisingly that all of the factors are ‘partially the product of international economic forces and a correction of supply and demand structure of our tourism industry. I remain optimistic that the tourism industry will begin to show an upward trend closer to the end of the year’! I do not think that any tourism player will take comfort in Gilfellan’s prediction, which is not explained nor justified, and contradicts that of our national Minister of Tourism, Marthinus van Schalkwyk, who said that things will get worse by the end of this year! Once again, the stakeholders are spoken to patronisingly, advising them to price our products ‘responsibly and competitively’, package experiences ‘in a creative and appealing way’, to add value to our tourists’ experiences, and ‘leverage existing partnerships’ (unexplained)! He supports some of what he writes by the greater presence of special offer advertising in print and on-line; and that the industry is marketing to the local market, as well as to Europe, the USA, the Middle East, Africa and Asia. The key sentence, that contradicts everything else he writes is: “Everybody is doing their bit to counter the effects of the slump”. OK, so we have a ‘tourism slump’, and not a ‘tourism crisis’!
Reporting on the recent stakeholder Cape Town Routes Unlimited breakfast held at Sante Hotel, Southern African Tourism Update said that Gilfellan denied that the tourism industry in the Western Cape is in a ‘post-World Cup crisis. ‘It is serious but we should not be alarmist and call it a crisis’ he told the stakeholders. ‘There are people who are doing well and there are people who are struggling’, he added naively. He was reacting to COSATU Western Cape General Secretary and City of Cape Town Councillor Tony Ehrenreich’s recent criticism that the tourism industry is in crisis, as tourists are being overcharged. What is interesting in the report is that Gilfellan told the stakeholders that a slump was to have been expected after the World Cup, but the tourism industry was not told this, and new hotel operators were not warned about the ’slump’ potential, given the experience of other cities hosting big events, such as ‘South Korea and Germany’. Gilfellan clearly was just grasping at straws, as Germany never suffered a post-World Cup slump! He also told the stakeholders that the government could not interfere in the ‘market-led correction of market forces’. Not mentioned in his stakeholder letter, but emphasised at the breakfast, was that twelve airlines are flying to South Africa this summer and he asked the audience:”Why would they invest if we were doing so badly? They know the situation will correct itself”!
Gilfellan focused the rest of his stakeholder letter on the newly planned Western Cape domestic campaign ‘esCape to the Cape whatever the weather’. We say it is too little, too late. We are in our last winter month. The campaign does not appear to have been launched yet, as the letter says its next edition will provide a ‘complete update on the campaign’. A number of the problems identified by Gilfellan should be addressed by a tourism body such as Cape Town Routes Unlimited: airport taxes (the Airports Company’s Cape Town International head sits on the Cape Town Routes Unlimited Board!), airfares, special deals for tourism players re municipal costs, and more accurate and realistic tourism arrival information!
Cape Town Tourism CEO Mariette du Toit-Helmbold countered the recent Cape Argus front-page article about the Cape Tourism crisis, by denying that things were as bad as depicted, also playing with semantics. Interestingly, the Southern African Tourism Update article headline reporting on the new ’strategic plan’ for Cape Town, ‘Cape Town Tourism meets slump head-on with new tourism drive’, uses the same ’slump’ word as does Cape Town Routes Unlimited, and says that its proposed ”brand positioning and destination marketing campaign…(will) counter the current slump that has already seen 118 tourism businesses in the Cape to close shop in the past two years and 18000 jobs lost due to lack of growth in the industry since 2007″ ! At the Cape Town Tourism ’strategic plan’ presentation last week, its Australian strategy consultant Ian Macfarlane told Cape Town Tourism members that there is no correlation between the exchange rate and travel!
It is embarrassing to see Cape Town Tourism and Cape Town Routes Unlimited being so out of their depth that they are just throwing clichés and patronising platitudes at the industry, in an attempt to defend themselves against criticism that they should have predicted the ‘tourism crisis’, and done something proactive about it. It appears far too little too late right now! Cape Town Routes Unlimited continues to be seen as playing a meaningless role in the local tourism industry by most, and its most recent stakeholder letter confirms this perception! The defensive drivel by both Cape tourism bodies once again emphasis how divided they are, seemingly duplicating marketing actions, and what a waste it is to have two bodies marketing Cape Town!
Chris von Ulmenstein, Whale Cottage Portfolio: www.whalecottage.com Twitter:@WhaleCottage
Mon 15 Aug 2011
Last week Cape Town Tourism hosted a series of four workshops on “A Strategic Plan for Cape Town Tourism and Destination Brand for Cape Town”, invitations having been sent to Cape Town Tourism members. The presentation was wishy-washy, and most certainly did not meet the promise of a “Strategic Plan”. I left the two-hour presentation concerned, and convinced that Cape Town Tourism does not have a clue about Marketing, despite the appointment of an Australian consultant!
What was not previously declared by Cape Town Tourism was that it has appointed Ian Macfarlane of Strategetic Consultants in Sydney, who has worked with the organisation for six weeks already. One wonders why a consultant had to be appointed at all, if Cape Town Tourism is the City of Cape Town appointed marketing agency of ‘Brand Cape Town’, and had Lianne Burton as its consultant Marketing Manager (we have previously questioned her Marketing capability, being a journalist), and why a consultant from Australia has been appointed on a five month contract, and at which cost! Macfarlane was introduced as the ex-Marketing Manager for Tourism New Zealand, which developed the ’100% Pure New Zealand’ advertising campaign more than ten years ago, CEO of the Gold Coast Tourism Bureau in Australia, and Marketing Director of Tourism Australia, which launched the controversial campaign ‘Where the bloody hell are you?’, when tourism dipped after the Olympics. This campaign cost $180 million, and was deemed a failure and withdrawn, being banned in the UK for the use of the word ‘bloody’, and tourism numbers dropped rather than increased, according to Wikipedia! Macfarlane is an ex-Capetonian, who was once MD of Young & Rubicam Cape Town, and left the country about 18 years ago. Surprisingly for a marketing consultant, it was hard to find information about him on Google!
Instead of the presentation by Macfarlane on ‘the strategic plan proposed for Cape Town Tourism’ (the plan should be for ’Cape Town’ as a brand anyway, and not for the organisation!), as indicated in the invitation Cape Town Tourism members were sent, Macfarlane entertained us with a humorous take on the global tourism scenario. He said that the United Nations World Tourism Organisation (UNWTO) reflects an increase in tourism, but that this is not the case, as the body is counting cross-border Asian travel, something SA Tourism has been blamed of as well, in counting shopping visits from neighbouring South African countries. He spoke about cities winning tourism awards, which is nice for them, but that these do not translate into bookings, as we have seen with the recent TripAdvisor top destination award. He candidly said that he hasn’t a clue about the future, and that no one knows for sure! “Times are tough, and friends are few”, he said! He said that tourism will be successful if many little things are done a little better, rather than doing one big thing. These were hardly the quips we were wanting to hear about a serious topic, being our livelihood! He talked about ‘conspicuous consumption’, having led to over-extended consumers, and that a new post-materialism era had begun. This means that consumers are looking for better value, are cutting back on their expenditure, and have become more conservative in spending their money. ‘Urbanisation tourism’ is a trend too, Macfarlane said, in that tourists like to experience the music, museums, art, and entertainment in cities. Bush holidays are on their way out, he added. He told us that South Africa is not competing that well in a tourism context. He reiterated that the only visuals one sees of South Africa, in SA Tourism marketing campaigns, is the Big 5, which means that these campaigns miss 70 % of the world’s travellers visiting cities. While many expected South Africa to fail during the World Cup, it was a success he said, and left an overriding impression of its great cities in which the soccer matches took place. The marketing of our cities has not been carried through, and now SA Tourism is pushing wildlife tourism again, he said sarcastically! Wildlife is not unique to South Africa, shared with other African countries, thus not giving our country a unique positioning.
Macfarlane shared with us ‘learnings from the rest of the world’:
* Visitors are the most important element of tourism, not the suppliers of tourism services. Visitors are changing all the time.
* There are no ’silver bullets’ to fix tourism. A portfolio of events is needed, not one big one. He sarcastically wished us good luck in hosting the proposed Grand Prix, saying that it had led to a financial loss for Melbourne, and had not grown tourism to the city.
* If there is no demand, there are no sales, which means that one must get into the mindset of the traveller.
* Communication must be on travellers’ terms, meaning that Cape Town should not be packaged aspirationally, ‘badge value’ no longer being important to tourists.
* There is no correlation between the exchange rate and tourism arrivals, a contentious claim!
* ‘Destinations don’t sell themselves. They need a USP (unique selling proposition), representing the sense of the city, touching different people at different times’.
* The ‘mindful consumer’ is tougher, looking for value, wanting to see and do more at no or little cost. He/she wants to expend energy, cycling being popular, and wanting actively engaging experiences, in contrast to ‘restorative’ ones.
None of the above was a ’strategic plan’, and was more of a consultant-speak overview of the world!
When Cape Town Tourism CEO Mariette du Toit-Helmbold introduced the session at the Baxter Theatre, I was concerned when the word ‘Marketing’ was not mentioned at all. Contrary to the invitation to hear the presentation of a ’strategic plan for Cape Town’, Mrs Helmbold talked about an ‘intervention strategy’ that was to be an open-forum discussion, to which they wanted input. It was not clear what Mrs Helmbold was addressing when she took over from Macfarlane. Much of what she had said at the Brand Cape Town presentation was re-packaged, but with some changes. For example, the upturn Mrs Helmbold had predicted for 2014 just two months ago is no longer on the table, saying that we will never recover to 2008 levels. She urged us to become ’scouters of change’. Consumers are depressed. She said it would be suicide if we looked for new markets, such as business tourism and the domestic market, and neglected the 80 % of tourists coming from our traditional European (Germany, Netherlands, France and Italy), UK, and USA markets, contradicting what she had said at the ‘Brand Cape Town’ presentations. The marketing message for Cape Town must be changed to be relevant to more people. Most people in the world are in ’survival mode’, and not thinking of travelling. “We must speak to people in their mindset, so that they put us on their bucket list”! In the past 24 months, 118 tourism businesses closed in Cape Town. No job creation is occurring in tourism, given the reduced tourism growth since 2008. We are over-reliant on the traditional long-haul market, and should attract more locals, but the international tourism spend is far more lucrative. The domestic market is the toughest ‘nut to crack’, as it comes with such established preconceptions about a city like Cape Town, e.g. it rains all the time, it is so expensive, it is so ‘racist’, it is so clicky, and it is so far away! For the domestic market these are realities. This market should be attracted to Cape Town for short city breaks.
Further highlights mentioned by Mrs Helmbold reflecting marketing activities included:
* Cape Town should package tourism around events already hosted rather than creating new events.
* airfares to the country are high, and discussions are taking place to address this. Increased demand is needed for airfares to drop.
* Cape Town has some of the world’s best 5-star hotels, but also good value for money B&B’s and guest houses
* the knowledge for Cape Town must increase, and change. Here Mrs Helmbold went down the ‘Brand Cape Town’ workshop presentation route, justifying a broader positioning for the city in being a centre of academia, business and creativity.
The only element of a ‘Strategic Plan’ I picked up was its Vision: “to make Cape Town a ‘must visit’ city”! This means that visitors must be encouraged to come now and spend more. Very briefly, some marketing activities were mentioned, too specific to be a ‘Strategic Plan’, including:
* promotions of the city, with showcases on Discovery (interestingly, the Tourism New Zealand campaign also focused strongly on the Discovery channel) and National Geographic channels, a joint project with the tourism offices of Durban and Johannesburg, as well as of SA Tourism. Within these programs, city-specific ads and promotional programs will be placed.
* packaging food and wine events under one umbrella, to establish Cape Town as the Gourmet Capital of Africa (the city cannot lay claim to this, as this accolade belongs to Stellenbosch)
* tourists must go beyond the usual city tourist attractions, and should be involved in the history of the city, in experiencing the story of freedom in a creative way, and incorporating the Fan Walk.
* proactive PR
* do more direct marketing with the consumer via the Cape Town Tourism website, with real-time bookability
* ‘community-building’ on-line via social media
* appointment of an ad agency this week, to create a brand campaign, to be launched at the Cape Town Tourism AGM om 17 October.
* local content about Cape Town is to be created and distributed via the Cape Town Film Commission
* reviewing and probably reducing the number and location of the Cape Town visitor centres, eighteen being too many.
* A Brand Ambassador campaign, using Cape Town residents as communication icons, including Archbishop Desmond Tutu, Olympic swimmer Natalie du Toit, and SABC3 Expresso Show and Kfm presenter Liezl van der Westhuizen. The day after the presentation, the Cape Argus headline screamed “Tutu: tax wealthy whites”, hardly the brand ambassador needed for Cape Town!
* inviting visitors to Cape Town to attend blog club meetings
* targeting the ‘young black market’
‘Cape Town’ is a brand that is 361 years old, and is a ‘city of villages’. It still has a very generic image, and stands for a ‘cloud of things’. The cloud must give the tourist enough reason to come to Cape Town, concluded Mrs Helmbold.
It was clear to me that there is no exact ’strategic plan’, let alone a Marketing Plan for Cape Town, which is what we were expecting! It was a collection of clichés! A discussion arose around my question about the proposed positioning of ‘Inspiration’, which Mrs Helmbold harps on about for Cape Town, despite it already having been used for Edinburgh and Korea, and even by Pick ‘n Pay! Mrs Helmbold’s response, saying that it is hard to find something unique to say for Cape Town, and that Cape Town would be packaged ‘as a basket of unique propositions’, despite the appointment of an international consultant, made me realise that she has no understanding of Marketing! Scary, when one considers that the City of Cape Town has entrusted R30 million of our ratepayers’ monies to Cape Town Tourism to market our city in the next twelve months, with a new Marketing Manager, coming from an advertising agency, and who is only starting at Cape Town Tourism in September! Oddly, no summary of the ’strategic plan’ has been sent to Cape Town Tourism members who could not attend the presentations, nor to its media list.
The report about the ’strategic plan’ by the Cape Argus, with a headline “Cape Town to launch global drive for tourism”, appeared exaggerated relative to the information we heard in the presentation. The report states that the plan presented by the tourism body was a response to a report by the newspaper about the city’s tourism industry being in crisis, but we challenge this, in that work on the plan commenced seven months ago, coming from the ‘Brand Cape Town’ workshops!
POSTSCRIPT 15/8: A lengthy report about the ‘Strategic Plan’ was sent to Cape Town Tourism members after our blogpost was published this morning!
Chris von Ulmenstein, Whale Cottage Portfolio: www.whalecottage.com Twitter: @WhaleCottage
Tue 26 Jul 2011
When the ‘Clown Prince’ of Labour opens his mouth, one is bound to have a good laugh at his absurd views. Yesterday the Southern African Tourism Update reported on the latest absurdity to come from the Provincial Secretary of COSATU (The Congress of South African Trade Unions), Tony Ehrenreich, City of Cape Town councillor, and the city’s failed mayoral candidate for the ANC.
Mr Ehrenreich blames the ‘crisis in tourism’ on overcharging international tourists: “The exorbitant prices for wines and crayfish are contributing to visitors feeling ripped off. And so the important word of mouth that underlies a tourist destination’s success is not assisting the South African industry.”
Mr Ehrenreich also attacks provincial Minister of Tourism, Alan Winde, in excluding workers from the recently elected board of Cape Town Routes Unlimited: “As Cosatu we will insist that the workers’ interests be directly represented by a labour representative, before the funding to support the industry is released. We will further call for an independent body to examine the crisis, as the industrial players have been colluding with government at a local level. This collusion is demonstrated by the City Council giving the tourism industry R40 million to spend on themselves”! Mr Ehrenreich seems to have lost the plot in what he is stating, in mixing up the roles of Cape Town Tourism and Cape Town Routes Unlimited:
* Cape Town Tourism received R40 million from the City of Cape Town last month, for marketing Cape Town for the next twelve months. We do share Mr Ehrenreich’s concern about how this money will be spent, given that Cape Town Tourism does not appear to understand that the city’s tourism industry is in crisis. The organisation is also without a Marketing Manager at a time when marketing is needed most. It has been criticised for choosing the positioning of ‘Inspirational’ for Cape Town, when it is not unique to the city, having been previously claimed by Edinburgh and Korea! Mr Ehrenreich is a Councillor of the City of Cape Town, and he could have voiced his dissatisfaction with the Cape Town Tourism budget at the time it was debated in Council.
* Minister Winde recently handpicked the Cape Town Routes Unlimited board, without advertising for nominations. It appears that the Minister chose largely the same directors, with the exception of the FEDHASA Cape representative now being Rey Franco, the hotel association’s Deputy Chairman. Mr Ehrenreich served on the Cape Town Routes Unlimited Board for two years until two years ago, and embarrassed the tourism industry as well as Cape Town Routes Unlimited when he made inappropriate and widely reported media statements, claiming that the Waterfront was charging rip-off prices, referring to the cost of crayfish at Panama Jack, which is not even located in the V&A Waterfront! He had to be silenced during the remainder of his term as director, due to the damage he caused the tourism industry. Minister Winde has no say over the City of Cape Town’s R40 million allocation to Cape Town Tourism.
* Cape Town Tourism will have presented a budget to the City of Cape Town, and it will have included continuing the PR and trade marketing for Cape Town in the UK, Germany, Holland, and in the USA, despite the national Minister of Tourism, Marthinus van Schalkwyk, advising regional and local tourism bodies to leave international marketing to SA Tourism. Social media marketing is part of the budget too. Unfortunately Cape Town Tourism has not shared its marketing plan and R40 million budget allocation with its members to date.
* If the Tourism Crisis would be so easy to attribute to wine and crayfish pricing, one could do something about it. Being’ ripped of’ for these delicacies is the least of the worries of potential tourists - rather it is being ‘ripped off’ by the airlines in terms of their fares that is their real concern. It shows that Mr Ehrenreich is completely out of touch with the reasons for the current crisis in the Tourism industry - high domestic and international airfares, the strong Rand, severe economic recession in the UK (Cape Town’s major international source market), future uncertainty about Greece’s ability to repay its debt and other European countries experiencing similar problem, the current financial crisis of the USA, the oversupply of accommodation, and crippling cost increases whilst rates have remained the same or are being slashed!
It will be interesting to see how Mr Ehrenreich will get shot down in flames by the tourism industry, for his ridiculous claims! However, he is a determined man, and will not easily give up on his mission, to stay in the news!
Chris von Ulmenstein, Whale Cottage Portfolio: www.whalecottage.com Twitter: @WhaleCottage
Thu 21 Jul 2011
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
Thu 16 Jun 2011
We have been very happy to have you as our Minister of Tourism, especially when your portfolio became a dedicated one. Since May, however, I sense that our tourism authorities in cities, SA Tourism, and your department are seeing the development of a crisis in our tourism industry, but that nothing is being done about it. I remember a song Jeremy Taylor once sang about the Ministers that ‘minis’ - I feel that you and your department are ‘minis-ing’, not playing open book with us, and that you are deserting us in our time of need. Here is why:
1. You appointed tourism consultancy Grant Thornton, who created fantastic forecasts of how many tourists would come to South Africa for the World Cup. The recession hit the world in 2008, and at no stage did Grant Thornton revise its forecast for the event attendance. On the basis of their projections, Cape Town alone saw the addition of 9 new hotels and 1500 beds, not to talk about the numbers of apartments that were hastily vacated and renovated, for letting purposes. We all painted and polished our guest houses, yet the soccer fans that came to stay were just like all our other tourists in the end. Home and flat owners, taken by Seeff’s campaign with Gary Bailey as a spokesperson, sat with empty accommodation when they cancelled leases with their existing tenants to make a quick buck.
2. You allowed us to be ripped off by MATCH, a FIFA affiliate hospitality company, who milked us with unheard-of commissions of 30%, with your blessing! And then they cancelled the largest part of the booked stock, on their own favourable cancellation terms, just eight weeks or less prior to 11 June 2010.
3. You sent the Mickey Mouse team from Disney to quickly spruce up our service excellence, at a cost to taxpayers of R9 million or so, a waste of time for all that attended. Our nation is one known for Ubuntu, and we were recognised for it as one of our success factors - we did not need Disney to teach us that!
4. But it is the current post-World Cup crisis, which Cape Town Tourism confidently tells us a year down the line was predictable, given the 2000 Sydney Olympic Games example, that is getting to all of us. The Bureau of Economic Research survey results released earlier this week shows us that confidence in the Accommodation sector is at its lowest ever, at 25 % (even estate agents are more confident at 41%, and they are not having a great time!). There has been no growth in confidence since 2007, even though we knew that the World Cup was coming in 2010.
As the most senior official driving tourism in our country, we would have expected that you would guide and lead us, that you would tell us what drastic steps your department and SA Tourism are taking to help us to get international tourists to our country, and local ones to our cities and provinces. All we hear from you is how successful South Africa has been, and how the World Cup has contributed to this success. For the first time you have acknowledged that things are not going so well, and that “growth in the tourism sector is expected to slow down towards the end of 2011“, reports Eye Witness News about your address to FEDHASA Cape earlier this week. You are reported to have said at that same meeting that ‘visitor number (sic) still look good following the country’s successful hosting of the soccer showpiece. The minister replied by stating some establishments invested too much in catering for an influx of tourists prior to the tournament”! Sir, with respect, it was your consultants that guided us on visitor numbers. Now the proverbial has hit the fan, and there will be none of us left in this industry if you are saying that it will get even worse towards the end of this year!
5. I feel for you, being reliant on those on the ground to feed back to you how bad things really are, and that you are misinformed and misled by some. I cringed when I read that FEDHASA Cape Chairman Dirk Elzinga put the poor booking situation down to the usual Cape winter seasonality, demonstrating that he is not a hotelier, and does not have a clue about the hospitality industry, having headed up the Cape Town International Convention Centre previously. I was depressed by Cape Town Tourism’s long-winded acknowledgement that something mustbe done about changing how Cape Town is marketed, as if we have months and years to do so. Cape Town Routes Unlimited has been the most proactive in talking to our industry via the media, in asking us to slash our rates, but clearly they do not know that we charge rates of up to 50 % less in winter, and have done so for the past 15 years or more. Many ofus have not increased our summer rates since 2007, yet costs are rising continuously.
6. Your own consultants Grant Thornton are saying that not enough local and international marketing is being done, especially in the newly opened markets of China, India, Brazil, Mexico and Argentina. I like that you have addressed the ’silo’ mentality of the tourism industry, as reported in the Cape Argus, and even see this at our local level. Cape Town Tourism and Cape Town Routes Unlimited are operating independently, and without apparent collaboration. High airfares are one of the reasons for the poor tourism performance - please help us to get SAA to price flights realistically, so that we can get the tourists to our country. Help us to get direct flights to Cape Town, instead of via Johannesburg. It is interesting that you identified that the power of tourism is in the hands of a small number of powerful operators. Share the tourism pie with all of us. Please open the doors, and create dialogue between the different sectors that feed and sustain the tourism industry. I was shocked to hear that the Board of Directors of Cape Town Routes Unlimited is now hand-picked by provincial Minister of Tourism Alan Winde- what happened to getting privatesector input, via nominated Board candidates? All we are getting is the same perpetuation of provincial-friendly players and their thinking, and most Board members that were newly elected in April are unknown to us!
We are receiving no guidance from your Department, SA Tourism and our local tourism authorities about how we keep our businesses afloat, and how we prevent a bloodbath of restaurant, hotel and guest house closures in the next few months, which has already started. It does not help to hear that your CEO of SA Tourism, Ms Thandiwe January-McLean, has just resigned, and will leave at the end of August, in a time that we need SA Tourism desperately.
Sir, we need your help. Help us with negotiating extensions of bond repayments at the banks; help us by not allowing the Reserve Bank to increase interest rates; help us with better tax breaks; help us by getting electricity increases suspended; help us with loan facilities to help us survive and to continue to offer employment to our staff; help us with an urgent campaign to encourage locals to travel - it has been talked about but we are not seeing its impact; help us by pushing PR internationally, to not allow South Africa, and the Cape in particular, to lose visibility when New Zealand hosts the Rugby World Cup in September and October; and lastly, be honest with us - do not give us false hope by telling us how fantastic our industry is right now. We are bleeding Sir, and we need your help!
POSTSCRIPT 16/6: Business Report today quotes the Minister as saying: “Although tourism had continued to grow since the World Cup ended last July, the industry was slowing down worldwide.” He is also quoted as saying that international tourism growth to South Africa will continue but that we must “be more competitive than our opposition”. He added: “Our prices and products must remain competitive, and unnecessary cost drivers must be identified.” He would not be issuing price guidelines, and he confirmed that the traditional source markets remain Europe, the UK and the USA, due to their longer holiday period, but recognises the longer-term value of the Asian market. He urged that visa applications for tourists be made easier, and even become electronic. The Minister’s Department of Tourism is to set up a conventions bureau, to spread the business ‘beyond the three main cities’, and he indicated that benefits could flow from the expiry this year of the current system of granting air traffic rights to fly into South Africa.
POSTSCRIPT 17/6: Southern African Tourism Update reports that the Minister is to have also said at the FEDHASA Cape AGM that local tourism authorities should not market internationally, as SA Tourism is doing so already, and that they should focus on local marketing instead. He quoted the example of KZN Tourism, which has a marketing office in Gauteng. Was he addressing Cape Town Tourism and Cape Town Routes Unlimited?
Chris von Ulmenstein, Whale Cottage Portfolio: www.whalecottage.com Twitter:@WhaleCottage
Sat 11 Jun 2011
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
Sun 3 Oct 2010
The frantic building of new hotels for the World Cup has led to an oversupply of hotel rooms, says Arthur Gillis, CEO of Protea Hotels, reports Business Report.
The oversupply is so bad that Gillis predicts that some hotels will go out of business, or will be converted into flats or old-age homes. Gillis says his company has been approached by hotels, to be taken over by Protea. Branded hotels with international marketing arrangements will be the only ones to survive the hotel accommodation glut, Gillis said. According to Gillis, the recessionary depressed America and Europe will make itself felt in the local accommodation industry for another twelve months.
The Protea Hotel’s 15 on Orange is only now starting to attract larger numbers of tourists, including film crews, having been open for a year already.
Gillis says that delighted World Cup soccer fans that visited Cape Town three months ago will not be coming back this season, but they will recommend the city to friends and family. ”People in the UK are getting fed up with austerity and some will probably decide they would like to go abroad this year, to somewhere different, particularly if airfares stay at reasonable levels” he said.
Chris von Ulmenstein, Whale Cottage Portfolio: www.whalecottage.comTwitter: @WhaleCottage
Tue 20 Oct 2009
2010 World Cup soccer fans coming to South Africa next year will be the target of overpricing of car rental, hotel accommodation and air transport, according to a number of travel industry players interviewed by Travel News Weekly.
Tour operators and travel agents complain about the “2010 rip-off”, and many have been quoted double the normal accommodation rate by hotels. Showing their greedy side, the hotels are also cutting the commission percentage they are offering agents, given that they expect to be fully booked. “It is great for those making the money, but in the long run, it is going to reflect badly on South Africa.” said an agent. Others have decided to not be part of the ‘rip-off brigade’, and Dorienne Levitt of African Stay said as follows: “I have decided to not be part of that and am only dealing with providers who offer reasonable prices. I will try my hardest not to use vendors who are acting without integrity, during 2010 and thereafter”. In addition the conditions set by hotels with minimum stays of 8 - 30 days are too stringent, agents say. Protea Hotels has contracted 80 % of its rooms to MATCH, at prices ranging between R 950 - R 4 500 per room.
The Travel News Weekly article also quotes Brett Dungan, the national CEO of FEDHASA, as saying that his organisation would not “associate with nor support hotels that were not affiliated to MATCH and were “ripping off” clients. The reason why we have been working so closely with MATCH is to eradicate the issue of price gouging”. But it is MATCH that is ripping soccer fans off, by adding 30 % commission on all its contracted accommodation rates!
Transport costs too have soared, with car rental prices doubling from the already high 2009 Confederations Cup rates levels. Avis says it will increase its rates by 15 - 20 %, justifying this on the basis of “the expected demand and additional work required”!
Airfares for 2010 too are a rip-off, for both incoming and outgoing flights, and for domestic travel, that is if any tickets can be found to be available. Most airlines have not released their seats for the World Cup period. Domestic flight tickets are likely to cost double the normal fare, reports the Weekend Argus, at about R 3 800 for a return airfare between Johannesburg and Cape Town on SAA, and at R 5 300 on BA/Comair. International flight prices are set to triple, the airlines milking a money-making opportunity after many years of tough trading.
Coach companies too have imposed “crippling conditions”, agents say.
Chris von Ulmenstein, Whale Cottage Portfolio www.whalecottage,com