Whale Cottage Portfolio Blog

Both the Bureau of Economic Research and the Tourism Business Council of South Africa (TBCSA) FNB Tourism Business Index reflect that the first three months of this year showed an improvement in the confidence level for the South African tourism industry. While Cape restaurants would agree, the confidence may not have been shared by the Cape accommodation industry, who still cannot see a significant improvement in their occupancy levels, and dread the early arrival of the winter season.

The Bureau of Market Research released its results for the first quarter of this year last week, and showed a 7% growth in the volume of Accommodation business, with a very positive expectation of an 11% growth rate in the second quarter - this contrasted strongly with the 16% decline reported for the last quarter of 2012. Since 2009 the Bureau had measured declining volumes of Accommodation business, the first sign of a turn around being measured in the first and third quarters of 2012, but with declines in the second and fourth quarters of the same year, demonstrating how variable the growth is and how susceptible it is to global recessionary influences.  Business confidence in the Accommodation sector increased to 52 (an index measured out of 100) in the first quarter of this year, a significant increase from 38 the quarter before. In contrast, the real estate and business services industries showed minimal business confidence growth in the same period.

The TBCSA FNB Tourism Index was introduced in 2010, and is based on a study of tourism confidence conducted quarterly by Grant Thornton. The Index is measured and compared against a score of 100 reflecting ‘normality’.  For the third consecutive reading the Tourism Business Index has exceeded the score of 100, a positive step given that most of the scores since 2010 lay below the 100 mark.  The latest index measurement is 111, just below that measured at the time our country hosted the World Cup, the highest score ever achieved, before the scores slid.  Respondents are asked to quantify their expectations for the quarter ahead, and the actual first quarter confidence score far exceeded the anticipated score of 102,5.

Grant Thornton’s Gillian Saunders said that the survey results were split, with 30% reporting strong demand and another 30% reporting it as weak. ‘Playing in different geographic markets may impact this; for instance in 2012, Asian markets saw a huge growth in tourist arrivals and businesses targeting those markets have no doubt benefited’. One hopes that Mrs Saunders is not referring to the SA Tourism statistics for China, which appear to include transit passengers!  More likely could be a geographical difference, in that Gauteng and Durban may have been more positive in the past quarter due to the AFCON Cup of Nations which took place in Johannesburg and Durban in January - February, while Cape Town missed out as a host city for the soccer event due to the City of Cape Town’s mismanagement of the bid process, and therefore Cape Town’s tourism industry may not have been as confident as a result!  Durban has hosted a number of top conferences and events, including a meeting of the BRICS country presidents, and an Indian tour operator conference.  Saunders emphasised that there is still concern about the impact of the recessionary problems of Europe.  While tourism confidence may have improved, the TBCSA CEO Mmatšatši Ramawela stated that the petrol price, cost of sales, electricity prices, municipal tariffs, and labour issues negated the confidence levels of tourism players.

Grant Thornton, the company that got the estimate of the World Cup 2010 attendance so badly wrong, is to conduct a three year study of the Cape Town tourism industry, to measure the value of its tourism industry. A 2009 survey had put a value of R17,3 billion on our City’s tourism industry, a 6% increase on the 2008 value of R16,3 billion.  The study results will become a benchmark to measure the economic value of Cape Town’s tourism industry, said Mayoral Committee member for Tourism, Events and Marketing Grant Pascoe. The study will use national data (read highly criticised) SA Tourism statistics and tourism surveys to measure the spend by tourists whilst in the city. Tourism businesses will be interviewed, to establish their turnover and employment figures.  One can be sceptical about the co-operation that the researchers will receive from the hospitality industry in extracting turnover figures!   Councillor Pascoe said that collecting the tourism industry information could be used to assess the infrastructure requirements for Cape Town, and could be used to motivate infrastructure upgrades to benefit the tourism industry!  One wonders how many millions the Grant Thornton Cape Town tourism study will cost, and how reliable its results will be, given the sensitive information sought!

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

Yesterday afternoon Anton Groenewald, Executive Director of the City of Cape Town’s new TEAM (Tourism, Events, Arts, Marketing) Directorate, addressed the French networking group CAP40 at the Alliance Française on the topic ‘Perspective on strategic and policy intiatives to grow the Tourism business in Cape Town‘.  He was described as the ‘keyholder that can unlock tourism to the Cape’. Groenewald has become the most powerful person in Tourism in Cape Town, and has a considerable budget.

Groenewald is an interesting man, very honest (often at his own expense) and direct, very goal-orientated, non-political in his actions, and charming even though he may be ruthlessly honest.  He is not always ‘media-correct’ in his honesty, yet he does not seem to mind being quoted, no matter how sensitive his response may be to the parties he may be commenting about, as we discovered last year when Cape Town Tourism was blowing its own horn about the number of Twitter impressions it had created by inviting four international bloggers to the city. For Groenewald it is all about the bottom line, his mantra being ‘commercialisation’ to achieve revenue targets. His department has promised Cape Town Tourism R117 million for the three year period from 1 July 2013 onwards, but with demanding revenue and commercialisation targets to be achieved. He certainly means business, and was honest in admitting that a head of Cape Town Tourism who has been in the position for nine years no longer is fresh enough to be on top of her game.  He confirmed that its outgoing-CEO Mariette du Toit-Helmbold did not need any encouragement to not renew her contract.  They will shortly start recruiting a replacement CEO nationally as well as internationally.  His no-nonsense attitude shows when he stopped Cape Town Tourism PR and Communications Manager Skye Grove from continuing to use its legal firm for a personal matter!  Groenewald was told by a number of members of the audience what problems they have experienced with Cape Town Tourism.  He welcomed all feedback.

Groenewald related that he had attended a ‘Big Six‘ meeting a few days ago, representing Cape Town’s biggest tourist attractions, being the V&A Waterfront, Kirstenbosch, Table Mountain Cableway, Cape Point, Robben Island, and the Constantia wine route.  He emphasised to them that he is focused on conversion from marketing, whether social media or above the line, into hard core bookings.  I asked him why the work of his TEAM Directorate is so low key, after a year of operating, and he said that they have just appointed Saatchi & Saatchi to handle all its communication requirements (advertising, PR, and Social Media).

Groenewald’s biggest challenge is the loss-making Cape Town Stadium, and the video he showed us was focused on the behind-the-scenes preparation of the Ajax/Manchester United match last year.  He said that a lot has to happen behind the scenes to make an event such as a soccer match or a concert happen. The funniest part of the video was the 1100 umbrella holders who had arrived on the rainy day, and who were not allowed to enter the Stadium with the umbrellas for security reasons,  and could not get them back afterwards, which generated negative media coverage for the City.  The City team of 2500 - 3000 can prepare events in days, while it would take weeks for an outside company to do.

Cape Town has had major events in the City since the beginning of March, and they will continue into April, which is excellent for tourism:

*   Design Indaba

*   The Argus Cycle Tour with 35000 participants, and 85000 attendees at the Lifestyle Expo

*   Cape Town Carnival on 16 March at which 50000 - 60000 attendees are expected

*   Spar Ladies Race at the Stadium, with 15000 participants, on 17 March

*   Two Oceans Marathon takes place on Easter Saturday, with 25000 runners and 40000 expected at the Expo

*   International Jazz Festival on 5 and 6 April, with 36000 attendees expected.

While we did not see any impact for accommodation from the Manchester United/Ajax match, the City had market research conducted and projected from this that the economic impact of the event had been R 112 million ‘broadly’, and R7,6 million in ‘narrow impact’.  Ten percent of the 52228 ticket holders were said to have stayed over for the match, yet 48% of the economic impact was said to have been generated by accommodation, and 23% by food and drink. The media coverage was measured to have a value of R 219 million (mainly broadcast and in print).  Given the direct cost of R3,5 million, the economic benefits made this event a success, Groenewald said.  He said one should have the ‘right cheese in the trap to attract the economic benefit’.

Groenewald went through the strategy slides far too quickly for all of them to be captured, but the essence was that he wants the different positionings of Cape Town (’Cape of Great Events’, ‘Creative Cape Town’, Love Cape Town’, World Design Capital‘ and more) consolidated into one, which makes marketing sense.  He also wants to ‘create a global world class city experience, comparable with the best that the world has to offer’! He is accountable to 27000 City of Cape Town employees, as well as the citizens of Cape Town, its residents, its ratepayers, and the visitors to the city.  His Directorate is working on commercialising the Cape Town Stadium (we were invited to take a copy of the detailed documentation along and to make submissions) and Athlone Stadium; rejuvenate the City Hall (which is 10 years old and requires R 51 million) and the Grand Parade; renovate and redesign the Good Hope Centre; and reposition Cape Town to the BRICS countries, and through events. In addition to Cape Town Tourism’s handout of R 117 million, the City of Cape Town will be giving R 40 million to Cape Town Design for World Design Capital 2014.   Six events are planned for World Design Capital 2014.  Groenewald could not confirm what is planned for winter, but three of five UK soccer club match proposals on his desk have been confirmed, and there is a likelihood that a Spanish team, as well as potentially Bayer München, could be seen in Cape Town too!  The Grand Prix is a definite NO, he said, but two ‘clean fuel’ formula one races will take place.

Groenewald would like to see one events calendar for the City,  to start addressing Winter Seasonality.  He will only define the success of his TEAM team (with 264 staff in his Directorate) on the basis of measurables such as ticket sales, media output, economic impact, and visitor satisfaction.  The City has just appointed tourism consultancy Grant Thornton to measure the value of the tourism to the economy of Cape Town.  He mentioned the 1000 x 1000 x 1000 formula of feedback, 1000 departing tourists, 1000 incoming, and 1000 locals to be interviewed.    Interesting was Groenewald’s response to the delineation between Cape Town Tourism, Wesgro, and his TEAM Directorate, all handling marketing of Cape Town.  The City does Destination Marketing, and Cape Town Tourism handles Tourism Marketing.  He had approached Wesgro initially, but he had an ‘awkward conversation‘ with the provincial tourism body at the time.  He was ‘not invited by Wesgro’ to talk, so Groenewald decided to ‘occupy his own space for the City of Cape Town’ for the projects which Wesgro could not handle.  He described the relationship with Wesgro as being ‘more co-operative‘ now.

We have written before that Anton Groenewald is a very powerful tourism player, his TEAM Directorate controlling Cape Town Tourism directly and indirectly, and he is extremely goal orientated, having been set tough targets himself.  Hearing him speak one can only have confidence in the future of the tourism industry in Cape Town, a welcome change!

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

Increasingly the tourism industry is seeing information that informs it about its successful performance, but this information does not tie in with actual business experience.

Yesterday on Twitter Guy Lundy, CEO of Accelerate Cape Town and Board member of Cape Town Tourism, created a PR gaffe (accommodation establishments make up a substantial proportion of Cape Town tourism members) by writing disparagingly:  ‘So if the airport & Table Mountain had a record December, why are the hotels crying? Because people want bargains & they’re too expensive’. When challenged on his statement, Lundy quoted the record 813000 arrivals at Cape Town International in December, and its best ever year in 2011, and the record Table Mountain Aerial Cableway 142000 ticket sales from mid-December - mid-January, attributing this success as follows: Positive legacy of 2010 World Cup; increased profile & awareness’. Few tourism businesses would agree with Lundy about the tourism benefit of the 2010 World Cup.

The Tourism Business Council of South Africa also described its 4th quarter Tourism Business Index of 87 as a ‘marked improvement in business performance for the last quarter of 2011′, correct relative to last year’s 3rd quarter (70), 2nd quarter (74,5), and 1st quarter (79) Index measurements.  What the Tourism Business Council media release neglected to point out is that the 4th quarter Index of 2011 is below that of the 4th quarter of 2010, which was at at 89.  The improved performance was attributed to the COP17 Climate Change Conference and the better than expected festive season.

The Tourism Business Index is sponsored by FNB, and compiled by Grant Thornton, the tourism consultancy that got the 2010 World Cup tourism estimates so badly wrong. Pieter de Bruin, Head of Industry Sales at FNB, said that the results showed that there are ‘different cycles in business, such is the importance of South Africa being an events destination and having a healthy domestic tourism market. We trust that this may be the first sign of the industry making a turn into positive territory’. Tourism Business Council CEO Mmatšatši Marobe commented: “When we launched the TBI (Tourism Business Index) project in 2010, one of the key objectives was to develop a business tool which would produce relevant information that will assist us to map out a clear picture of general ‘health’ our (sic) industry.  At this point the index is showing positive signs of progress; however it also highlights the important role that the domestic and regional markets can play in boosting tourism trade”.  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. A score of 100 is the norm, reflecting that the tourism industry is still operating below par.  The industry has predicted an Index of 82 for the first quarter of 2012.

Durban bragged about its excellent performance over the past two years, claiming to have ‘outperformed other major SA cities’, reports The Mercury, due to the COP 17 Conference, achieving near 100 % occupancy for about a month, and the excellent local visitor numbers over the December school holidays, with hotel occupancy of around 80%, according to the local FEDHASA branch.

FEDHASA Cape Chairman Dirk Elzinga would not admit to a tourism crisis last winter, blaming the poor hospitality performance on the Cape scapegoat of Seasonality.  Eventually he had to admit that it was the worst season ever. Elzinga has deplored the cancellation of direct flights to Cape Town by Malaysia Airlines and Etihad Airways, stating that Cape Town’s tourism fortune is reliant on ‘direct access’.

Once again we would like to encourage the tourism authorities to be honest and realistic in reporting tourism successes, and to be correct in defining the summer season being from October, which showed poor performance with November too, and runs until April. The Cape is currently experiencing a ten-day dip, and yesterday’s J&B Met was the poorest ever for the hospitality industry.  Very encouraging is the almost fully-booked February, due to the Mining Conference taking place in Cape Town, as well as Valentine’s Day, with a welcome increase in British tourists too.

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

Reports about the status of the tourism industry in Cape Town and the Western Cape in the last few days are enough to confuse anyone, as the view on how the industry is doing this summer, two months into the season, appear contradictory, some saying that it is better, and others saying that it is the worst ever!

Reports about a FEDHASA Cape media review held last week contradict each other.  The Cape Argus, using the headline ‘Hotels catch the scent of recovery’, reported that a ‘fair’ season is expected this summer. It stated that the industry had come through a ‘pretty bad year’.   Gotravel24 had a more realistic headline ‘Worst year yet for Cape Town tourism’, quoting FEDHASA Cape Chairman Dirk Elzinga admitting for the first time that the past year has been ‘one of the worst the Cape Town tourism industry has ever seen’.  When we wrote about the tourism crisis in winter, which was subsequently picked up by the Cape Argus, Elzinga did not seem perturbed, and said that Cape Town was just experiencing its annual seasonal dip!

In its review FEDHASA Cape indicated that average revenue per available room decreased by 10% this year, due to the ‘double dip recession’ in Europe as well as the 20% increase in accommodation rooms for the World Cup. The past winter was particularly tough, with four hotels and 10 restaurants that were FEDHASA Cape members closing their doors (many more non-FEDHASA restaurants closed their doors too). Elzinga is hopeful of a recovery, based on average revenue per available room increasing by 5 % in October, relative to the same month a year ago.  Occupancy was estimated to reach 60 - 80 % this summer, Elzinga said, and events such as the J&B Met, the Two Oceans Marathon, and Cape Town International Jazz Festival would attract more local tourists, the type of tourist Elzinga said Cape Town tourism businesses should encourage.  However, Eye Witness News’ report on the FEDHASA Cape  meeting was that ‘70-80 percent hotel occupancy (could not be referred) ‘as a standard anymore’.  Elzinga sees positive spin-off from Cape Town being named the World Design Capital 2014, and a provisional New7Wonders of Nature. We have written before that none of the accolades that were heaped upon Cape Town so far this year have led to any significant increase in tourism to Cape Town, probably because tourism from the United Kingdom has all but dried up.

FEDHASA Cape also used the opportunity to share results of a 30-week pricing survey conducted not only for Cape Town hotels, but also for hotels in Barcelona, Melbourne, Vancouver, Boston, Nice, Hong Kong and Munich, chosen to be comparable to Cape Town in that they are not capital cities, and attract convention business.  The survey was instituted due to feedback levelled against the local accommodation industry for its high prices, which FEDHASA Cape wished to dispute.  Predictably it did so, stating that ‘….the Mother City is not out of line with its peers around the world’.  No hard statistics, such as average hotel prices, are provided from the survey. The FEDHASA Cape survey had found that Cape Town’s price and room offering is wider than that of the comparative cities, with the exception of Barcelona.  Five star hotel rates generally are on a par with the comparative international hotels.  Room rates for 4-star hotels were up to 20 % lower than the international hotels, the report states.  We too have checked Cape Town rates at the top-end hotels, and conducted three telephonic surveys, in May, August and November this year, finding a wide range of 5-star hotel rates, and that rates had been lowered in the harsh winter months.

Moneyweb also reported on the hotel pricing survey of FEDHASA Cape, writing that the finding about Cape Town’s hotel prices being on a par with those in other international cities was a ‘surprising result’.  The description about the worst winter is far more explicit, as being ‘one of the most dismal in recent memory”! Elzinga is quoted as saying that Cape Town is ‘not cheaper, but also not more expensive. People think that prices in Africa should be lower than in Munich or Singapore. But luxury costs the same; it doesn’t matter where you are’. An interesting observation by FEDHASA Cape was that those hotels that did not drop rates recovered more quickly than those hotels that cut rates. Our Whale Cottage hotel surveys demonstrated that all hotels decreased rates in winter, contradicting FEDHASA Cape’s observation!  What Elzinga did not appear to consider was that given the lower operational costs of running an accommodation establishment in Cape Town relative to the comparative cities, on labour costs alone, combined with the 20 % increase in accommodation supply since last year, accommodation prices should have decreased, based on the law of supply and demand.  A further negative impact on rates should be the cost of long haul air travel and airport taxes to Cape Town. Therefore there can be no justification for Cape Town’s hotel prices to be the same as those of its international counterparts.

FEDHASA Cape sees a positive impact of direct flights to Cape Town by Air France and Swiss-based Edelweiss, but which could be countered by the cancellation of Malaysian Airlines flights to Cape Town next year.  Elzinga has called for more marketing by Cape Town Tourism and Cape Town Routes Unlimited in India and China, given the problems with the USA and European economies.

At Whale Cottage we have compared Occupancy over the past five years, and we have seen a steady decline over this period, halving over the five year period.  Occupancy at Whale Cottage Camps Bay this month will be the second best this year after the record 88% in February, and an improvement on last November, but is far below the 88 - 96% occupancy experienced in November between 2007 -2009.

FEDHASA Cape only predicts a recovery for the Cape Town accommodation industry in 2013, with occupancy and room rates returning to a ‘normal level’.   The European and USA economies are in such disarray that one wonders how any tourism body can make any prediction about the future of tourism, especially given FEDHASA Cape’s poor interpretation of the industry in winter!  FEDHASA Cape also indicates that bookings are increasingly last-minute, which makes it even more difficult to predict future tourism performance. We urge FEDHASA Cape to be conservative in its estimates, and to not create hopes about the season for the industry, which led to disastrous results when Grant Thornton did the same about the soccer World Cup last year.

The Protea Hospitality Group has seen similar cause for optimism, its Danny Bryer, Director of Sales, Marketing and Revenue, writing a letter to the editor of Southern African Tourism Update that it saw occupancy increase by 3-4% in August and September. Against the background of the unstable USA and European economies, Bryer says that it is hard to make predictions for the hospitality industry, especially with the heavy discounting taking place (contradicting Elzinga too).  Bryer pleads for an end to discounting, even though his hotel group probably is the one to slash rates most severely, quoting day by day rates, and generally is at the bottom end of the rates scale in the comparative hotel rate surveys we have conducted: “Continued discounting devalues every hotel in South Africa, as the battle is fought on price rather than value”. Bryer says the proof of this is that the average daily rate has decreased and the costs are increasing, meaning a declining profit.  This can only be turned around with an increase in rates, he argues.  He deplores that developers, investors and owners added on new rooms, the accommodation oversupply resulting in hotel closures and local companies taking over the management of international hotel groups. Bryer warned against reducing one’s offering to justify a lower price.  Offering value for money is vital.  He also warned that 3, 4 and 5 star hotels are marketing their rooms at similar price points, which he believes to be ‘foolhardy and unnecessary‘.  The Protea Hospitality Group is focusing on offering value-added packages for the domestic market this summer.

Bryer was also quoted in Business Report, saying that their December bookings are up on a year ago, that 5-star guests are travelling again, but that ‘inbound business to South Africa is still quite tight and long haul flights are losing out to short haul’.  The South African Tourism Services Association (SATSA) CEO Michael Tatalias predicts a better ‘holiday’ season than last year, but says that the rates charged will be more realistic than in the past.

Western Cape Provincial Minister of Tourism Alan Winde warned that he will present a ‘bare-bones’ 2012 budget in March, and about ‘emptier’ provincial government coffers and budget cuts, which could impact on its funding of tourism too, reported the Cape Argus last week.  Winde said that the local economy had to be ‘buffered against current shocks in traditional markets’, and urged exporters in the province to find ‘high-growth emerging markets’.  The European growth outlook is poor too, the fourth quarter prediction being one of slipping back into recession, reports Business Report.

What is certain is that it is impossible to predict the summer season until Easter, given the continued economic woes of our tourism source markets, the UK market being sorely missed, and the forecast of Europe slipping back into recession.  Bookings for the summer ahead for Whale Cottage Camps Bay look good until 10 January. Domestic tourism will be the major source market for the medium term, until the global economy recovers.

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

When Table Mountain was in the running for New7Wonders of Nature, the City of Cape Town ran an advertising campaign, spending more than R1 million to encourage South Africans to vote for Cape Town’s icon.  Voting for Table Mountain was motivated as the tourism revenue benefit of R1,4 billion per annum and for its resultant job creation.  Now a report has shown that the estimates were based on 2007 tourism information!

The Cape Times journalist Zara Nicholson has taken a lot of flack for her report on the New7Wonders competition, in having questioned the credibility of its organisers, and the monies that were generated via vote SMS’s.   Last week Ms Nicholson wrote another article about the tourism benefit, and has questioned the accuracy of the projections made by tourism consultancy Grant Thornton, having found that their projections about the tourism benefits of having been named New7Wonders of Nature were based on outdated 2007 tourism arrival statistics. 2007 was the last good year our tourism industry experienced, and our experience is that tourism has reduced steadily every year since 2008, and halved in the past five years.

The Grant Thornton study was commissioned by the Table Mountain Aerial Cableway Company, and projected that the Table Mountain Cableway would attract 155000 more visitors, a 20 % increase, which they translated into a R1,4 billion tourism revenue increase per year, for the next five years. In their short report, Grant Thornton had estimated that 70 % of the new arrivals to Cape Town would be international visitors (109000 in total, and 9000 per month), 31000 domestic visitors, and 15500 Capetonians, based on the experience of the winners of the 2007 New7Wonders competition.  However, the world was not in recession in 2007, and the tourism industry was projected at that time to grow by leaps and bounds.

Grant Thornton gained notoriety during the soccer World Cup last year, in having vastly overestimated the visitor numbers and the resultant financial benefit that the event would have. We have seen that all the wonderful international accolades that have been awarded to Cape Town during the course of this year have made little impact on tourism.

It has gone very quiet around Table Mountain and its New7Wonder status, given the proviso of the announcement of the seven New7Wonders that results are only provisional, and that the count is subject to verification and audit in the next two months, a bizarre conclusion to this highly publicised competition. Cape Town Tourism and the City of Cape Town did not qualify Table Mountain’s win status, whereas the cities linked to the other six New7Wonders were very specific about talking about their ‘provisional’ win.

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

Just when all of Cape Town, and even South Africa, is feverishly voting to make Table Mountain a New7Wonders of Nature when voting closes today, damning articles were published yesterday in the Cape Times and The Guardian, questioning the credibility of this competition.

The Guardian wrote that the 4-year competition has become controversial, with some countries having been charged millions of dollars for the marketing use of the campaign.  In its final leg of voting, to select the top seven ‘natural landscapes and places’, a short-list of 28 includes Table Mountain, the Great Barrier Reef, the Maldives, Mount Kilimanjaro, Uluru, the Dead Sea, and the Amazon rainforest.  Charged a mere $199 registration fee to enter initially, some participating countries have since been charged exorbitant fees for a global marketing campaign, leading to the threatened withdrawal from the competition by the Maldives and the Komodo Island national park in Indonesia.  The organisers have encouraged these two attractions to remain in the competition, without any further payment.

Past CEO of Cape Town Tourism and past Mayor of Cape Town, Gordon Oliver, is quoted in The Guardian as asking: “What authority does this organisation have to determine a natural wonder as a finalist? It’s important that our authorities get the credentials of such organisations who set themselves up as the authority to decide the prominence of natural features”. The New7Wonders Foundation has denied charging excessive fees, yet it has confirmed that there are fees to be paid if the Foundation’s branding is used. A spokesperson said that the income derived from the competition funds the running of the competition and ‘maintaining a voting platform’.

In its lead story yesterday, the Cape Times wrote a damning report about the New7Wonders competition, the Foundation earning half of the R2 SMS fee per vote (potentially generating up to R1 billion, if it achieves its goal of 1 billion votes). The report also states that the campaign does not have any standing with international official or scientific bodies.  It has no relationship to UNESCO, which governs the World Heritage sites.  The article also quotes Oliver, and he asks what additional benefit the New7Wonders of Nature title would have.  Being based purely on a vote by SMS or on MXit restricts the campaign to a vote by cellphone and computer owners, and does not reflect the views of the ‘entire world’, said a UNESCO spokesperson, the organisation having distanced itself from the campaign.  The City of Cape Town confirmed that it has spent R1,7 million on advertising country-wide, to encourage South Africans to vote for Table Mountain.  The City has justified its expenditure , in that Table Mountain has made it to the finalist list of 28, from 440 initial entrants.   It also quoted research by Grant Thornton (the consultants who grossly over-estimated the economic value of the World Cup), which estimated that Cape Town specifically and South Africa generally could benefit from being named a New7Wonder of Nature, through an increase of R1,4 billion in tourism revenue.

We have seen that the accolades which Cape Town has received this year, including being named top world travel destination by TripAdvisor, have had little benefit for tourism to date, and therefore question the value of the New7Wonders competition for tourism.  Earlier this week it was announced that votes for Table Mountain were lagging badly behind those of many other finalists destinations.  It has been noticeable that Cape Town Tourism has given Table Mountain little support for its New7Wonders of Nature campaign, despite Sabine Lehmann, Table Mountain Aerial Cableway Company CEO and driver of the Table Mountain New7Wonders campaign, being a Board member of the tourism body.

Voting for the Top New7Wonders of Nature will end at 11h11 GMT (13h11 in South Africa) today, 11 November 2011, reports The Guardian.  In a Southern African Tourism Update article received last night, it is announced that the result will be announced at 21h00 in the V&A Waterfront this evening. www.new7wonders.com

POSTSCRIPT 11/11: I read the City of Cape Town’s ad properly after writing this blogpost - it features Archbishop Tutu with outstretched arms, standing on top of Table Mountain, so badly photographed by Oryx Multi Media that he is unrecognisable.  It also contains a quote by him: “I really can understand how, when God created all that there is he said, ‘I think I’ve got to do something special here’. And so God produced this fantastic gateway in the South - Table Mountain - our mountain, what a wonder!”. Over-optimistically, the ad claims boldly that becoming a New7 Wonders of Nature will ‘boost the South African economy by R1,4 billion per annum’, and that ‘11000 new jobs will be created’.

POSTSCRIPT 11/11 21h15: Table Mountain has just been announced as one of the New7Wonders of Nature, with the Amazon Rainforest in Brazil, Halong Bay in Vietnam, Iguazu Falls in Argentina, Jeju Island in South Korea, Komodo in Indonesia, and Puerto Princesa Underground River in the Phillipines.  What is extraordinary is that the organisers write that the list of seven is provisional, and subject to verification, as late as the start of 2012!

POSTSCRIPT 12/11: Tourism consultants Grant Thornton have issued a media release today, predicting that Table Mountain’s inclusion in the New7Wonders of Nature will attract 108000 new tourists per annum, and that this translates to additional tourism revenue of R 1,4 billion per year, for the next five years.

POSTSCRIPT 12/11: City of Cape Town Mayoral Committee member for Tourism Grant Pascoe has been extensively quoted in Kfm news reports this morning, stating that Table Mountain’s inclusion as a New7Wonders of Nature will boost tourism and create jobs, emphasising the latter in particular.  One hopes that the expectations he is creating will not be dashed!

POSTSCRIPT 12/11: The organisers of the New7Wonders of Nature have found a new way to generate income, and announced last night that they are starting a new campaign to choose the New7Wonders Cities, for which city nominations close on 31 December.

POSTSCRIPT 13/11: A surprise sentiment is expressed in a media release sent today by Cape Town Routes Unlimited, its CEO Calvyn Gilfellan subtly requesting lower rates for ‘ordinary people’ to go up Table Mountain: “We want to salute the thousands of ordinary South Africans who voted for Table Mountain, and whose support ensured that the city’s iconic peak was named one of the New7Wonders of Nature. These ordinary people, we believe, stand tall among the real heroes in this accomplishment. Together with the official organizing committee, they deserve our richest praise and congratulations. Now the challenge is to make Table Mountain, and the rest of Cape Town’s tourist attractions usually associated with visitors who have deep pockets, more accessible to ordinary people. After all, it was the ordinary people who stood up to vote for Table Mountain. We at Cape Town Routes Unlimited, the official destination marketing voice of Cape Town and the Western Cape, stand ready to assist with this”.

POSTSCRIPT 13/11: Earlier this week provincial Tourism Minister Alan Winde did a tandem jump from Signal Hill, taking a ‘leap of faith‘ in the vote for Table Mountain.  He said: “As nervous as I am for this jump, I am far more nervous about this vote”. The Minister stated that the win for Table Mountain would mean a 20 % increase in tourism numbers, reported the Cape Argus.

POSTSCRIPT 4/5: The status of Table Mountain as a New7Wonders of Nature has finally been confirmed, six months after Cape Town’s landmark received a provisional award, subject to a voting audit.  All seven New7Wonders of Nature have had their status confirmed.

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

Dear Minister

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

It is interesting that a review of the advantages and disadvantages of South Africa hosting the World Cup, which started on 11 June last year, and particularly the downside of this world event, is only emerging now.

Yesterday we wrote about the tourism slump that has been caused by the World Cup. In yesterday’s Weekend Argus, a very critical article was published, summarising the book to be published in September and to be entitled “South Africa’s World Cup: A Legacy for Whom?”, written by Eddie Cottle, ‘regional policy and campaign officer for the Building and Wood Workers International, a global trade union federation’.

Cottle is given a prominent space in the paper, and in summary he argues that “…the promises made about the benefits of hosting the soccer World Cup were nothing but ‘bald lies’”!  His introduction is complimentary and gentle, praising the benefits of the event, in there being few technical hitches and little crime. The negatives far outweigh the event, he writes, and he says that South Africa fell for the ’sales pitch’ of the positives of a mega-event, despite “…the volumes of academic studies on the negative impact of mega-sporting events such as the World Cup”.  He says that the promises made about the financial benefit that was the drawcard for South Africa hosting the event, with its resultant contribution to the GDP, tax revenues and job creation, which was promised by the government, FIFA, the local organising committee and tourism consultancy Grant Thornton,  were “…bald lies, wrapped up in the haze of developmental spin. There was no serious study of the opportunity cost of the investment to be made by the government; the impact on the environment; nor the contribution of the event towards the country’s debt position or the social costs of hosting the event.”  He adds that the official economic report was kept secret, and not open to public scrutiny, because of the flaws it contains.

Grant Thornton made many projection errors, not just in overestimating the number of international visitors to the country for the event, but also in the expected expenditure of tourists while in the country, which was only 16 % of the estimated R55 billion. 

The cost to the government for hosting the event was initially estimated in 2003 to be a ‘mere’ R2,3 billion, but given an estimate of R7,2 billion tax revenue, the event was packaged as generating profit.  In reality, the event cost R39 billion. This figure may not reflect the final cost tally.  The Reserve Bank estimated the cost to the state on capital formation to have been just under R130 billion, creating a deficit of R 63 billion.  What is causing a large income hole is that FIFA took R25 billion profit made by the event out of the country without paying any tax! It was the largest profit that FIFA has ever made out of a World Cup, Cottle states.

South Africa was also misled by projections of the employment benefits of the World Cup, 695000 jobs to have been created, of which just less than half were estimated to be retained after the World Cup.  This scenario proved to be incorrect, in that employment decreased by 5 % in the second quarter of 2010.  The losses of jobs in the construction sector was even higher, at 7 %.  Cottle says that as only a handful of construction companies, including Aveng, Murray & Roberts, WBHO, Group Five and Basil Read, built the insfrstastructure for the World Cup, their quotes were higher than required, a ‘grand theft’, he says.   

South Africans were caught up in the spirit of the World Cup, and went on a spending spree using their credit cards, which they are feeling the after-effects of now, partly as locals were led to believe that things would be better financially as a result of the World Cup.  Informal traders were moved out of their normal trading locations, on the basis of FIFA’s rules of a non-trade zone around stadia, impacting on the incomes of such traders.

Cottle concludes: “Indeed, a considerable negative impact has been left through higher levels of both public and individual indebtedness, the high opportunity costs associated with the event, the displacement of local spending and the reinforcing of already high social inequalities in income among and within cities.”  He states that the government’s decision to not bid for the 2020 Olympic Games ’surely is a wise decision’!   

POSTSCRIPT 14/6: Southern African Tourism Update  reports today that the Department of Sport and Recreation will request the government to re-consider the Olympic Games bid for Durban for 2020, before the bid deadline of September.

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

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

It was depressing to read the article”The Business Case for Tourism and a strong brand for Cape Town” by Cape Town Tourism CEO Mariette du Toit-Helmbold, and published on the Cape Town Tourism Blog.  Oddly it has not been sent to its members.  The most disturbing prediction it contains is that the R14 billion Cape Town tourism industry, which employs just short of 300000 staff, will only recover in 2014, in getting back to the 2007 level, the last good year for tourism in Cape Town.  What is disappointing is that Mrs Helmbold does not provide any guidelines to her Cape Town Tourism members as to how businesses should survive the next three years of poor business, nor does she spell out what she and her organisation are doing to market Cape Town more visibly!

To set the scene, Mrs Helmbold writes that international arrivals to Cape Town as well as domestic arrivals have stagnated due to the ‘Global Financial Crisis’, as she calls it, and she estimates a total loss of R 1,5 billion for the Cape Town tourism industry between 2008 - 2014, with zero job creation as a result.  Unlike other provinces, Cape Town and the Western Cape has little Africa-business, with more than 80 % of its business coming from Europe (including the UK, one assumes) and the USA.  Cape Town is a small fish in a massive global tourism pond, with our city’s market share being 0,2 % of world tourism.  She blames SA Tourism by implication for doing too much marketing of wildlife, and too little of the cities in our country :”…many national campaigns are of a tactical nature, which do not necessarily build knowledge and esteem values of our cities”.  The marketing of Cape Town, which is the responsibility of Cape Town Tourism, does “not allow for Cape Town to be compellingly and relevantly portrayed to potential visitors”.  This sounds odd, as Mrs Helmbold is pointing at her own organisation, but she does not explain what constraints there are to marketing the city. She also states that Cape Town’s attributes of being “iconic, complex and multi-faceted” are not evident to tourists.

The rest of the five page document becomes a long and theoretical ramble about how Cape Town should be positioned and at whom it should be aimed: in summary, the marketing of Cape Town no longer should be focused on leisure tourism alone, by highlighting the beauty of Cape Town, but it should incorporate business, investment, academia, and the creative sectors too. All of this appears to have been written to justify to its funders, the City of Cape Town, that unnamed ‘partnerships’ (probably the writers of the document, given its theoretical nature and unusual style for Mrs Helmbold’s writing) are “waiting in the wings for public sector endorsement of Cape Town Tourism’s new 2011/2012 marketing strategy and for the brand execution plan”. 

Sydney is used as an example, in how the 2000 Olympic Games caused a five-year tourism slump to that city, mainly because they stopped marketing themselves, thinking that they had world exposure.  The key learning points for Cape Town Tourism are that cities do not market themselves, they need to be marketed; investment in infrastructure and hosting events create growth and ‘livability’, but may not be relevant to tourists: “lack of marketing induces invisibility and irrelevance, which in itself reduces demand”.

The conclusion of the article seems far too obvious, and one must question why Cape Town Tourism, custodians of brand Cape Town, have not been able to identify the poor tourism and resultant poor industry performance trends, and have not acted proactively to address these problems.  Mrs Helmbold concludes: “If we do not act decisively now our industry and the economic well being of our city and people are at great risk.  If we don’t proactively engage in a new marketing and branding strategy we run the risk of being positioned nonetheless by our competitors, our critics and the media, and most likely to our disadvantage”. The last sentence does not make sense in its wording, nor can one understand why Cape Town Tourism has not changed its marketing strategy to date, having been responsible for the city’s marketing for the past three years already.

As we have pointed out on this Blog, the recent TripAdvisor accolade of Cape Town being ranked in first place as its Travellers’ Choice Top Destination, has seen no tourism benefit at all, and this is echoed by Ms Helmbold: “Although we are considered as one of the new cities to watch for 2020 and continue to rake in travel accolades, it is no guarantee for success or economic growth”.

One must question whether Cape Town Tourism is capable of driving such an important campaign, influencing the revenue of almost all the city’s businesses, all directly or indirectly influenced by tourism, and of its population, dependent on jobs.  Cape Town Tourism’s Marketing Manager until recently was Lianne Burton, a journalist, and not a marketer.  Her departure from the organisation has been kept low-key.  Ms Burton has not been replaced to date.  Mrs Helmbold and her PR Manager Skye Grove are very active on Twitter, but this is rarely about tourism, and far more about their social life. We must question why their time during working hours is not focused on their work and the marketing challenges of our city !  A further concern is the information that we have received that the highly respected PR company that Cape Town Tourism had appointed in Germany, KPRN, no longer does the PR for Cape Town.  There appears to be no visible benefit to tourism in Cape Town of the appointment by Cape Town Tourism of PR agencies in Holland, Germany and the UK.

We wrote to Mrs Helmbold, and asked her some questionsaboutthemarketing of Cape Town.  The first question related to the replacement of Ms Burton.  It appears that Ms Burton left some time ago, but is assisting Cape Town Tourism in a “consultative role” until the end of this month.  A new Executive Manager: Marketing should start on 1 July, she wrote.  Of concern is that Cape Town Tourism also does not appear to have an eMarketing Manager, with a job advertisement posted on Careers24 yesterday, and requiring the person to start on 1 July, not giving anyone time to work out their notice!   We asked about the international PR companies that had been appointed, but Mrs Helmbold was only detailed in respect of the non-renewal of the contract with Kleber Public Relations Network, which has worked with SA Tourism for years.  The company has been replaced by Akomasa Creative Connection in Germany.  Mrs Helmbold did not provide information about the success of the PR campaigns overseas, other than to say that information about it has been presented at workshops, which not all Cape Town Tourism members can attend.  One hopes that Cape Town Tourism can justify its international spend by sending members a detailed report of their international activities to obtain exposure for Cape Town. 

In reply to our question:”What is Cape Town Tourism doing to prevent a bloodbath of restaurant, hotel and other accommodation closures due to poor forward bookings?”, Mrs Helmbold was generalist and vague, and she does not appear to understand that a solution must be found NOW, and not in months to come! This was her disappointing response:

“As I explained in the Paper done on the Business Case for Tourism, the global financial crisis and the subsequent consumer behavioural change has had a significant adverse effect on the tourism industry; demand has diminished, visitor spends have steadied and costs have increased. Our over-reliance on traditional source markets, worse hit by the GFC, places us at further risk. There is not a quick-fix for this problem and no one could anticipate the extend (sic) of the impact of the GFC, of which we are really only now experiencing the magnitude of the impact. This is of course exaggerated by seasonality and as I said before our over-reliance on international leisure visitors from mainly Europe and the US.  

Investing in a strong, multi-dimensional brand is critical. We are pursuing private partners for a few significant brand platforms like international TV productions (BBC, National Geographic), events and campaigns, focusing on our unique strengths as a destination i.e. food and wine. We are focusing our efforts and resources on the “dream” and “conversion” part of the customer journey – assuming that the choice to come to Cape Town is not an obvious one and expensive to get here. We have to reinforce the awareness created during the World Cup, but move to conversion with good value for money offers. From an eMarketing perspective we are adding bookabilitytoourweb-platforms by July this year, starting with accommodation and then introducing it for tours and activities as soon as the new module is built. Through the new marketing alliance with Joburg and Durban we should be able to leverage some of SAT’s marketing spend, this will be a key focus for us in the next 4 months.

Whilst we continue our investment and reinforce our presence in traditional international leisure markets, we are investing in domestic tourism, using mainly some key events as draw-cards and working with the business sector to start changing negative perceptions around our business brand. Both the domestic and business markets are complex issues and will take a long-term approach to turn the tide against seasonality.

We are hosting a series of product workshops within the next few months on value, price, packaging and marketing alignment aimed to assist the industry to become more competitive and mitigate some of the risks faced within these tough economic times.

We will all have to work very hard together, under a powerful and united destination brand, to change the current trends and grow tourism into a more sustainable, year-round industry with a more healthy balance between international leisure, business and domestic tourism.

We are making a few significant changes to our marketing strategy and as soon as the plan is finalised and partners confirmed we will share it with the industry.”

We call for a heavyweight Marketing professional to be appointed, to drive Cape Town Tourism’s marketing of Cape Town. Ms Helmboldhasbeen running “Brand Cape Town” workshops for the past three years, and she is still asking workshops what Cape Town stands for.  Surely by now she and her team should have decided on a unique positioning for Cape Town that would be universally applicable in communication with all the sectors it wishes to attract to Cape Town.  Ms Helmbold’s article sounds like a city marketing organisation that is overwhelmed by the problems its tourism industry is facing, and that does not know the way forward - a very scary situation indeed!

POSTSCRIPT 10/6:  The only response from Cape Town Tourism is this sarcastic Tweet from its PR Manager Skye Grove:  @MariettedTHons le, sit, loop, rol rond op twitter.. tsk tsk.. mar (sic) ek belowe ek sal more bietjie werk.. @SoniaCabano1

POSTSCRIPT 10/6:  Yesterday Cape Town Routes Unlimited CEO Calvyn Gilfellan was reported on Eye Witness News to have urged ‘hotels and industry suppliers to reduce their rates to make travel more affordable for locals’.  He said “I think the industry must really wake up and make themselves more affordable if they want to remain competitive in a very cut-throat industry”. 

POSTSCRIPT 12/6: A business tourism event with a difference was the hosting of the global Playboy editors’ conference, which took place at the Mount Nelson Hotel earlier this week, reports the Weekend Argus .  The group of fifty met for three days.

POSTSCRIPT 13/6: The Bureau of Economic Research sent its results for the confidence in the Services industry today.  Of the service sectors surveyed, Accommodation has by far the lowest Business Confidence Index at only 25% (the next lowest is Real Estate at 41%).  Accommodation bookings are expected to decrease by 56% in the second quarter of 2011, relative to 2010, which was out of the ordinary for bookings due to the World Cup.  For the third quarter of this year, bookings are expected to be down by 23 %.  Trend information supplied showed that the last period of growth for the Accommodation industry was the fourth quarter of 2007.

POSTSCRIPT 13/6:  The provincial Minister of Tourism, Alan Winde, has announced that his plans to consolidate a number of marketing agencies for Western Cape businesses into an Economic Development Agency are back on track, and the Agency is expected to be launched in November, reports the Cape Argus today.  Perhaps this is the agency that can do the business marketing of Cape Town.  However, Cape Town Tourism is no longer on the Minister’s list of agencies which he wants to consolidate, his plans to do so originally causing a huge outcry.  The agencies to be consolidated include Wesgro, Cape Town Routes Unlimited, the Cape Craft and Design Institute, the Cape Film Commission, Calling the Cape, the Cape Town Boatbuilding and Technology Initiative, the Cape Music Industry Commission, the Cape Town Fashion Council, and ten others.    

POSTSCRIPT 14/6:  One company that is benefiting from the tourism slump is the Protea Hospitality Group, which is leasing and buying hotels that have ‘over-extended themselves and are now struggling to survive due to the current slump in the local hotel industry’, reports Southern African Tourism Update.  Protea’s CEO Arthur Gillis predicts that ‘many of South Africa’s 80 hotel brands will disappear’.  Gillissaid that he doubted whether there will be a tourism boom ‘unless it gets more bums on airline seats’. He suggests that SAA should fly routes in the interest of tourism, whether profitable or not.

POSTSCRIPT 14/6: Gillian Saunders of tourism consultancy Grant Thornton said about the tourism industry recently: “It’s really tough out there”.  She blamed this on the recession, the strong Rand, increased costs such as electricity and labour, and an oversupply of accommodation, reported the Cape Times.  City Lodge Hotels CEO Clifford Ross said: “It’s probably the worst I have known for 32 years”.  He added that no one “expected the drop-off after the World Cup to be so severe. There will be casualties in the market. Quite a few (hotels) are teetering on the brink”. 

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