Whale Cottage Portfolio Blog

The boom projection of foreign attendance of the World Cup of 483 000 has been revised to a still-optimistic 373 000 by Grant Thornton, the tourism consultancy that created the original projection about 3 years ago, a drop of 23 %, reports SA Tourism Update.

The Grant Thornton estimate contradicts the FIFA estimates that the number of international soccer fans attending matches in South Africa has dropped by almost half, from 500 000 to 220000, reports The Times.

Based on the original optimistic international soccer fan attendance, the hospitality industry saw $-signs , and actively renovated their establishments, and put excessive price tags onto their properties.  Private home owners did quick renovations of their properties in the major cities, and planned to travel overseas during the World Cup period, spending their rental income, only to find the rental market being almost non-existent for the World Cup, given the over-supply of accommodation.

MATCH, the accommodation and ticketing agency for FIFA, also greedily added a 30 % surcharge onto the accommodation it contracted, and will have added similar commission rates to transport, flight and ticket prices, giving South Africa a dreadful label of “rip-off” pricing in the international media.  It is the fear of the excessive costs as well as the soccer fans’ fear of the perceived crime risk, that has kept soccer fans away in the main, report the international media.

Grant Thornton only revised its international attendance projections in the last month, when it became clear that MATCH could not sell all its contracted rooms, and gave them back to establishments, and that more than two-thirds of the tickets sold to date are to South Africans.  Even World Cup sponsors and football associations have not been able to sell all their tickets, and have returned them to MATCH.  

One wonders why it took Grant Thornton such a long time to revise the estimates, as its first estimate set the expectations for the hospitality industry.   The tourism consultancy now blames the credit crunch (which has been around for 2 years) and the distance of our country from the qualifying nations as the main reasons for the poor international bookings.  It also says that accredited Tour Operators also did poorly in selling packages.   Such Tour Operators had to pay $ 30 000 for a licence fee per country in which they were looking to sell packages, reports The Daily Maverick.

MATCH cancelled 1,3 million room nights out of the 1,9 million it had originally contracted, reports SA Tourism Update.    Many of the rooms released were in Zimbabwe, Mauritius, and in smaller local country towns (e.g. Plettenberg Bay, Hermanus).  The Protea Hotel Group has had 60 % of its rooms returned, in Cape Town, Durban and smaller towns, having originally been forced to allocate 80 % of their rooms to MATCH.  The Kruger National Park had 25 000 room nights returned.

Grant Thornton is trying to put a positive spin on the tourism benefit of the World Cup, by claiming that the average length of stay now is 18 days as opposed to 14 days as estimated originally, and that the average spend per trip would be R 30 200 as opposed to the originally estimated R 22 000.  On average, international soccer fans will watch 5 World Cup  matches, as opposed to the 3 previously estimated.

Attendance by African soccer fans has fallen to an estimate of 11 000, in what was meant to be an “African World Cup”, reports Business Report.    High ticket prices and lack of access to credit cards and the internet in other African countries has been blamed on the poor support from this continent.   It had originally been estimated that 48 000 African soccer fans would attend the World Cup, which still would not have been a satisfactory attendance level.

Grant Thornton in 2007 estimated the impact of the World Cup on the economy of R21,3 billion, with 159000 new jobs created.   International consultants Morgan Stanley published an estimate two months ago, of 350000 international fans attending and the local economy benefit being R15 billion.  The government has spent R33 billion on the tournament, for the building of stadiums and upgrading its infrastructure around the country to date, reports The Times. 

Grant Thornton now says that no new jobs appear to have been created due to the World Cup, but that it has prevented job losses, reports Business Report.   An estimated 2,5% – 3,5 % growth in the GDP of South Africa has been drastically reduced to 0,54 %.   Many fans have chosen to book via the internet, and are booking at B&B’s and guest houses, rather than hotels, and therefore are not booking via the “official MATCH-hosted channels”, says  Business Report.

FIFA President Sapp Blatter will be staying in the 5-star Michelangelo Towers during the World Cup, while the rest of his FIFA entourage of 200 will be accommodated at the Michelangelo Hotel next door, reports The Times.   Herr President’s requirements are a minibar stocked with South African wines, which is a good boost for the local wine industry, but the ice cubes in his fridge must be made from Evian water.  He will be protected by 5 bodyguards.   While sponsors’ products are meant to be used, which would mean that Blatter would have to drink Coca Cola’s Bonaqua, he is breaking protocol by drinking imported San Pellegrino mineral water.

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

A recent letter to the Cape Argus by reader Merle Kaplan about rising prises and decreasing levels of service in Cape Town over the Festive season was food for thought.   Our response to her letter, sent to the Cape Argus, was as follows:

“While not a restaurant owner, but a frequent restaurant user, I cannot agree with Ms Kaplan about price increases.  I want to commend our restaurants for holding their prices in these difficult times - they probably have no choice anyway.  I must immediately exclude the mad prices charged for New Year’s Eve dinners and entertainment, with up to R 2 000 per head charged for 3 or 4 courses, 2 free glasses of  bubbly, and some entertainment.  

A sensitive point raised is that of staff.  If Ms Kaplan had any idea about how difficult it is to run a hospitality business, then she would be more sympathetic to the staffing problems our industry experiences.   Realities are no-shows of staff - something else comes up or they want to go out with their friends, who are all on holiday.   Staff move from one job to another on the basis of a few Rands, without giving the required notice period, as per their contracts and the Department of Labour’s Sectoral Determination for the Hospitality Industry.   Students are a fantastic source of help, but they need to be trained.  Students do not appear to be as “hungry” as they used to be, and they too would prefer to spend the Christmas and New Year’s days with their family and friends and forego the income.   Unfortunately not arriving at work is not a “dismissible offence”, as Ms Kaplan claims - one can issue 3 letters of warning and then hold a disciplinary hearing before one can even contemplate firing an employee.  Then the restaurant owner is still guaranteed to be called to the CCMA, or the Department of Labour. 

But hardest of all, is the extreme short-term nature of customers’ decision-making.  Last minute bookings, or arrivals without a booking, must be a restaurateurs’ worst nightmare, as they cannot predict how many customers they will have each day - this affects planning for stocks and staffing.   Restaurants experience good and bad days, and there is no pattern to predict when they will be busy and when not.

I also think that after a quiet year due to the credit crunch, during which everything went at a slower pace, it is hard for restaurants and their staff to pick up the pace and deal with full restaurants again.   All our businesses have become leaner, due to the credit crunch.  Cape Town’s hospitality industry must get out of the credit crunch mode, and must gear up to face the busiest June and July ever during the World Cup.”  

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

Latest information on tourist arrivals in the second quarter of this year show that tourism was badly affected by the credit crunch in this period, with 90 000 fewer tourist arrivals, according to S A Statistics, reports South African Tourism Update.

Arrival increases reflect the strong following which the British and Irish Lions Rugby Tour had, with a 12 % increase in British and 33 % increase in Irish tourists in this period.   Indian tourist numbers rose by 34 %, due to the IPL cricket series held around the country.

Arrival decreases were evident for Germany, the USA, Canada, and France, all down by 12 %, and The Netherlands down by 11 %. 

Whale Cottage Portfolio www.whalecottage.com

More restaurant opening and movement news continues to reach WhaleTales.

Klein Genot is ending its relationship with Mark Radnay, of the Overture partnership with Top 10 chef Bertus Basson, after a one-year marriage, due to the restaurant not being financially viable, says Basson.   Angie Diamond, the owner of the luxury 5-star Klein Genot boutique hotel and winery called WhaleTales to say that she is taking over the Genot restaurant, with a name refinement to Genot Restaurant Cigar Bar, from 1 November, and is celebrating the opening with a Frank Sinatra tribute evening on 5 November, and a jazz evening on 6 November.    Diamond says her new restaurant model is Baia, the upmarket seafood restaurant in the V & A Waterfront, but at far reduced prices.  Starters range in price from R 38 for sardines to R 68 for parma ham and melon, with mussel and prawn starters costing R 58.   Salads average R 48, and the fish main courses range between R 78 for the calamari and sole to R 98 for baby kingklip.   Meat dishes range from R 78 for a spatchcock chicken to R 138 for rack of lamb. Pasta dishes are available at R 48 - 58, and desserts cost R 48 each.  Live music will be offered on Friday and Saturday evenings.   The restaurant is also offering a new service to guest houses, with complimentary transfers to the restaurant.   Genot is also offering picnic baskets, to be enjoyed at 20 picnic spots along the riverbank of the wine estate.

Overture restaurant on the Hidden Valley wine estate outside Stellenbosch is going from strength to strength, and chef Bertus Basson says a younger more affluent clientele is booking at the restaurant.   A sommelier starts at Overture at the beginning of October.   The sister catering company has been awarded the catering for all events at Lourensford, and will be moving its operation to the Somerset West wine estate.

Chef Bruce Robertson has revealed that two of his current restaurant consulting projects are for two hotels managed by Queensgate Holdings.  The Upper East Side Hotel is opening as a 4-star conference hotel in Woodstock in May 2010, and Robertson is setting up a 260-seater restaurant and kitchen.   He is also setting up the 160-seater restaurant and kitchen for the hotel Queensgate is opening in Pearl House on Adderley Street,   Furthermore, Robertson is setting up a gourmet picnic service at Warwick Estate in November, according to a recent tweet from Mike Ratcliffe (”Gourmet picnic project with Chef Bruce Robertson taking shape”).   About the Franschhoek restaurant that he is helping to set up, Robertson is staying mum, only revealing that it is on a wine estate.   Robertson has also become a gourmet tour guide, and has teamed up with Bon Appetit magazine and Ryan Hilton from AdmiralityTravel to bring tour groups from the USA to South Africa, with Robertson taking them to unusual gourmet highlights, including slowfood, outstanding herb gardens, wine biodiversity, and cooking for his guests.

More than seventy restaurants received 2010 American Express Platinum Fine Dining Awards this month, 13 of these going to new restaurants winners, reports TravelWires.   The new restaurant winners in the Western Cape include Bizerca, Gold, Salt, The Pavilion in Hermanus, Grande Provence, and Rust en Vrede.  Those from other parts of the country, receiving the Awards for the first time, include Mastrantonio, Osteria Tre Nonni, Sel et Poivre, Harvey’s, Roma Revolving Restaurant, and Orange.   The Award winners are judged on the basis of cuisine, service, wine list, decor, ambiance and overall excellence and consistency.   Standards are checked regularly, says American Express.

The Caviar Group of restaurants, which already includes Beluga and Sevruga, as well as the Caviar deli in the V & A Waterfront, is opening its first non-caviar named restaurant, to be called Blonde.   Its newsletter is keeping the location of the new restaurant a secret, but hints at the decor and style as follows:  it will be a 120-seater restaurant offering ‘fine-dining cuisine’, and will only be open in the evenings.  It is in a Victorian building, it has a ’seductive interior of bar and lounge’, it has ’couches covered in rich fabrics, the gorgeous wooden floors and high ceilings, to the crisp white linen, designer chairs, beautiful staircase, and romantic balcony”  They gush on : “One thing’s for sure.  Blonde will be in a class of its own.   We love Blonde!”   It refers one to the website www.blondedining.co.za for more information, but there is none!  Caviar’s design agency Malossol has tweeted on Twitter that they are currently designing a Caviar “group menu”, which means that Blonde could be opening soon.

Ginja restaurant, currently located off Buitengracht Street, in a building which has not benefited the image of the restaurant, and once a national top 10 restaurant, is said to move to the building in which Nova restaurant was, on New Union Street in the City Bowl.

George Jardine of Jardines is said to be opening the new restaurant on Jordan Wine Estate in Stellenbosch, and to be moving to the Winelands, for a lifestyle change.

Allee Bleue’s plans to open a fine dining restaurant lower down on the Franschhoek estate appear to be on ice, due to the economic climate.   However, construction work on its second informal restaurant linked to its wine tasting venue, adjacent to the security entrance, is almost complete.

Few details are available about the restaurant which is opening at La Motte wine estate. About ten days ago Hein Koegelenberg, the owner, posted the following blog post: “Construction of La Motte’s restaurant and art gallery is coming along nicely on the grounds of the estate in Franschhoek….A bridge will connect the restaurant and the tasting room.  Whilst the team …is working hard to build the structure, other teams are equally busy to make sure that the restaurant and gallery are going to be world class and offer unforgettable experiences”. 

Reuben and Maryke Riffel’s baby daughter Latika was born last Monday.   Congratulations go to them from all at Whale Cottage.

DoppioZero in Main Road, Green Point, has an impressive decor, with the luxury of space.  It has opened a bakery in the restaurant, with breads, rolls, croissants, cakes and other sweet treats for sale.   The franchisor was hands-on in the restaurant last weekend, serving customers, and checking customer satisfaction, to ensure the success of this newest restaurant in the franchise chain, having opened less than 2 weeks ago.   An interesting and clever service offered by the restaurant is a “mess-bib”, Doppio branded, which is put around patrons eating pasta or any dishes with a sauce.

New restaurant Le Tique opens in the Sugar Hotel on Main Road in Green Point tomorrow.   Restaurant-lovers can pay R 250 each to attend the opening.  “Entice yourself with the finest gourmet from the earliest renaissance, contemporary twisted, French with a hint of European Influences. Featuring South Africa’s Finest Venison.  Platinum wines of this worlds, proudly South African viticulture. Bellini’s & cocktails to lure your fantasies” is the copy contained in the invitation.

Basil O’Hagan, whose O’Hagan’s pub chain was liquidated 8 years ago, is reinventing himself and has launched a new pub and restaurant chain called Brazen Head, with 23 pubs planned for the greater Cape Town area in the next ten years, including the city center, Hermanus, Paarl, Somerset West, George, Knysna, and Tygervalley.   An outlet is already trading in Stellenbosch, reports Cape Business News, and other Brazen Head pubs are already operating in Gauteng.

Bukhara was to have re-opened its restaurant in Burg Street, but the person answering the call yesterday said that there is no opening date in sight yet, it probably being another 2 - 3 weeks.   Bukhara is doing renovations and repairwork after a fire caused damage in the restaurant some time ago.   A restricted Bukhara menu is available at Haiku, the sister restaurant downstairs from Bukhara.

Late casualties of the credit crunch are Aqua D’or and the Franschhoek Water Company, both of which have closed down.  The Franschhoek Water Company was the supplier of the L’Aubade and Franschhoek mineral water brands.  Earlier this year the Franschhoek Water Company had handed over the distribution of its water brands to Aqua D’or, but took the distribution back when customers complained about the poor service from Aqua D’or. NOTE: SINCE THIS POST WAS WRITTEN, AQUAD’OR HAVE CONTACTED WHALETALES TO DENY THEIR CLOSURE.  THE INFORMATION OF THE CLOSURE WAS INDUSTRY TALK, AND WHEN THE COMPANY WAS CALLED FOR CONFIRMATION, THE SALES AND ADMIN DEPARTMENT LINES JUST RANG, WHICH WAS TAKEN AS A CONFIRMATION OF THE CLOSURE OF THE COMPANY.  EARLIER THIS YEAR AQUA D’OR FACED PROVISIONAL LIQUIDATION.   WE APOLOGISE TO AQUA D’OR FOR ANY INCONVENIENCE WHICH THIS POST MAY HAVE CREATED.

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

As a small operator, it has often felt like David versus Goliath when WhaleTales has criticised MATCH, FIFA’s accommodation agency, in its terms and conditions of wanting to do business with small accommodation establishments for the 2010 World Cup.

Whale Cottage has been vindicated for its brave public stand against the MATCH terms, which it first wrote about in a WhaleTales newsletter dated June 2007, soon after MATCH did its first presentation to the Cape Town hospitality industry at the Cape Sun.  

An in-depth article in the Sunday Times of 13 September says what Whale Cottage has been saying for the past two years - that MATCH is a rip-off as far as accommodation for visitors to South Africa is concerned in 2010, and that many other accommodation establishments are saying so too, and are not contracting with MATCH.

Initially MATCH set very stringent criteria for hotels, and for small accommodation establishments, the latter being an accommodation category not previously utilised by MATCH, but necessary due to the 55 000 beds required for the FIFA officials, the media, VIP visitors, and package purchasers.

The major complaints from small accommodation establishments related to the setting of the rate, initially dictated by MATCH as being the 2007 rate + 16 %, of which MATCH would take 30 % commission.   There was to be one uniform cancellation policy, despite the poor track record MATCH has in cancelling hotel rooms in Germany in 2006, without compensating the establishments.  MATCH dictated that 80 % of an establishment’s rooms were to be made available to MATCH.   Payment would only be received on the day of arrival of the guest, by means of a sealed cheque, which the accommodation establishment could only bank the following day.   No deposits were to be payable upfront.   Whale Cottage tried to reason with the MATCH authorities whilst it was a member of the FEDHASA Cape Board, but little attention was paid to the needs of and feedback from the small accommodation sector, given that FEDHASA is an hotel association looking after its large hotel member needs first and foremost.

Regular criticism of MATCH and its terms, and the company’s inability to sign up the required number of beds - it is still about 15 000 beds short of its target - led MATCH to relax its conditions, in that the cancellation policy has been relaxed somewhat, in that establishments may set their own “fair” accommodation rates, and that MATCH will take 30 % on top of this rate as its commission.   From the outset MATCH, and FIFA’s PR machine, has stated that 30 % is an average rate of commission paid by the accommodation industry, which is blatantly untrue, given that the norm is 10 %, and at most 20 % for operators with whom one has done business for a long time.

Accommodation establishments in Cape Town, especially along the Atlantic Seaboard, are receiving a steady flow of 2010 bookings, and therefore do not need MATCH to sell their rooms.   The accommodation rate norm is to use the summer rate for 2009/2010 and to add 10 % to set the 2010 World Cup rate.   These establishments are receiving the cashflow benefit of 50 % deposits at a time when the credit crunch is still making itself felt.

What is most interesting about the Sunday Times article is that it stated that one of the directors of MATCH Hospitality shareholder Infront Sports and Media is Philippe Blatter, nephew of FIFA President Sepp Blatter. MATCH Hospitality was contracted in 2007 to sell tickets and suites for FIFA matches, for the 2009 Confederations Cup and the 2010 World Cup in South Africa, and the 2014 World Cup in Brazil.  MATCH Hospitality is said to have paid $ 120 million for the rights to provide hospitality services at the FIFA events.

MATCH Event Services belongs to Byrom PLC, a British company, says the Sunday Times, selling 55 000 rooms, transportation and tickets as all-in-one packages, which will make it far more difficult for soccer fans to see how badly they are being ripped off.   In the Sunday Times article, for example, angry Kruger National Park regulars state that they cannot book the Kruger Park accommodation, as it has all been contracted to MATCH, at prices 400 % above the normal rates.

The Sunday Times article contains quotes from the CEO’s of Southern Sun, City Lodge and Protea Hotels, all praising and supporting MATCH, and downplaying the size of the MATCH commission.   Given that these are the largest hotel groups in the country, which will benefit greatly from its MATCH bookings, they cannot but sing the praises of MATCH. 

What has also been confirmed by the Sunday Times article, and is something Whale Cottage has been concerned about, is that the bulk of the commission which MATCH will be making, plus FIFA’s profits generated from the Word Cup, will leave South Africa.    On the accommodation side alone this could easily amount to R 330 million at a most conservative estimate.

Whale Cottage Portfolio: www.whalecottage.com

Statistics SA has confirmed what all in the hospitality industry have been experiencing - income from accommodation fell by 5 % in the April - June period compared to a year ago, reports the Weekend Argus.

Had the Confederations Cup and the British and Irish Lions Tour, and to a far lesser extent the IPL, not taken place in this quarter, the drop in accommodation revenue would have been even greater.  June showed positive growth of 6 % on average, compared to the negative growth in April and May, proving that the IPL did not live up to its promised contribution to the economy and protection against the recession!   June has been the only positive growth month this year so far.

In Cape Town RevPAR (revenue per available room) increased by 14 % in June, the first month in 2009 with a positive figure, based largely on two rugby matches in Cape Town, with rates having been increased to R 880 per room on average over the match days, and occupancy increased to 51 %, the first occupancy increase in the 12-month period.

Stats SA also records the “number of stay nights” to have decreased by 10 % compared to 2008, with hotel income dropping from R 1,99 billion in the second quarter of 2008 to R 1,86 billion in the second quarter this year, a 7 % decline.   Guest house income grew by 2 %, and that of caravan parks and campsites by 8 % in the same period.

Whale Cottage Portfolio : www.whalecottage.com

Governor of the Reserve Bank, Tito Mboweni, caught the market and most economists by surprise today, by cutting the interest rate by 50 basis points, to 7 %, a positive sign that may signal a reversal of the credit crunch.

The interest rate is an indication that the recovery of the economy has not been progressing as speedily as the government would like it, given the previous interest rate cuts since December.  It could also be Mboweni bowing to the pressure from trade union federation COSATU for a cut in the interest rate.   Finally, the cut may be a reflection of the slow but certain decrease in the rate of inflation.

The cut in the interest rate eases the pressure on family and buusiness incomes, and should have a positive effect on tourism.

Whale Cottage Portfolio: www.whalecottage.com

Domestic and short-haul tourism are important markets for South Africa, and should be nurtured, says Minister of Tourism Marthinus van Schalkwyk, reports Travelwires.

The credit crunch has demonstrated the vulnerablity of the international tourism market, Van Schalkwyk said, and therefore the new domestic ‘Sho’t Left’ campaign is vital, he said, which he unveiled in the form of a mural.

The Minister said that the local tourism industry had “managed to keep its head above the water and has in fact performed well amidst difficult circumstances”.   While domestic trips declined by 8 % in 2007, the total spend on domestic tourism increased by 17 % to R 26 billion, he added.

“We understand ….many South Africans and visitors from short haul markets are again discovering their own backyards, so to speak.   Visitors are again realising the exceptional value for money South Africa offers as a destination, and we must step up our efforts to boost domestic tourism” said Van Schalkwyk.

The Sho’t Left campaign encourages locals to travel locally, by offering them value for money packages.

Whale Cottage Portfolio www.whalecottage.com

The Women’s Day long weekend has been good for business, with Whale Cottage Franschhoek, Whale Cottage Hermanus and Whale Cottage Camps Bay fully booked on most of the weekend nights.

The good bookings could be a signal that the worst of the economic crunch is over, and it is encouraging that the guest mix consisted of Italians (August traditionally is their holiday month, and they seem to favour South Africa as before), British visitors, and of  South Africans.

In Cape Town the Springboks played against the Wallabies at Newlands over the weekend, while in Hermanus the Kalfiefees and the Hermanus Food & Wine Fair took place.

Franschhoek was largely taken over for the long weekend by one of the largest law firms in South Africa, Edward Nathan Sonnenbergs, and Whale Cottage Franschhoek accommodated the band Watershed, which performed at the company’s function.   More than 300 staff and their families spent the weekend in Franschhoek, as the company’s way of thanking its staff for their contribution to its success.

The Whale Cottage guests celebrated the 13 th anniversary of the Whale Cottage Portfolio on Women’s day with the staff.

Whale Cottage Portfolio: www.whalecottage.com

The City of Cape Town and the FIFA Local Organising Committee (LOC) signed a Service Level Agreement this week, for Cape Town to host the FIFA Final Draw on 4 December, reports www.goal.com.   The Final Draw will determine which of the 32 teams play at which venues.

Mayor of Cape Town Dan Plato and LOC CEO Danny Jordaan agreed that the Final Draw will take place in the Cape Town International Convention Centre, and is to be attended by 2 000 guests and 800 media representatives.   The FInal Draw is expected to be broadcast in 200 countries. The ceremonial signing was accompanied by Minstrels.

“The impetus of expenditure and investment in infrastructure for 2010 could not have come at a better time to counteract the effects of the economic slump. While not every individual or suburb of Cape Town will benefit directly from the World Cup, improved facilities, services and infrastructure will benefit all indirectly,” said Plato. 

Whale Cottage Portfolio www.whalecottage.com/blog