The hospitality industry was touted as the sector to gain most from the Fifa World Cup. But has that boom been sustained?

According to industry experts, today’s discernible tourist seeks value for money. An ailing world economy has given rise to a phenomenon where tourists are now demanding competitive specials. The tourism sector must put massive efforts into building the industry over the next five to 10 years in an effort reminiscent of preparations for the Soccer World Cup last year.

South Africa’s economy and national pride received a welcome boost when the country hosted the 2010 Fifa Soccer World Cup.

Spain might have gone away with the trophy, but South Africa was left clutching a legacy.

It is now up to us to turn this opportunity into a South African success story.

An analogy would be not only to prepare for the wedding feast and accompanying rituals, but continuing to build the foundations of a strong marriage thereafter. The show is over and the commitment begins.

Surprisingly, the industry is experiencing its worst ever year. Cape Town Tourism recently told its members that this was to be expected, given the Sydney experience: the country endured a five-year slump after the 2000 Olympic Games, largely because city tourism authorities assumed that no marketing was required after the massive publicity of the event.

Cape Town Tourism has acknowledged the same oversight, a factor compounded by an ailing United Kingdom economy – the largest tourism source market for the city – a strong rand and high airfares.

The hospitality sector is unanimous in its verdict on attributing factors for the disappointing trading conditions experienced in 2011.

Ignus le Roux, sales and marketing manager for the Mantis Group, an award-winning hospitality group with interests in South Africa and abroad, reported: “If it were not for the world economic crisis and natural disasters such as the earthquakes in Japan and New Zealand, and volcanic eruptions in almost all four corners of the world, to name but a few, the hospitality sector in South Africa would have had a totally different outlook.

“South Africa has become a relatively expensive destination; not only because of the rand strengthening, but also because of the distance tourists have to travel, making flights expensive.”

How is the hospitality sector faring?

Many South Africans naively believed that the World Cup was enough to keep tourists visiting our shores in large numbers in the short term. This is not the case, if worldwide trends are to be believed.

Brett Dugan, chief executive officer of the Federated Hospitality Association of Southern Africa (Fedhasa), reflected: “Our country did not understand that the world was in a recession. It was only on 11 July 2010 (when the tournament ended) that we entered the recession.”

Brand awareness has been acknowledged as the Achilles heel in the tourism equation.

Cape Town Tourism released a press statement a year after the World Cup, citing a missed opportunity: “The City did not have a consolidated, overarching brand incorporating business, investment and tourism that could be leveraged in the lead-up to the World Cup.”

The new Cape Town brand is in the throes of creation.

Cape Town Tourism said: “The World Cup provided great input and material for development of the brand, in positioning Cape Town as an inspiring urban destination that has appeal for diverse audiences.”

Asked whether it was worthwhile investing massively for a once-off event lasting only 30 days, Beverley Davidge, sales and marketing director of the five-star Radisson Hotel in Port Elizabeth (completed in 2009), gave a thumbs-up: “You cannot put an amount to brand awareness. It has put Port Elizabeth and our hotel on the map. While international business has dropped in PE, this is due to the exchange rate.”

Dugan reported: “Our hotels did very well throughout the World Cup, which reflected in rates and in occupancy levels. Not one of the hotels will complain about occupancy during the World Cup.”

Le Roux maintained that occupancy levels during the World Cup were biased in some regions’ favour: “Most of the teams and supporters based themselves in Gauteng, so properties within the Mantis Group did not experience great occupancies, as most of them are in the Western and Eastern Cape.

Our properties in northern South Africa are not close to Johannesburg or Pretoria.”

Rather than berating the World Cup Organising Committee on how things could have been done differently, informed parties canvassed were unanimous that South Africans should be thankful for the cash injection and branding opportunity afforded them.

Dugan was frank in his reaction to assumptions regarding what we could have done differently with hindsight: “The hospitality sector mirrors what is happening in the rest of the world.”

In much the same vein, Cape Town Tourism said: “It has been proven internationally that an event in itself is not enough to affect a destination’s future economic growth; it is merely a catalyst for growth.

“We have learnt from other long-haul destinations like Sydney (which hosted the Olympics in 2000 and saw a dramatic drop in tourism revenue for five years thereafter) that we cannot be over-reliant on major events to bring about immediate tourism and economic development.”

Lessons learnt post-World Cup

Representing the luxurious Mantis Collection, Le Roux said: “The most important lesson to be taken out of the World Cup is that in as much as more time was spent on planning for the event, the same amount of time should be spent on determining how the legacy of the event can be leveraged. Too much time and energy was put into the 30 days, and not enough time was devoted to the next three to 10 years. ”

It is clear that the hospitality sector is in for a major overhaul.

Dugan, a respected voice in the tourism sector, said the challenge remaining was that there were not enough people to sustain facilities and hotels: “The tourism plant is there, but there will be ownership change by people trying to survive. We need to be realistic about this; there will be casualties.

“The market isn’t doing well in different sectors. People who spent R750 at a three-star hotel may now be spending this at a five-star – buying patterns are changing. Things are changing on a daily basis.

“Those establishments that survive the recession will do so by controlling expenses, offering competitive prices and products, in addition to rendering excellent service,” he added.

Le Roux agreed: “To stay competitive, you need to adapt: we are seeing more and more specials in the industry. The Mantis Collection no longer bases forecasting models on previous trends. This cannot be attributed to the World Cup only, but also to the world economic crisis.

“We have seen increased business from emerging markets such as Argentina and Brazil. Business from Germany, Switzerland, Austria and the United States is on the increase, and we attribute this not only to these regions exiting their recessions, but also to the positive exposure South Africa received during and after the World Cup.

“The buying patterns of tourists have changed, as they are making more short-notice decisions and they are looking for more value,” he added.

A spokesperson for Sun International said, “Emerging markets represent another market opportunity. We are hosting tourists from India and China. Tourists are visiting from Angola and Nigeria to enjoy shopping at Sandton City and other centres.”

Dugan articulated Fedhasa’s recommendation for sustained growth: “Tourism industry packages need to take cognisance that South African providers are participants in world market share. Ultimately, those businesses with gearing won’t be able to survive. Those that can afford to purchase – albeit at a higher price, but without gearing – can make a huge success of their business.”

Looking forward to growth prospects for the sector, he forecast that it is only in five to 10 years’ that we will experience the benefits accruing from the World Cup. It is a sentiment echoed by Cape Town Tourism.

What are the patterns? “Increased supply, decreased demand and lingering recession add to the challenges the sector faces. There are signs of recovery, albeit at a slow rate of 3% to 4%, which means that recovery could take significantly longer than initially anticipated, unless we change tactics.”

The sector has not over invested in new establishments. Dugan reported: “Building new hotels in anticipation of the World Cup was totally contrary to what we suggested to our members. We asked them to upgrade and refurbish their establishments. Many hotels being built in Cape Town started on construction two years before the event and couldn’t stop construction. Hotels are purpose-built and it’s not possible to convert them
into offices.

“Actually, fewer hotels were built than expected two years previously.”

Davidge cited 60% to 70% daily occupancy at the Radission Hotel, and has retained staff numbers.

Le Roux, representing the Mantis Collection, said: “We believe that we are doing slightly better than the industry standard but, then again, from what our sources tell us, the industry as a whole is not in great shape.

“We have been on a cost-saving drive, but our motto is that whatever cost savings we implement, they must not have a negative impact on our guest experience.”

Sun International, through prudent planning and an ongoing focus on staff training at all levels, has maintained staff numbers post-2010.

A spokesperson outlined its approach to tougher trading: “We put together value-for-money packages. Sun International started an in-house travel division, offering complete packages including accommodation, flights and car hire. We don’t cut out the travel trade, however, and appreciate their business.”

Sun International believes that delivering superior service and doing things differently has paid dividends. Its spokesperson said: “We are always one step ahead and introduce innovative things.

“At risk of sounding arrogant, Sun International is experienced in hosting mega events including music shows, the Miss World Beauty Pageant, Cirque de Soleil and the Nedbank World Cup Golf Challenge, which enjoy huge TV audiences.”

Significantly, contrary to the media being negative in the run-up to the World Cup, Cape Town Tourism representatives abroad have reported a reversal of the media’s Afro-pessimism.

Sun International contended that negative perceptions of South Africa had changed. A spokesperson said: “Nothing nasty happened during the event relating to security.”

Le Roux summed up the exposure gained: “If you consider the exposure received in different media worldwide pre-, during and post-World Cup, and put a monetary value to this, then it was priceless.

“To quote some of our leaders, the investments made in infrastructure were not only for the World Cup – they were on the cards and were fast-tracked because of the event.”

Indicators are that the sector needs a healthy dose of realism, tempered with innovation, value for money and outstanding service.

Samantha Barnes