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South Africa: moving forward

With just a year left before the FiFA World Cup, South Africa is fine-tuning the last details in its organization of this global event. At a time when political confrontations have not all been quelled, this event offers an exceptional opportunity to showcase the country’s abundant tourism resources, from the sweet life of Cape Town to Kruger Park and its famous “big five” of the Savanna. South African professionals are planning to exploit the publicity offered by the black and white ball to accelerate growth in this destination that can no longer rely on the Mandela effect to boost arrivals.

In less than a year all eyes will be on the Soccer City Stadium. The kickoff for the 19th FiFA World Cup is scheduled for June 11 in Johannesburg to end one month later on July 11, 2010, once again in the economic capital, after making its way through several major cities in the country. This will mark the end of a 6-year wait that began May 15, 2004: the day FiFA announced South Africa as the host for the first World Cup on African soil. Support from two dynamic ambassadors - Desmond Tutu and Nelson Mandela – played an important role in this victory over Egypt and Morocco, two countries that benefit from greater proximity to Europe.With nearly 33,000 rooms as well as other lodging solutions (luxury lodges, B&B, guest houses…), bringing the total to 100,000 rooms, South Africa has one of the biggest hotel supplies on the continent. “Its quality is almost that of Germany,” estimates Eric Estegassy, manager of the touroperator Pass for Sport. And yet, the major operators are not very present. Marriott and Choice International are missing from this market. The inventories of Hilton, Wyndham, Best Western, Starwood and Hyatt altogether may be counted on just two hands. Only IHG and Accor have a more extensive supply. The French group has 4 Mercure and 24 Formule 1, the international version of Etap Hotel. The British group has 7 properties at present but plans to take advantage of its partnership with ISO Leisure to expand its supply to its Holiday Inn family. The perspectives of tourism produced by the World Cup and the economic development of this continental leader has begun to attract international hoteliers. With its announcement last month of the opening of a Park Inn in Sandton and a Hotel Missoni at Cape Town, Rezidor’s supply should grow to 7 hotels for the kick off of the event. Increasingly jet set, Cape Town is particularly attractive, even more so than the economic-political triangle Johannesburg- Sandton-Pretoria. “This is our priority. We can implant all our brands there, from Hampton by Hilton to Waldorf Astoria,” explains Deepak Seth, of the Hilton group. Upper-upscale and luxury brands from the world over are racing to the foothills of Table Mountain. The Indian group Taj Hotels has just announced its arrival next December, to join the first One & Only urban resort by the South African Sol Kerzner. The Middle Eastern group Coral International is close to opening a property that is Shariah compliant. NH Hoteles was also waiting for the inauguration of the NH Oscar Pearse (5*) in 2010 in addition to its 3* property Lord Charles. But the owner Phelan Holdings broke off negotiations to continue its adventure solo or so it would appear... All these groups are far from reaching the size of the groups Protea, Southern Sun and CityLodge. Pioneers, these three South Africans have been expanding their network throughout the country for several decades. In this way they have largely contributed to making South Africa into a country that could host the future World Cup. These three actors have several properties underway for 2010 as they look towards the future. Southern Sun, a previous partner of IHG in a JV with Accor for Formule 1, has only recently been developing its own segmentation with Garden Court or the budget brand StayEasy by Southern Sun. CityLodge also has four brands ranging from 1* to 4* to satisfy a mostly domestic clientele. After being bought out in 2007 by the Australian group Stella, Protea once again became 100% South African, at the hand of Investec, following the Australian company’s financial setbacks. It marks a return into local hands, and the largest hotel group on the continent with over 130 hotels plans to take advantage of this.The country’s ability to welcome major events was certainly an important factor. World Rugby Cup in 1995, African Cup of Nations football competition in 1996, Cricket World Cup in 2003: these events took place without any major setbacks. But this time the breadth will be much broader. Since 2004, all the elements have been progressively falling into place to host the world of football, all those directly involved as well as its supporters. The construction or renovation of certain stadiums is running a bit late, but all should be ready on time. The new international arrivals terminal at O.R. Tambo International Airport, an air transport hub catering to dense air traffic, opened its doors last April. The hotel infrastructure is waiting for a few openings.South Africa plans to take advantage of this sounding board to give new momentum to its tourism industry. In 1990, the liberation of Nelson Mandela made this country politically respectable. This return to grace, after its quarantine due to the apartheid, brought on a rapid takeoff of tourist arrivals. From 1990 to today, the number of visitors grew eightfold. Such exponential growth was initially greatly due to the “Mandela effect” that triggered great curiosity about the destination. But the impact of the phenomenon inspired by the “father of the Rainbow nation” softened. If, since 2002, the country has posted doubledigit growth in arrivals, it owes it above all to its own efforts and to the professionalism of the players in tourism. “The Mandela effect has been over since the beginning of this new millennium. It is then that we began to manage the destination as a brand,” explains Linda Sangaret, director of the South African Tourist Office in France.Statistics, in-depth market studies, targeted communication strategies: tourism authorities have analyzed the different markets and reservation channels to optimize its marketing with limited means and to compete with long-haul destinations such as Brazil, Australia or Thailand. Thanks to these efforts, Jacob Zuma, the newly elected President, is the leader of a country that hosted 9.1 million visitors in 2008. The strong growth of South African tourism in recent years may be explained by the growth of clientele that are practically captive: neighboring countries. Nationals of Lesotho, Swaziland, Zimbabwe, Mozambique or Botswana are crossing the borders in increasing numbers to visit family and friends. Nonetheless, they account for only a limited number of nights.Long-haul tourism, a much more important contributor in terms of revenues and nights with an average stay of more than 8 days, currently represents “only” 2.2 million. But, on the positive side, its growth is continuous and remains strong despite the crisis. South Africa is, moreover, one of the rare countries able to congratulate itself on tourism growth in 2008 (+0.3%), despite the decline of two key markets: the United Kingdom (-2.5%) and Germany (-6.5%). The crisis did not discouraged the French (+11.3 %), as well as Australians (+4.2%), the Spanish (+9.2%) Brazilians (+9.2%). A significant event during this difficult year: the North American market is progressing by 4.4%. “I see three explanations: an upscale market that was not hit as hard by the crisis, Afro-American celebrities who are publicizing the destination and an Obama effect that put the continent in the spotlight and was certainly felt in Kenya, but also in South Africa,” estimates Linda Sangaret.The country is playing on the fundamentals of tourism that are as solidly built as the Springboks, its rugbymen who are world champions: the sweet life on Cape Town and in its vineyard region, the natural beauty of the Cape Garden Route to Port Elizabeth, the beaches and mixed culture in Durban, Johannesburg and Pretoria for the business world. But South Africa takes full advantage of one major interest to stand out: the “big five”. Australia, Thailand, Brazil: none of these can boast that it offers visitors the thrill of seeing the five kings of the African savanna (lion, leopard, buffalo, elephant, rhinoceros). And, even compared to Kenya, South Africa stands out with its open roof “game drives” rather in than minibus tours.All these riches… lucky fans who make the trip in 2010 will discover them directly while the rest of the world watches it on their televisions. The upcoming World Cup will make tourism its focal point. “We will bring people to South Africa to visit the country and watch a football match and not the opposite. With 600 rooms a day on the 3-5* segments, we have concentrated our supply on major cities that we may radiate from,” explains Eric Estegassy, manager of Pass for Sport, an authorized tour-operator. The beauty of the country is a strategic vector for attracting the 450,000 supporters expected. Considering the geographic distances, accommodations for fans are not coordinated by a hotel reservation center like WCAS in Germany 2008 or Mondiresa in France 98. Match Services, the official agency, and authorized T-Os will sell accommodations- travel-tickets packages that associate the pleasures of the sport with discovering the country.For the first time in its accommodations strategy, FiFA is leaving the beaten path of standardized hotels to explore “guest houses” and lodges. “A supporter may take a safari at dawn, go support his team and return to dine by the fire,” explains Linda Sangaret. SanParks, the company that manages the main parks, expects at least 15,000 visitors. In order to fill out its inventory, SanParks will install temporary camps for an additional 420 beds. “If all goes as expected, the value of the daily supply sold to Match Services should come close to 1.4 million rands (125,000 euros),” rejoices Glenn Phillips, general manager marketing. With close to 100,000 rooms, the accommodations supply, which includes all types of lodgings, would appear to be up to par for the event. But this will not prevent two occasional difficulties from arising: finding rooms in certain towns in the provinces, such as Rustenburg or Polokwane, and finding the best rooms. In host cities, luxury properties will be requisitioned by FiFA officials and the athletes. “There are fewer high quality rooms available than would be necessary, but this is always the case with major events,” observes Peter Csanadi, who is in charge of communications at Match Hospitality. Today the company has an inventory of 30,000 rooms per day to meet needs, but hopes to recuperate 15,000 more rooms according to the Johannesbourg Mail & Guardian. South Africa may also count on its neighbors, as Match has secured beds in Botswana, Mozambique, Namibia, Zambia, Zimbabwe and even the Island of Mauritius, a 4-hour flight away.“There should be no problem finding accommodations for the World Cup,” expects Linda Sangaret. “The number of visitors expected is less than in December, in the middle of the peak season.” A major advantage for hoteliers and one that makes it different from other World Cups: the event is not compounded by the high tourism season. South Africa should thus avoid the classic phenomenon of cancellations by the usual tourists for fear of crowding and high rates.The country thus looks forward to revenues of 11 billion rands, or 1 billion euros. To achieve this, the country hopes to catch the “Big Five” of European football (France, Germany, England, Spain and Italy) in its nets as these countries also represent some of the most promising tourism clientele. The director of the South African Tourist Office is praying that Les Bleus — off to the worst start in the qualification phase — will be present in summer 2010. “We have asked all our marabouts to work on this dossier,” she laughs. At six months from the verdict, the risks of bad surprises appear low. Four of the Big Five Teams are almost certain they will set spike on African turf. Important for tourism, the Japanese and Australians are also in the game. Of emerging clientele, Brazilians will be present unless there is an unimaginable catastrophe, as will South Koreans, while Saudi Arabia, Mexico and Nigeria are still racing to validate their tickets. Finally, even if China will content itself with watching the event on television, this competition will undoubtedly have an impact on potential tourists.In fact, once the final whistle has been blown calling the match to a close, the country will have to get to work to capitalize on windfall from the media exposure it provided. The primary challenge: durably establish the tourism brand “South Africa” to take advantage of this source that currently represents only 3% of the GNP (120 billion rands or 10.5 billion euros). While it does not expect to become a destination for mass tourism, the country hopes to expand its customer base. Authorities hope that the World Cup will reverse three main prejudices: the high cost of the destination when many inexpensive means of accommodations exist, the mild winter in the southern hemisphere when Europeans are generally heading to the beaches in search of the sun during this season, the distance of the country, whereas there is no time difference with respect to Europe. The success of the event should make it possible for another major construction site to advance. Riding the wave of success experienced by the Durban conference against racism in 2001, South Africa has a goal to become the hub for hosting regional and even global conferences. Cape Town, Johannesburg and Durban are planning a tough fight with competing destinations such as Rio, Seoul and Sydney.Several unknowns remain that may put a damper on this fine hope. The World Cup will highlight the strengths and weaknesses of this emerging nation. Starting with the supply of electricity– 11 neighboring countries have accepted to reduce their consumption during the tournament in order to avoid repeated shortages, like those the country suffered in January. With the concentration of immigrants from neighboring countries in new ghettos, and uneven sharing of national riches, the situation of latent violence and constant insecurity in major cities that make travelers fear the worst should not be silently ignored. “It’s a harsh reality,” admits Peter Csanadi who outlines that “millions of tourists travel throughout South Africa each year without any trouble. The security plan is well established and police will abound.” Outside cities and townships, risks are limited and tour-operators will do all it takes to ensure their guests are not left alone in the wild.Last June the country successfully passed a test with the Confederations Cup. “7,5 out of 10”, according to Sepp Blatter, president of the Fifa. But what will happen if a major event takes place in the middle of the outpour of media exposure? And yet, violence is not Linda Sangaret’s primary fear: “I hope that, despite today’s crisis and tight corporate budgets, we will meet a popular success. The first ticket reservations testify to great interest.” Match Services is observing a certain amount of timidity on the behalf of several major accounts. “But new clients are arriving and our historic clients are beginning to return. One thing is certain: we will not lower our prices,” maintains Peter Csanadi. Such tenacity may well prove itself. Hotel Groups: setting sights on South Africa

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