Whale Cottage Portfolio Blog

Having been a market researcher for a large part of my career, I completed one of the 5 questionnaires received yesterday from Grant Thornton, a consultancy contracted by the Department of Tourism to conduct a survey amongst accommodation establishments, with shock as to its poor design.  The results of the survey will be used to prove that South African accommodation is not ripping off soccer fans for the World Cup.

Given that the consultancy will stand to make a good income out of the survey, it is surprising that Grant Thornton have got the survey design so wrong, meaning that much of its survey will be meaningless, being based on incorrect or missing information.  It is pretty clear that Grant Thornton does not know how the tourism industry operates, despite its work it conducts in the industry!

The survey problems are the following:

1.  The survey shows that it is hotels that have been used as a model for the survey.  Guest houses, self-catering establishments, and B&B’s outnumber hotels by far.

2.  The questionnaire becomes intimidating when one has to state one’s room types - again the design is for hotels, and the various room types do not match those of guest houses/B&B/self-catering establishments.  Surprisingly, single rooms are not listed as an accommodation type.

3.  It is made even more complicated in respect of the rates charged per room type - small accommodation establishments do not quote “STO” rates, and tend to charge the same for all room types - the table requesting this information could be intimidating for a small accommodation establishment.  “Not applicable” options are lost after the first question, and one is not told how to deal with pricing of room types one does not have.

4.  A bigger concern is the time period used for the study - the industry has been admonished for “price-gouging”, and FEDHASA CEO Brett Dungan has pointed a finger at the industry, telling it that the World Cup runs from 11 June - 11 July, and that it should therefore charge normal winter rates from 1 - 10 June and from 12 July onwards.   However, the survey asks for one World Cup rate only, from 1 June - 31 July, thereby condoning this pricing policy.

5.  The question that shows that Grant Thornton is not in touch with the industry is the one requesting information about current pricing - it obviously wants to compare the World Cup rates charged with those charged currently and the year prior - however, it defines these as “2010″ and “2009″.  In the accommodation industry generally, and this would include hotels, one quotes 2008/2009, 2009/2010, etc, giving that the rates usually change from the start of the summer season of every year, i.e. October.   The information generated about current rates would therefore create confusion and potentially incorrect answers, importantly required as a benchmark for the World Cup pricing comparison.

It is inexcusable that a company of Grant Thornton’s stature could have got a survey, which could have been made so much more simple and more meaningful, so wrong.

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

The power of FIFA in organising the world’s largest sporting event is hitting home to the media, which is subject to draconian requirements if media representatives want to be accredited for the event, according to www.moneyweb.co.za 

Some of the  media restrictions for media accreditation include:

1.   Newspapers may not publish photographs or videos relating to the event on their websites - only copy may be transferred there

2.   Reporters may not write about the hotels at which the soccer teams are staying

3.   Newspapers may not be sold in a restricted area around the stadium, in a radius of about 800 meters

4.   Whilst FIFA commits to guaranteeing freedom of speech, it has a clause that states that news organisations “may not bring Fifa into disrepute”.

“Freedom of press is guaranteed”, says FIFA’s Head of Media, Pekka Odriozola.   “That is very important for us, and you will be able to cover the World Cup in the best possible conditions.  We really work hard to have the best possible facilities, the best possible access to the teams, and the competition.  I can tell you that the international press in general are always satisfied with the service because at the end of the day, we are servicing the media.  Really, there is nothing to fear” he added.

FIFA came under fire in Germany for its media restrictions.  It appears that the media simply ignored FIFA’s restrictions regarding positive reporting about FIFA, and no journalists appear to have been evicted in that country in 2006.

The South African National Editors’ Forum (Sanef) says as follows: “It’s outrageous what Fifa is used to get away with.  The tragedy though is the virtual absence of outrage by local media and editors on the violation of freedom of the press on such a scale.”

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

South Africa is one of 31 destinations recommended for travel in 2010 by the New York Times on its site www.nytimes.com.  The top five destinations are Sri Lanka, Patagonia Wine Country (San Patricio del Chavar), Seoul, Mysore in India, and Copenhagen. 

“Waiting in the wings”, according to the article, as places to go to in 2010 are countries/cities which include Damascus, Antarctica, Leipzig, Los Angeles, Las Vegas, Shanghai, Minorca, Costa Rica, Marrakesh, Bahia in Brazil, Kitzbuehl in Austria, Norway and South Africa.

South Africa made 22nd place on the list, and its selection is motivated by the Soccer World Cup taking place this year,  and Cape Town is highlighted as the best city in the country.  The full text motivating the selection of South Africa on the list follows:

“As host of the 2010 World Cup this summer, South Africa has gotten its game on with a flurry of new stadiums, new hotels and safari lodges.  While soccer is being played across nine cities, much of the action off the field is taking place in Cape Town. Already known for its stunning beaches, mouthwatering cuisine and sophisticated night life, the city is welcoming high-end hotels, including the recently opened One & Only Cape Town and the forthcoming Taj Cape Town (www.tajhotels.com/capetown). Set to open this month, the Taj will have 166 rooms, many with views of Table Mountain. Also scheduled to open in Cape Town this year — but not in time for the World Cup — is the second branch of the nascent Missoni Hotels group (the first property opened in Edinburghlast year, with future outposts planned for Kuwait, Brazil and Oman). Between matches, there’s plenty of time to go on a safari. If money is no object, check out the Ulusaba  (www.ulusaba.virgin.com), a private game reserve that’s part of Richard Branson’s collection of luxury vacation properties. It has opened the new Cliff Lodge, with private swimming pools and spectacular views of the bush. Prices start at 13,800 South African rand (around $1,878 at 7.35 rand to the dollar) a night for two.”

The full article can be read here.

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

The festive season saw fewer holiday makers in the Cape, they stayed for a shorter period, and they spent less during their stay, say the tourism authorities, reports Fin24.   According to the Cape Argus, international tourism numbers dropped by 6 %, compared to 2008, due to the recession and due to the stronger Rand, offering lesser value for money.

According to Cape Town Routes Unlimited CEO Calvyn Gilfillan the Garden Route was quieter, speculating that this was due to the water shortage in the area.   The bookings however were slow compared to previous years, long before the water crisis became a reality.   The Overberg (especially Hermanus) and the Cape Town city centre were quieter, while the Boland reported similar tourism numbers as last year.   The West Coast had improved visitor numbers, being a more affordable destination.

Tourists were looking for affordability, says Cape Town Tourism, and that is why 5-star hotels struggled financially as guests traded down to lower star accommodation or even to self-catering accommodation.   Fedhasa Cape reports that occupancy in 5 star hotels reduced by 10 - 20 % compared to last year, over the festive period, while 3 and 4 star hotels “did better”.

The lower number of visitors from Johannesburg was evident in Cape Town and especially Plettenberg Bay.  It is said that the Johannesburgers stayed home this festive season, to save money in order to renovate their homes, which they want to rent out for the FIFA World Cup, at which time they want to leave the country.  Even the Table Mountain Aerial Cableway Company had mainly Capetonians as visitors.

At Whale Cottage Camps Bay bookings are starting to look good from 28 January onwards, the start of the weekend on which the J & B Met takes place, and almost all of February is booked out already.  The Argus Cycle Tour in March is also good for business.

Upmarket restaurants have been reported to have also felt the pinch over the festive season, and many did not manage to fill their expensive tables for New Year’s eve, with prices as high as R 2 000 per person.

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

Tourism and travel in 2010 will remain depressed, but travellers will demand more individualised holidays, and will be seeking value for money, in the form of good rates, travelling to countries that offer good exchange rates, and joining clubs that offer exclusive discounts, according to the website www.mrandmrssmith.com, reports The Star.

Stark minimalist hotels will be replaced with homely “granny-chic” ones, which are comfortable and “homey”.   “Green” travel becomes more important, with travellers checking out the “green credentials” of their destinations.

The Top 10 specific travel and tourism trends highlighted by the website are the following:

1.   “Cheap-chic holiday houses and apartments”, opening up more self-catering accommodation with higher levels of service and presentation

2.   Guest Houses and B&B’s will become “Boutique”, as have their hotel counterparts, to give them “come-hither sexiness”

3.   All-inclusive packages, with no hidden service charges or extras

4.   Hotels are increasingly becoming environmentally independent, to lower their carbon emissions - water from a local spring, solar energy, saving seabirds,  etc.

5.   “Bleisure” travel will increase, whereby business and leisure travel are combined, with business travellers wanting their corporate travel needs met, but within a leisure environment, or adding on extra time to a business trip, to which they invite their partner.

6.   Mexico, and surrounding countries, have increased in attractiveness as a luxury travel destination

7.   “Traincations”  will increase, with high-speed train travel across Europe.

8.   “Flashpacking” is backpacking with a higher budget and more style, closer to 5-star accommodation than youth hostels

9.   “Granny chic” is a move away from “look-don’t-touch minimalist” to “traditional-with-a-twist homey comforts” hotels.

10.   “Hip hotels” that are family friendly - they not only “tolerate” children, but welcome them and make the family holiday an enjoyable one.

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

We asked Cape Town Tourism on Saturday why they had not informed members of Cape Town Tourism of the Private Home Registration program they have launched.   Lianne Burton, spokesperson of Cape Town Tourism, has apologised for this communication error, and sent the following statement to Cape Town Tourism members today: 

“With regard to the 2010 FIFA World Cup, as Cape Town’s official tourism authority, Cape Town Tourism’s role is to ensure that the expectations of World Cup visitors are met and exceeded to ensure a lasting tourism legacy for Cape Town. Hence our decision to offer full paid membership to Cape Town Tourism for temporary accommodation providers, covering the costs of assessing their accommodation to ensure that it meets our minimum requirements, advising owners on visitor services and guest relations standards, and offering potential visitors an assurance that there is comeback via Cape Town Tourism if they are unhappy.

This is our role as the Visitor Services organisation for Cape Town and we are committed to fulfilling it for the benefit of Cape Town’s tourism sector as a whole. Bad visitor experiences, even if they are as a result of temporary accommodation promises not being delivered on, will hurt Cape Town’s reputation for offering exceptional accommodation for every budget; from 5 star Hotels to Backpackers, B&Bs and private homes or tented villages. Great visitor experiences during the 2010 FIFA World Cup will ensure repeat business for the tourism sector. Ours is a long-term view and we are committed to this vision.”

Lianne also replied to our questions addressed to Cape Town Tourism regarding the Private Home registration program:

Why have you not informed us as members of Cape Town Tourism about this?

Bad visitor experiences, even if they are as a result of temporary
accommodation promises not being delivered on, will hurt Cape Town’s
reputation for offering exceptional accommodation for every budget; we are
known for our excellent accommodation standards, and we would like this to
apply over the World Cup period, whether for 5 star Hotels, Backpackers, B
and Bs, private homes, university residences or temporary tented villages.

The established tourism industry stands to suffer if unscrupulous temporary
accommodation providers aiming to make a quick buck take advantage of
unsuspecting World Cup visitors. The entire tourism sector will then be
tarred with the same brush and Cape Town’s reputation as a quality
destination will be damaged, to the detriment of everyone working in
tourism.

In contrast, great visitor experiences during the 2010 World Cup will ensure
repeat business for the established tourism sector, since most temporary
accommodation providers are purely focused on the World Cup opportunity and
will not be operational beyond June and July 2010.  Hence the repeat
business generated as a result of Cape Town¹s standards of excellence in the
established and temporary accommodation sector during the World Cup, will
greatly benefit established accommodation providers.

Cape Town Tourism’s is certainly a long-term view and we are committed to
this vision.”

What survey have you done to establish what our availability is for the
World Cup, especially if we have not contracted with MATCH?

“Cape Tourism in the process of refining our online accommodation and tour
operator listings and booking system and will be advising members of the
strategy shortly. Our contact centre is currently fielding 2010
accommodation booking queries and passing on all enquiries to members who
meet the criteria outlined in the requests in terms of number of rooms,
proximity to the stadium, budget etc.

“Why would you want to divert attention from your stated objective, i.e. to
market Cape Town and its products, to advise and organise non-professional
private home owners in their marketing?

The Horwath HTL Hotel Performance Confidence Indicator survey for the fourth quarter of 2009 paints a mixed picture as far as Occupancy, Average Room Rate Performance and Total Revenue are concerned.

Overall, 53 % of accommodation establishments expect a decrease in Occupancy, with only 19 % expecting an increase.  Average Room rate is expected to increase for 51 % of establishments, while almost equal numbers of establishments said that their Total Revenue would increase, decrease or stay the same.

Comparing their performance in the first 8 months of this year with that of last year for the same period, Occupancy had clearly declined, by as much as 15 %, for 74 % of all establishments interviewed.   Worst hit were 4-star establishments, with 21 % having lost 15 % or more in occupancy.   In the Western Cape only 19 % of establishments expected an increase in the 4th quarter of this year.   Occupancy is more likely to increase in lower graded establishments in this province.

Average Room Rates increased for 59 % of establishments, by up 5 % for a third of all establishments, and by up to 5 - 15 % for a further 26 % of establishments. Five-star establishments, and the ones with 151 rooms or more, did better than their 3-/4-star  smaller counterparts on this measure.  In the Western Cape 56 % of hoteliers expected the Average Room Rate to increase, especially the lower graded hotels.

Total Revenue decreased for 50 %  of the establishments, especially for 3 and 5-star hotels.  Those with an increased revenue did not see an increase of more than 5 % on a year ago, but small boutique hotels saw their revenue increase by as much as 15 %.

The study was conducted amongst 104 hotels throughout South Africa.    If Whale Cottage Camps Bay is a sample of one, a very different picture emerges for guest houses - November and December are almost fully booked, thanks to the FIFA Final Draw on 4 December, and the New Year period.

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

2010 World Cup soccer fans coming to South Africa next year will be the target of overpricing of car rental, hotel accommodation and air transport, according to a number of travel industry players interviewed by Travel News Weekly.

Tour operators and travel agents complain about the “2010 rip-off”, and many have been quoted double the normal accommodation rate by hotels.  Showing their greedy side, the hotels are also cutting the commission percentage they are offering agents, given that they expect to be fully booked.   “It is great for those making the money, but in the long run, it is going to reflect badly on South Africa.” said an agent.  Others have decided to not be part of the ‘rip-off brigade’, and Dorienne Levitt of African Stay said as follows: “I have decided to not be part of that and am only dealing with providers who offer reasonable prices.  I will try my hardest not to use vendors who are acting without integrity, during 2010 and thereafter”.    In addition the conditions set by hotels with minimum stays of 8 - 30 days are too stringent, agents say.   Protea Hotels has contracted 80 % of its rooms to MATCH, at prices ranging between R 950 - R 4 500 per room. 

The Travel News Weekly article also quotes Brett Dungan, the national CEO of FEDHASA, as saying that his organisation would not “associate with nor support hotels that were not affiliated to MATCH and were “ripping off” clients.  The reason why we have been working so closely with MATCH is to eradicate the issue of price gouging”.  But it is MATCH that is ripping soccer fans off, by adding 30 % commission on all its contracted accommodation rates!

Transport costs too have soared, with car rental prices doubling from the already high 2009 Confederations Cup rates levels.  Avis says it will increase its rates by 15 - 20 %, justifying this on the basis of “the expected demand and additional work required”!

Airfares for 2010 too are a rip-off, for both incoming and outgoing flights, and for domestic travel, that is if any tickets can be found to be available.  Most airlines have not released their seats for the World Cup period.    Domestic flight tickets are likely to cost double the normal fare, reports the Weekend Argus, at about R 3 800 for a return airfare between Johannesburg and Cape Town on SAA, and at R 5 300 on BA/Comair.   International flight prices are set to triple, the airlines milking a money-making opportunity after many years of tough trading.  

Coach companies too have imposed “crippling conditions”, agents say.

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

Wine marketing will not be the same again if the planned provisions in the proposed amendment to the Western Cape Liquor Act and Regulations are introduced.   However, some changes are positive.

Wine.co.za reported about the implications the “stern regulations” for wine estates in South Africa, as well as for persons selling wine, or just collecting it.

The proposed regulations give municipalities a greater say in wine marketing, with wine licence applications costing R 1 000 for the application alone, R 2 000 for the granting of a wine licence, and R 4 000 per annum for the renewal fee.

The new Act, according to Danie Cronje, of Cluver Markotter Incorporated, and a speaker at the recent South African Wine Tourism Conference, demands that wine estates must have a licence to produce wine - previously they needed it to sell wines.    The new Act only exempts garagistes who make wine for themselves and do not plan to resell it, from the licence.   Producers who use other producers’ wine cellars will also have to apply for a licence, as will wine estates who sell their stock to existing licence holders, such as hotels, restaurants and liquor stores, currently being exempt from a licence requirement.  

The article refers to the Act allowing wine estates to now charge for winetastings, but this has been done for some time now.   The winetasting times are subject to the  municipal regulations.  So, for example, it is proposed that liquor stores, wine shops and supermarkets be allowed to open from 9h00 - 18h00, while restaurants, hotels, clubs and pubs can trade from 11h00 - 2h00, if they are not in a residential area, where the trading time is reduced until 21h00.   

Licence applications will also have to be advertised in local newspapers, displayed on the premises, and submitted to the municipalities and ward councillors, the Act proposes. 

Wine estates may not sell more than 30 litres of wine, 10 litres of spirits, or 100 litres of beer per day to a person who does not have a liquor licence.   It would also be an offence to have more than this quantity of liquor in one’s possession, even in one’s home, a major knock for wine collectors, who would be forced to get a liquor licence as well.  

One good aspect of the proposed legislation change is that supermarkets may sell wine up to 16,5 % alcohol content, compared to 14 %, once the legislation is passed.   Also, wine sales on Sundays in supermarkets could also be allowed, subject to municipal approval thereof as to the trading days and hours. 

Another positive aspect of the Act is that open bottles of wine may not be transported, and one may not drink alcohol and drive, with heavy fines to be implemented.

Cronje has recommended to the wine industry that liquor licence applications should be done before the new Liquor Act is legislated, because it will become a more cumbersome and expensive process once the Act is legislated.

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