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Month: May 2013

At the HICA conference in Durban last week, Arthur Gillis, Group MD Protea Hotels, told Tourism Update that tourist resorts were not sustainable for South Africa.

According to Gillis, the reality is that it is expensive to get to South Africa from Europe or the US. Tourists wanting to enjoy the ‘Fun and Sun’ aspect of a destination will more than likely opt for either a short-haul destination such as Egypt or a more affordable long-haul destination such as Cuba, which offers flights at half the cost of those to South Africa.

Gillis says South Africa should focus on its major strengths and not try to attract long-haul tourists with a ‘Fun and Sun’ offering. “You get fun and sun everywhere. What you get in SA that you don’t get anywhere else is the culture and the people, which are unique. The game – the Big 5 – is another draw card. Beaches, mountains, grass, trees – that you get everywhere.”

Publisher: Tourism Update

 

All eyes have been on Tourism Indaba in Durban as well as the Hospitality Investment Conference Africa preceding it. In his opening speech, Minister of Tourism Marthinus van Schalkwyk called for Indaba to modernise and expand its experience and offering to include the rest of Africa.

He said: “Over a long period, the Tourism Indaba has maintained its stature and viability as Africa’s top travel show. Simultaneously, we can do more to tangibly strengthen the African tourism industry through mutually beneficial ‘coopetition’ – which brings out the best in all of us through cooperation and healthy competition on our continent.

“It is time to modernise and expand Indaba. Our vision as government and South African Tourism is that Indaba must be the platform for exhibitors and buyers, not only in and from South Africa, but for the whole of the African continent. To achieve this we are willing to invest even more to transform Indaba into a pan-African trade platform.

“I can therefore announce that, as part of our growth and expansion plans, we will be gradually increasing African participation at the Indaba in 2014 and beyond. That will ensure more exhibitors and more buyers, which will be good both for South Africa and the African continent. South African Tourism has been consulting and will do more work to generate firm proposals by December this year. As Africans, the lesson is this: Let’s not resent each other’s success; instead, let’s grow off the success of each other.

“Furthermore, in the coming year, South African Tourism (SAT) will roll out a global hub strategy created to effectively deliver the destination marketing message, with a wider reach than ever before. To further bolster growth, we have identified core markets, investment markets and tactical markets across regional Africa, the Americas, Asia and Australasia, as well as Europe. We understand that when we enter a market, we have to work hard to achieve success, and that it is always a partnership. That is why, in the coming year, SAT will open fully-fledged offices in Brazil, Angola, Kenya and Nigeria, whilst also expanding its marketing presence and partnerships with the trade in South Korea, Russia, Scandinavia, Shanghai in China, Uganda, Ghana and Tanzania.

“In positioning our country as a globally competitive and responsible tourism destination, we will, amongst other things, be raising the profile of our heritage and cultural tourism assets. This year, our Heritage and Cultural Pavilion here at the Tourism Indaba aims to profile and promote the eight world heritage sites we are proud to have in South Africa. I invite you to visit the pavilion, experience some of the exciting products on offer, and promote these in your future travel plans.”

The minister remains committed to growing the local tourism industry. He said: Domestic tourism is a key component of our journey going forward. Increasing domestic tourism’s contribution to gross domestic product (GDP) and promoting a culture of travel among South Africans are key objectives of the National Tourism Sector Strategy. At any given time, three-quarters of all tourists in South Africa are South Africans, with domestic tourists having contributed one hundred and one billion rand (R101-billion) to our economy in 2011.

“Some of the South Africans who do not travel tell us that they cannot afford it or are not aware of accessible offerings. As a sector, we therefore need to work harder to address these information and cost barriers. To this end, we are:
* investing in new partnerships and relationships, including between provincial tourism marketers and SAT;
* investing in a new marketing campaign for domestic tourists that is to be launched during Tourism Month in September, targeted at a broad cross-section of the South African population; and
* reminding South Africans that tourism is everybody’s business. All South Africans stand to benefit from a robust, growing destination.

“We are also thinking innovatively of new ways to ensure that more South African families have access to the places that we have inherited as a nation. To truly deliver on the promise of tourism, we have to create the conditions that render the tourism experience and the treasures of our country accessible and affordable to a much greater share of our population. To this end, I can today announce that, in partnership with the Industrial Development Corporation (IDC), we have recently commissioned an audit of under-utilised state assets and properties that could be developed into tourist attractions and facilities. It is simply wrong to have state resources stand vacant while there is cropped-up demand in certain market segments. Pursuant to this, we have also commissioned a feasibility study for a pilot budget resort chain, which could in some or other way be de-risked through partnership approaches, aimed at an under-served market segment of would-be travellers earning less than R5000 per month. The time has come to remove the final barriers to fully unlock our country’s tourism treasures and the intrinsic value of travel for all South Africans, thereby bolstering our contribution to job creation and poverty alleviation.

“This year, we also start to take stock of 20 years of freedom and democracy, and 20 years of tourism in our country. We have come such a long way. Tourism has taken its place as a vital contributor to economic growth, catapulting South Africa from a pariah prior to 1994, to one of the fastest-growing and most desired leisure holiday destinations in the world today. In 1993, the country received just over 3.4-million international arrivals. In 2012, we witnessed over 13-million international arrivals, of which some nine million were international tourists visiting our shores. In addition, we have gained recognition across the globe as a capable, warm, friendly and accessible global mega-events destination. Therefore, we are planning a celebration of 20 years of tourism in the months leading up to Freedom Day on 27 April 2014. At next year’s Tourism Indaba, we will recognise South Africa’s top 200 trade partners for their contribution to our industry over the past 20 years. We will also honour all the Emerging Tourism Entrepreneur of the Year Award (ETEYA) winners over the years, with a focus on learning from what they continue to achieve.”

Van Schalkwyk also listed the tourism achievements of the previous year: “We welcomed approximately 9.2-million tourists to our shores last year. Our overall international tourist arrivals growth in 2012 was 10.2%. This was against an average global industry growth of 4%.

“But, of course, this did not just fall into our laps. We had to work harder than ever to sustain growth and encourage prospective travellers to act on the seed of inspiration we had sown through our various branding and marketing endeavours. Our brand message on channels such as National Geographic and CNN International enabled us to reach over one billion consumers last year. Our video, banner and text adverts were displayed to targeted audiences over 1.1-billion times. This complemented our online partnerships with the likes of Expedia, Facebook, TripAdvisor and WAYN.com. Last year, we also generated over R4.6-billion in editorial coverage for our destination through our global and in-country media relations work.

“We are intent on building on this foundation. The launch of the South African National Convention Bureau has delivered exceptional results and has greatly boosted our global competitiveness in pursuing our target of R6.2-billion in direct spend via business events over the next five years.”

He ended off by looking at the past 20 years: “I look forward to continue taking the hands of all our partners as we celebrate 20 years of freedom and democracy and 20 years of tourism, and as we put our heads together to lay the foundation for another 20 years of new opportunities and fulfilling experiences.”

Publisher: Hotel & Restaurant

Change – and how South Africans see their neighbours on the rest of the continent – were very much part of the second and final day of the Tourism Business Council’s Hotel Investment Conference Africa (HICA 2013), which took place at Durban’s Elangeni Hotel this week.

“My story about doing business on the continent has never been about anything but inspiration, has never been about anything else other than the attitude I carry in myself, has never been about anything else than believing that this continent has a lot to offer.

“It has always been about believing that Africa is the ultimate business frontier,” said business commentator Victor Kgomoeswana.

He quoted Longfellow:

Let us, then, be up and doing,

With a heart for any fate;

Still achieving, still pursuing,

Learn to labor and to wait.

“I’ll start with the labouring and the waiting part, because this continent that I love take some labour, and it takes a lot of patience.”

To read full article, click here.

Arthur Gillis, the CEO of the Protea Hospitality Group, likes to call it as it is, and there’s no doubt he did that at HICA 2013 (Hotel Investment Conference Africa) when he spoke as a panelist during the first open session of the day: ‘Straight talk from the top – the state of the regional and global hotel industry.’

Change was very much a focus of the first day of HICA 2013: I’ve already written about ‘Hard talk between airlines, tour operators, and hoteliers’ – the session that was moderated by Paul Bannister, CEO of strategic marketing consultancy Ignite: I quoted him as saying, “I’m hoping to wake the audience up to the principle of competition.”

But Arthur upstaged him a little when he said that Protea can’t find funding to put some of its smaller hotels into the hands of black entrepreneurs.

That woke ‘em up.

So I cornered him, and asked him about it (watch the complete interview here – it’s a little less than 7 minute’s long).

“We have a situation where there are a lot of black people who are employed in our industry – at menial level and all the way through to senior level; we also have a number of investors in our industry.

“Protea, for example, is more than 50% black-owned.”

But those owners include the chairman of Nedbank, Reuel Khoza, and a union that boasts hundreds of thousands of members.

“But the fact of the matter is that these investors are not actually involved on a day-to-day basis” – which prompted Protea’s team to ask how it could create wealth in the hands of a significant number of black hotel managers.

Their solution? Develop entrepreneurs by helping managers to buy hotels of eighty bedrooms or less.

Protea, said Arthur, wants to put businesses into the hands of families – husbands, wives, parents, children – who’ll run them with the kind of drive and dedication that can only come from private ownership.

“We’re happy to contribute a significant slug of the equity portion to them, and they would then work their debt off – it’ll take eight or ten years, but at that point, 100% of the debt and 100% of the equity should be paid back.”

You’d think that government institutions and the banks would be falling over themselves to help: in a country that’s striving to right the wrongs of the past, here’s a corps of solid – but previously disadvantaged – people who have the experience (and the backing of Africa’s largest hotel chain) to make their projects work.

But they can’t.

“The problem,” said Arthur, “is not finding the hotels, not finding the individuals, nor finding the equity.

“The problem is finding the debt.

“Most of the government agencies are very happy to fund brand new hotels, but are – for some obscure reason – completely averse to funding existing properties.

“And that’s what I can’t understand, and that’s my frustration.”

So has he any idea why this might be happening?
Not really: he’s baffled. “I’m trying to say to them that if you build a new hotel, it’s going to be 1.5 million rand a room – but an existing one is six or seven hundred thousand rand a room. And that’s a very big difference in your pay-back period.”

Money’s money, of course, and Arthur doesn’t care whether the solution comes from government-backed agencies or commercial banks.

“Right now, there doesn’t seem to by anybody who’s prepared to up their game and say, ‘I’m going to stand up and be counted: I’m going to make this happen’.”

Although Protea is trying to do that.

“We’re prepared to enter into soft franchise agreements with them: we would charge an absolutely minimal fee, and they would get all the benefits of the power of purchasing, distribution, and marketing” – because the groups know that this will make success more likely.

“It would also give the lender a lot of comfort to know that our quality assurance teams are in there all the time – because we won’t allow our brand to be put onto properties that aren’t up to standard.”

Initially, he said, he’d like to see ten hotels transferred to black ownership in this way – but the number could eventually rise to two hundred.

So would this make such a difference in the greater scheme of things? He’d be empowering just 200 families? It doesn’t really create a lot of wealth for a lot of people, does it?

“Well it does, you see – that’s the part that people are missing because every person that works in South Africa and sub-Saharan Africa feeds up to ten people.

“When you have a family there – let’s say a traditional family: husband, wife, three kids, two sets of grandparents – all of those people can live and exist on that property. and everybody – from the suppliers of meat to the people who are growing the vegetables will benefit from it.

“If we could create a couple of hundred proper entrepreneurs in this country – real people that have been given the opportunity to have their own hotels – I think that we’ll be a long way down the line to righting the wrongs of the past.”

But there’s hope, of course: there were a lot of bankers and officials in the room today, and the talk at lunch was all about how they should change their policies.

And that’s what HICA was designed to do: find the constraints, and create the linkages that’ll remove them.

Publisher: The Gremlin

Change was very much a focus of the first day of HICA 2013 – the Tourism Business Council’s Hospitality Investment Conference Africa, which began at Durban’s Elangeni Hotel yesterday.

This in line with the conference’s theme: ‘Shifting Gear.’

Speaking during one of the day’s breakaway sessions – ‘Achieving equity and diversity in the hotel sector’ – the chairperson of CATHSSETA Advocate Brenda Madumise, highlighted the mind-shift that’s taking place.

Black entrepreneurs, she said, are looking beyond finance, and are now beginning to take more of an interest in operations, although she did caution that skills transfer remains a concern – particularly in middle to senior hotel management levels.

But these aren’t only South African issues: group CEO of ASTOC Leisure Group, Emmanuel Fundira, agreed that the same is happening in the Zimbabwean hospitality industry.

Wiza Nyondo, Head of Tourism at First National Bank, said that money knows no colour, and that from a financing point of view, deals have to make good business sense – irrespective of who is taking part.

To read full article, click here.

Publisher: HICA