Cape Town at the tipping point
Tourism is about job creation
The notion of a buoyant tourism industry, evidenced by substantial growth in the global visits over the last 20 years, actually masks the fact that this expansion is not uniform. It has resulted from the ever-increasing access, at lower cost, to a greater number of destinations, effectively reducing market share for many, while visitor spend in real terms, stagnates and length of stay reduces.
Within this context, the global financial crisis and the subsequent consumer behavioral change has had a significant, adverse effect on the tourism industry – demand has diminished, visitor spends have steadied and costs have increased.
Globally, nationally and provincially, tourism is a major contributor to the GDP. Given that at its core rests a disproportionately sized SMME sector, its employment level is significant. Its capacity to create sustainable work opportunities, in the short term, is real and its capacity to influence people’s attitudes and perceptions is also significant.
In Cape Town alone, some 298 000 people are directly employed in the industry. Their livelihoods are dependent on an increasing demand for the city. In addition, the international visitor industry spends some R14-billion per annum in Cape Town; a significant proportion is spent in non-tourism businesses, which benefits incrementally from the sector.
Tourism is extremely competitive
Since tourism provides for jobs in established places, it makes the industry particularly attractive for governments that seek to create opportunity for people across the broad skills spectrum.
The creation of demand (for a destination) and the provision of services are the central feature of all government interests and investment. Almost every national, state / provincial and local government is involved in the tourism industry. This makes the market extremely competitive.
Far from taking the view that the “place or city sells itself”, most cities in the world, even those with substantive visitor numbers (like New York or Paris) actively and continuously present themselves to potential visitors to create sustainable demand.
This is a necessary although difficult task. Today and tomorrow constitute the age of the urban tourist. The notion of people wishing to escape and take vacations in non-urban areas is a myth. Urban tourism dominates the landscape – over 30% of all global visitor revenue is expended in the top 150 visited cities and, taking tourism as a whole, over 70% of tourism spend occurs in urban areas. For most people to escape means to explore different and new cultures and for them cities are the epicentres of modern, living culture.
Tourism marketing is about creating demand for cities
To improve competitiveness and desirability, many cities not only promote their regular attractions but also distinguish their destinations from others. Effective visitor demand creation results from linking the city with the motivations of potential visitors. If well executed, this attracts more visitors, improves economic growth and contributes to job creation.
It has also been documented that cities exist in their own right, with their own identity, and unique attributes, quite apart and independent from the countries in which they exist. Arguably, cities actually take precedence over countries in the minds of potential visitors. One only has to think about cities such as London, Glasgow, Sydney, San Francisco, Boston, Nice and Florence to realise that they have individual characters and a unique potential for drawing visitors to them.
Cities are considered to be the new super-brands of the 21st century and according the Communications Group from the UK, “the prisms through which countries are viewed”. This does not mean that visitors do not explore the regions beyond cities – for most visitors, city boundaries are undefined and irrelevant.
All is not well though … There are over 1 000 locations in Europe alone, all promoting exactly the same thing, looking identical and representing themselves in similar ways through pictures of people playing golf, sunning themselves on golden beaches, people in airplanes taking off. These places have become commodities, indistinguishable from one another and offering little or no added value. As a consequence, their industries have stagnated and marketing focus has gravitated toward emerging markets (primarily Asian ones).
Successful cities of the future will be stand-out urban centres delivering benefits to residents and visitors alike (something different); they will not be defined by their size alone but by their ability to capture the imagination and define themselves as being the most livable and enjoyable places on the planet.
Cape Town in context
We operate in an extremely competitive space
Cape Town competes in the most competitive segment of the visitor industry, the urban sector. The city has to deal with its long haul characteristics and balance that with the benefits of the established and lucrative European source markets.
The global financial crisis (GFC) had a significant effect on international arrivals to the city and domestic visitors have stagnated.
Post the GFC, while the number of arrivals have grown, the recovery rates out of our international source markets remain sluggish. Without intervention, it is projected that Cape Town will only reach 2007 tourism visitor and revenue levels again by 2014.
This represents a cumulative loss (against 2007 figures) of R1.5-billion to the sector over seven years and a zero increment in job creation over the period.
We are alone
Cape Town’s source markets, objectives, visitor profiles and imperatives are not aligned with the national agenda. Unlike all other provinces whose markets are primarily inter-regional (African) and domestic, Cape Town generates over 80% of its international revenue from the European and USA markets.
With national tourism marketing still focusing predominantly on wildlife as the central theme, cities receive very little exposure in international campaigns. In addition, many national campaigns are of a tactical nature, which do not necessarily build knowledge and esteem for our cities.
Additionally, national campaigns are focused entirely on the tourist dimension where, best practice shows that urban campaigns, by their very nature, require a far more integrated approach centred around livability via lifestyle, business and academia. It is the livable city, expressed via these lenses, that attracts people and not the singular (tourism) characterisation. This aspect is absent from national initiatives and programmes.
We are not thought about that often
With Cape Town’s market share of world tourism being less than 0.18% and our share of global urban tourism less than 0.3%, it must be said that the city is a very small competitor in a crowded field.
While we may think that everyone knows about Cape Town, the reality is that the vast majority of people do not think about us at all.
The world is still battling through a recession and there have been significant shifts in consumer behavior. Current marketing initiatives do not allow for Cape Town to be compellingly and relevantly portrayed to potential visitors.
Cape Town has some wonderful attributes – she is iconic, complex and multifaceted. Her incredibly rich offering and diversity provides great opportunity.
To visitors however, these attributes are not self-evident and for us to unleash the potential, the offer must be relevant and made continuously and compellingly.
The vibrancy and beauty of Cape Town actually hides the reality.
The city of Cape Town’s visitor industry is, at best, in a stagnant predicament. With no demand injection, the industry will not be able to create jobs nor provide incremental revenue to its existing business infrastructure.
If nothing is done, for the next three years, or if we neglect our strong tourism markets, the city and individual (visitor industry) businesses will not generate effective returns from their capital investments. With stagnant demand, there is likely to be workforce reductions as business owners struggle with their cash flow.
Of grave concern is that an industry, which traditionally provides ongoing work opportunities for all skill levels, will not be able to do so, neither will it be able to grow year-round employment opportunities.
It is recognised that many other sectors are facing similar problems, but in a region, which is so dependent upon tourism and the visitor industry for such a large part of its economy, the situation requires attention.
It is clear; we cannot remain passive and rely on the city to market itself. Nor can we continue to be perceived purely as a place of natural beauty. Our urban identity, innovative outlook, entrepreneurial spirit, academic excellence and pioneering medical and science sectors must be added to the brand palette in order for Cape Town to effectively compete in the domestic and global market for visitors, investment and attention.
With the World Cup having come and gone, we find ourselves in a visitor demand / brand vacuum. Given the issues raised above, and the unique marketing challenges we face, this is a precarious situation to be in.
We cannot depend on the next big event to give direction to what Cape Town’s brand position should be. Although we are considered as one of the new cities to watch for in 2020 and continue to rake in travel accolades, this is no guarantee for success or economic growth (as many cities such as Sydney have found to their detriment).
We are unquestionably at a tipping point where we can either sink into insignificance or take our place as Africa’s top city and one of the top city destinations in the world to live, visit, work, study and invest.
The role and status of tourism
Tourism is a major economic driver for Cape Town.
Revenue and jobs
The tourism industry contributes an estimated R14-billion to our city’s economy and sustains over 298 000 jobs per annum.
Tourism is a serious business sector for our region, giving us a competitive advantage over other national cities and driving economic growth alongside other niche business sectors like agriculture, the knowledge economy and creative sector.
Sources of demand
Cape Town is in a unique situation in terms of our visitor movements. Eighty percent of visitors to the Mother City are international leisure tourists, about 15% are intra-regional visitors, while only 3% of all visitors to Cape Town come for business reasons.
The benchmark we compete against in the rest of the world and even some other South African cities is exactly the opposite – intra-regional provides 80% and extra-regional provides 15%. This places us in an exceptional situation with unique challenges.
The marketing questions
We are, and will be for many years, reliant on international leisure visitors from our key source markets of the UK, USA, Germany and The Netherlands. Strategically these cannot be neglected, as they sustain our industry and ensure its viability.
Optimising the portfolio
Given this, the marketing question centres around the portfolio of visitors and how to develop a sustainable demand for all sectors (business, business events and major events etc.), alongside visits from core, emerging and domestic markets.
Each of these has a unique set of circumstances and considerations. It is important to balance investments commensurate with the risks and reality of achieving results. As an example, it would appear simple to grow the domestic market, but experience in many countries has shown that growing share domestically is probably one of the most difficult and expensive marketing challenges, as it requires altering individuals’ preconceptions and habitual mindsets.
How to place the brand in front of people continuously
The most important feature of visitor decision-making is that it is non-linear. People do not compartmentalise their decisions and motivations and follow a sequenced process of evaluation.
A view of Cape Town is developed over time, in many circumstances and at different times (thinking about a holiday, a business decision, where to host the next conference etc.).
The central marketing question is “Can we portray Cape Town consistently with multiple messages to many people for an extended period?”
The costs of not promoting tourism and a weak brand
The case of Sydney
International leisure tourism arrivals to Sydney plummeted for five years after hosting the Olympic Games in 2000 after the city decided to limit investment in leisure tourism marketing and city brand differentiation.
They assumed, wrongly, that after the significant investment in the games, the raised awareness of the city would induce visitors to arrive automatically.
During this period, Sydney was consistently ranked in the top three cities to visit by prominent brand studies and populist opinion. The fact, however, remained that visitors failed to arrive and the city’s visitor industry suffered greatly with huge losses of jobs and investment.
The learning points from the Sydney experience are clear:
- Cities do not market themselves.
- Infrastructural investments and discrete events, albeit important for economic growth and livability, are not necessarily relevant for people when making decisions to visit.
- Lack of marketing induces invisibility and irrelevance, which in itself reduces demand.
The uniqueness of Cape Town
Cape Town is sometimes compared to European cities like Barcelona and some may question the need to further invest in tourism marketing and promotion, as they assume that visitors from our traditional source markets will continue to travel when we stop investing in marketing.
Cities like Barcelona, because of their location, depend on intra-regional and domestic travel for 80% of their tourism numbers and revenue, with only 20% visiting from international (extra-regional) countries.
Cape Town is different. The city’s visitor mix is the exact opposite, with 80% of revenue and numbers coming from extra-region international visitors. The upside of this is that these markets are the most lucrative, but on the downside, we have to compete with European cities that have the advantages of access and cost competitiveness.
Getting it right – it’s more, much more, than pictures and slogans
Beauty is no longer enough to create the kind of demand to sustain year-round economic growth and more job opportunities.
A strong, multidimensional brand positioning and strategy execution, incorporating leisure, business, investment, the academia and the creative sector is essential.
More than pictures, the required strategy is predicated on a multidimensional brand proposition and executed through a series and multitude of messages relevant to each market and market/segment.
It takes continuous care, uniformity, and commitment to produce the strong and evocative destination brand identity that over time will become an asset and distinguish itself from the rest.
Destination brand identities are about more than just attracting tourists, although they form, of course, the sector that most contributes economically to the economy. They are simultaneously about incorporating business and investment, the creative and innovation sectors, as well as the academia into one vision and direction – economic growth, job creation and inclusion to the benefit of all citizens.
A potential solution
Unless a brand is embraced, supported, and given “life” by the all stakeholders and partners, it will sink into insignificance and become nothing more than a logo or tagline on a piece of paper.
“Today’s world is an extremely competitive place, says Guy Lundy, CEO of Accelerate Cape Town. “Differentiation is key; Cape Town cannot be the same as everyone else. We need to create a brand positioning that is recognisable and understandable, and very importantly, believable. We must also ensure that we can deliver on the promise of the brand. The Cape Town brand must be able to encompass business and study, amongst other things, in addition to simply leisure and beauty, on which we are currently overly reliant. It also must avoid raising the position of one sector and inadvertently killing off another.”
Creating a city brand that is clearly distinguished from competitors, resonates with consumer needs, and gains the support of all stakeholders requires persistence, vision, collaboration, and strategic leadership.
There is no “silver bullet” or one-size-fits-all answer that can swiftly deliver a city’s brand strategy. Cape Town Tourism and partners like Accelerate Cape Town are committed to a branding approach that will introduce focus, message consistency, provide the leadership to unite public and private partners and become the core focus to add value for customers through our aligned marketing efforts.
A brand strategy
A successful city brand is constructed around the consumer and their total destination experience – before, during and after their visit.
We are committed to drive and implement an inspirational brand for Cape Town rooted in evidence and the complete story of this exceptional and complex city – an inclusive process that involves citizens, tourism, business, academia, events, and the knowledge and innovation economies of Cape Town.
The brand proposition of inspiration allows for multiple messaging and alignment with consumer behavior and sentiment. Furthermore, it is supported by all sectors mentioned and by international media groups such as the Discovery Channel, National Geographic and Sky TV.
Delivery a brand strategy requires a public / private sector / media partnership and to this end we have engaged and identified substantial partners interested and willing to invest in delivering a comprehensive brand and a new marketing strategy for Cape Town that goes beyond the tried and tested.
These partnerships are “waiting in the wings” for public sector endorsement of Cape Town Tourism’s new 2011/2012 marketing strategy and for the brand execution plan. In this regard, we need to note that a city brand is seen as a “public good” to be leveraged by the commercial and media industries.
Conclusions: Business unusual
In developing the strategy, Cape Town Tourism has undertaken rigorous analysis, investigated world best practice and identified organisations that have the willingness and resources to support its execution.
By following the Australian state of Victoria’s highly successful model, building demand for Cape Town will generate demand for surrounding areas and the province generally.
There are many examples of poor brand campaigns, but we also know that for cities to be successful, they absolutely have to have an exceptional brand and compelling message strategy.
By supplementing marketing communications with visitor-focused initiatives, Cape Town will elevate its relevance and generate more visitors and spend, thus negating the projected losses, stimulating our stagnant industry and creating jobs.
This means business unusual with a focus of our resources and energy on the market segments and platforms that will deliver the best results for Cape Town.
If we do not act decisively now, our industry and the economic wellbeing of our city and people are at great risk. If we don’t proactively engage in a new marketing and branding strategy, we run the risk of being positioned nonetheless by our competitors, our critics and the media, and most likely to our disadvantage.