Whale Cottage Portfolio Blog

The Minister of Tourism, Marthinus van Schalkwyk, has announced that he has contracted Grant Thornton to conduct a survey of accommodation prices during the June/July World Cup period, and to benchmark these against the prices of accommodation in countries that previously hosted FIFA World Cups, reports www.iol.co.za.  The survey is to be conducted, despite the tourism industry body Tourism Business Council of South Africa and FIFA’s MATCH accommodation agency denying that World Cup prices are excessive.

The survey comes amidst international criticism that accommodation pricing is excessive and deemed to be “rip-off”.   Van Schalkwyk said that “the survey would help safeguard the reputation of the South African tourism industry, since South Africa is a ‘value-for-money destination’  Price-hiking could damage the reputation of our tourism industry”, he said.

Van Schalkwyk did make it clear that tourists could not expect to pay normal low-season rates during the World Cup : “……June and July 2010 will be high season in South Africa”.

The Grant Thornton survey will only be conducted amongst professional accommodation establishments, and will exclude private homes.

The Tourism Business Council of South Africa (TBCSA), which claims to be ‘the official umbrella body for organised business in the South African travel and tourism industry’, and MATCH, FIFA’s accommodation agency, have made a joint statement that the industry pricing is not rip-off nor excessive, reports S A Tourism Update.  The TBCSA chairman Mmatsatsi Marobe praised the tourism sector for not charging “exorbitant prices as they understood the long-term effect on tourism into South Africa, but it was the doing of a few small suppliers that put South Africa in a bad light”, she said.   The MATCH Chairman, Jaime Byron, came with the following brilliant logic about pricing: “…the 2010 FIFA World Cup was expected to be more expensive than previous tournaments because it was a long-haul destination.  This makes South Africa inherently more expensive”, he is quoted as saying!   It was noted by them that the media should be careful about attacking the World Cup pricing, as it had to be accurate about what exactly was included in the prices quoted in such media reports (e.g. accommodation, tickets, transport).  

The TBCSA/MATCH statements are ironic, as MATCH has been blamed for excessive “rip-off pricing” since it started recruiting accommodation for the World Cup four years ago, demanding a 30 % commission from accommodation establishments initially, and now just adding this commission percentage on to the already high accommodation rates! 

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

FIFA’s MATCH accommodation agency has cancelled 65 000 bed nights in the Western Cape, and 441 695 bed nights nationally, reports the Cape Times.

The release of rooms without cancellation penalty to MATCH is a further sign that the World Cup may not be as successful in terms of international bookings as may have been hoped internationally.  The article’s opening paragraph states: “FIFA has relinquished 65 022 rooms nights in the Western Cape because of lack of demand….”

Vivienne Bervoets, Senior Accommodation Manager of MATCH,  stated in the article that the reasons for the room cancellations include that the rooms booked by MATCH were not on match days, that the establishments were further than 70 km from a host city, and that the accommodation type (e.g. timeshare) proved to be unpopular with international visitors.   The bulk of the room nights cancelled in the Western Cape appear to be in Cape Town.   The dates already cancelled appear to be bookings MATCH made with establishments for dates before 11 June and after 11 July, signalling that pre- and post-World Cup tours are unlikely to happen.   The article intimates that further accommodation cancellations may be possible, depending on the demand for tickets.

Business Day also reported on the accommodation cancellations, stating that 31 % of the bed nights booked initially, and representing 7 843 rooms, had been cancelled by MATCH.  The timeshare cancellations amounted to close to 31 000 timeshare weeks.  Bervoets is quoted as saying “Match has substantially curtailed its procurement drive to concentrate on sales and operations”.  She stated that MATCH is still looking for “good quality hotel rooms, specifically in Gauteng, and also for contract properties if customers specifically requested this”.  

It is surprising that so much of the room stock has been cancelled, given the outcry about the poor support of MATCH, and that it had to bring in cruise liners and contract properties in neighbouring countries, including Mauritius, to build up sufficient accommodation stock for the World Cup accommodation requirements.  

The Cape Argus also reported on the MATCH cancellations, and quoted Dr Laurine Platsky, the Western Cape province 2010 co-ordinator, as saying that “rooms were released because of a lack of demand and fewer bookings than expected.”   Rooms cancelled in the Western Cape were on the West Coast and in outlying areas, she said.  

The room nights cancellations may imply that MATCH’s Matchville concept, in creating hubs or concentrations of accommodation outside host cities, in supplementing accommodation supply, may have raised the hopes of accommodation establishments which cannot be fulfilled.   In Plettenberg Bay, a Matchville centre, for example, it appears that 50 % of the room nights booked by MATCH have been cancelled already.

MATCH has until 10 April to cancel further room nights without being subject to its cancellation policy, and resultant payment to accommodation establishments for accommodation cancellations.   More cancellations are expected before this date.

Accommodation establishments who have had their MATCH room nights cancelled are unhappy, saying that FIFA “overhyped” its accommodation needs, reports a further article in the Cape Times.

FEDHASA CEO Brett Dungan is quoted in reports about the MATCH cancellations, in which he opportunistically offers cancelled MATCH establishments the hope that his new (personally owned) website “portal” www.rooms4u.travel, which has been set up on behalf of S A Tourism, can fill all the room nights cancelled by MATCH.  This is contradictory sentiment, as Dungan has praised MATCH consistently, and protected their rip-off pricing, pointing a finger at non-MATCH contracted properties and blaming them for “rip-off” pricing!

Even Cape Town Tourism has insensitively “welcomed the release of the rooms and the opportunity now available for establishments to market their rooms during the 20 weeks leading up to the tournament.   Experience has taught us that last-minute bookings for events like the World Cup are not unusual and we are expecting an increase in booking confirmations during the next few months”, according to a quote in the Cape Times.

Non-MATCH contracted guest houses are complaining that bookings are not looking as rosy as they were led to expect, and many are only about 50 % booked, even if they are charging “reasonable” prices for their accommodation.

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

Today we publish an anonymous letter, featured on Southern African Tourism Update on 22 November 2009, which supports the Whale Cottage accussation that MATCH is responsible for rip-off pricing, and not the non-MATCH registered establishments!

“It is my opinion that MATCH is also guilty of price gouging. I recently had an enquiry from one of my regular Mozambique corporate clients who wanted to put together an incentive for their top executives and clients.  This was a group of 100 people.  I managed to find reasonably priced accommodation and transfers for them in Cape Town.  They were going to charter a flight from Maputo to Cape Town for the weekend.

The problem came in trying to purchase the tickets to the match.

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

As MATCH is unable to fill the missing 15 000 beds it requires to accommodate FIFA’s officials, sport teams and ticket package holders, it has made the shock announcement that it is letting go of its requirement that 2010 World Cup accommodation must be graded by the Tourism Grading Council, reports the Southern African Tourism Update.

MATCH requires 55 000 rooms, and has contracted 40 495 rooms to date, of which 75 % are hotel rooms and 25 % small accommodation rooms.

The report says that MATCH will use its “discretion” to select non-graded accommodation for the event.   The Memorandum of Understanding between the Department of Tourism and MATCH will be amended to reflect the grading requirement change.

However, Minister of Tourism Marthinus van Schalkwyk was adamant that he preferred that graded accommodation be used: “The South African government neither supports nor promotes the use of non-graded accommodation establishments.     Furthermore, the South African government respects the right of all accommodation establishments, whether graded or not, to choose whether they want to contract with MATCH or not”.  These are interesting words, reflecting the Minister’s understanding of the resistance to MATCH by the small accommodation sector, regularly reported by WhaleTales in this blog.

In the media statement, MATCH reiterated that it will not contract private homes, an initiative driven by Seeff and Pam Golding estate agencies.

FEDHASA National CEO Brett Dungan addressed the Parliamentary Portfolio Committee last week, and trashed the Sunday Times report of a week prior, which described the resistance from the small accommodation sector to FIFA’s “MATCH-fixing”.   Southern African Tourism Update reports that Dungan said that MATCH requires ”100 000 rooms”, clearly an exaggeration of the FIFA accommodation requirement.   Dungan is also quoted as saying that only 13 % of small accommodation establishments have contracted with MATCH, which, if correct, reflects how deep the distrust of MATCH is by small establishments.   Dungan also is quoted as saying that a 20 % commission is a standard fee to pay when receiving business from tour operators.  Once again he appears to be poorly informed, as MATCH is taking a 30 % (not 20 %) commission on top of the 2010 accommodation rates, a most exceptionally high rate.   Dungan did acknowledge that there would not be enough accommodation in each of the towns and cities with 2010 soccer stadia, according to the report.

One of the solutions to general accommodation during June and July 2010 is cruise ships, not for MATCH, but for soccer fan groups and individuals.   The QE2 from Dubai was reported to have requested docking in the Cape Town harbour, but Minister van Schalkwyk had strongly rejected the request, saying that South African accommodation establishments should be supported.  

The latest news on cruise ships is that a German based company Moltke Promotion GmbH, through its subsidiary One Ocean Club,  has partnered with IKapa Tours & Travel.  The MS Noordam is reported by Southern African Tourism Update to be based in Durban harbour, accommodating soccer fans, who will be taken to Port Elizabeth for the quarter final, and for the third and fourth place play-off.   The MS Westerdam will be based in Port Elizabeth for the first half of the soccer tournament, and then will be cruising between Port Elizabeth and Cape Town in the second half.

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

The Airports Company of South Africa (ACSA) and SAA have told Parliament that they have a number of concerns about the 2010 World Cup, and their role in its success, reports SA Tourism Update Online.

For ACSA its concerns include planning the movement of soccer fans around South Africa over the month of the World Cup.  It is also concerned about “the lack of co-ordination between land and air transport”.  A further concern is jet fuel supplies, a shortage meaning a “disaster” for the event.  Recently such a shortage was experienced at O.R. Thambo airport.   The airports company is confident that it can cope with the increased number of passengers.

For SAA the concern is also the fuel supply situation.   In addition, it is also concerned about the limited number of aeroplanes, as well as technical problems, as the planes will be fully utilised, with little room for downtime.     Further concerns are insufficient ground handlers at Pilansberg and Bloemfontein airports, and the lack of equipment at Polokwane airport.   According to the report, SAA has a responsibility to MATCH to supply 20 aircraft and crew to transport the 55 000 FIFA officials and media around South Africa, to and from matches.

SAA is not yet selling individual tickets for domestic flights during June/July 2010, only taking block bookings and selling group tickets currently.  The Final Draw takes place in Cape Town on 4 December, and will determine which teams will play at which stadia.   The outcome of the Final Draw will influence the demand for airline tickets.

ACSA stated that the congestion experienced at Cape Town International airport will be relieved in November, when most of the upgrades are completed, while Durban International’s congestion porblems should be relieved in May.

Baggage theft and pilferage, which was prominent at OR Thambo airport, appears to be “minimal” since the airport company changed its baggage handling company.   General security for airports and flights will be covered by a security plan for 2010, with the police and army getting involved.

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

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

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

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

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

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

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

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

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

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

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

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

Whale Cottage Portfolio: www.whalecottage.com

MATCH is not concerned about a shortage of beds in Cape Town during the 2010 World Cup, says its accommodation manager Vivienne Bervoets, according to a report in the Cape Argus yesterday.

MATCH, the FIFA accommodation agency,  has already signed up 7 020 beds in Cape Town, and has created a “Matchville” in the Garden Route.   Ms Bervoets is quoted as saying that there is no “need to panic”, and that there is sufficient accommodation “provided the room inventory is properly utilised and maximised”.   “Our target was 55 000 rooms, of which we have 40 000 contracted and a number of initiatives in the pipeline.  However, this does not include contracting private homes, (a claim) recently reported in the media.”

Many guest house and smaller hotel owners are selling their rooms directly to soccer fans, and are not utilising MATCH, due to the stringent booking guidelines imposed by MATCH on its contracted accommodation suppliers, calling the shots as to the cancellation policy, deposit and final payments, and the commission of 30 % it takes on top of the rate charged by the establishments.

Whale Cottage Portfolio: www.whalecottage.com

The Minister of Tourism, Marthinus van Schalkwyk, has acknowledged the concerns the small accommodation sector has regarding the MATCH rates and the cancellation policy for the 2010 World Cup.   

Business Report reported as follows on 8 July:

“Onerous conditions imposed by Match, the Fifa agency tasked with securing 55000 rooms for the 2010 Soccer World Cup, remained a problem for small hotel operators, Tourism Minister Marthinus van Schalkwyk said this week. 

The minister said that with more than a 100 000 graded rooms in SA, the country had more than enough accommodation for next year’s tournament, but many small operators were reluctant to sign over their stock to Match as they were unhappy with the contract conditions. 

“The industry has raised concerns about the price level offered by Match as well as its escape clause,” Van Schalkwyk said in an interview. 

“Many feel they can do better by holding on to their rooms. While we will continue to work with Fifa and Match to secure enough rooms, it is a free market, and we as government cannot interfere.” 

Addressing Fifa president Sepp Blatter’s concerns about the lack of available rooms in Bloemfontein, the minister said it was not a shortage of hotel rooms but rather a transport problem. 

“We realised that we could not approach private sector players to build hotels where there would be no demand beyond 2010. 

“So we had to come up with a way of transporting fans to the host cities, and the focus is on making sure we have the transport infrastructure in place for next year.”

The Whale Cottage Portfolio has expressed its concerns about MATCH and its unsuitable contract as far as Small Accommodation establishments go from the time that MATCH started doing industry presentations more than two years ago.

Whale Cottage Portfolio: www.whalecottage.com