Tourism in Cape Town a year after the 2010 FIFA™ World Cup
We were a country whole-heartedly and publicly committed to tourism during 2010, and the first six months of 2011 have called us to heed, more than ever, to a pressing need to highlight tourism as an essential component of our economic survival.
The international tourism industry has struggled hard to battle declines in turnover, as the effects of the global recession linger on. The global financial crisis and the subsequent consumer behavioural change has had a significant adverse effect on the tourism industry across the world; demand has diminished, visitor spends have steadied and costs have increased. The tail-end of the financial crisis has hit South Africa and the tourism industry hard; perhaps it had been initially diverted in the run-up to the World Cup.
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 significant.
In Cape Town alone some 298 000 people are directly employed in the industry. Their livelihoods are dependent on an increasing demand by visitors for the city. In addition, the visitor economy is worth an estimated R14 billon per annum in Cape Town; a significant proportion spent in non-tourism businesses, which incrementally benefits from the sector.
The sobering reality is that at the current slow recovery rate of about 3% - 4%, Cape Town will only reach 2007 tourism visitor and revenue levels again by 2014 – representing a cumulative loss of R1.5 billion to the sector over seven years. Many other sectors are facing similar challenges, but in a region dependent on tourism for such a large part of its economy and job market, 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 our market and brand offering, in order for us to 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 brand vacuum. Given the issues raised, and the unique marketing challenges we face, this is a precarious situation in which to be.
We cannot depend on the next big event to give direction to what Cape Town’s brand position should be. Although we are considered one of the new cities to watch for in 2020 and we continue to notch up travel accolades, this is no guarantee for success or economic growth, as many cities such as Sydney have found to their detriment. 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 come.
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.
With national tourism marketing still focusing predominantly on wildlife and natural beauty as the central themes, cities receive very little exposure in international campaigns. The World Cup showcased our cities, growing infrastructure, people and vibrant cultures – it gave the world a different perspective. Little has unfortunately been done from a national level to build on this marketing legacy.
Today, and tomorrow, is the age of the urban tourist. The paradigm of people wishing to escape and take vacations in non-urban areas is mythical. 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 culture.
The three cities marketing alliance launched at INDABA this year will focus our energy on urban tourism and lobby for a more representative marketing exposure of urban South Africa.
Cities like Cape Town compete in this 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 in the established and lucrative European source markets.
Cape Town is unique in that 80% of visitors to the Mother City are international leisure tourists and just fewer than 15% are domestic visitors. Only 3% of all visitors to Cape Town come for business reasons. The benchmark in much of the world, and other South African cities we compete with, is exactly the opposite in that the majority of visitors are intra-regional or domestic. This places us in an exceptional and perilous situation. We are over-reliant on international leisure visitors from our key source markets of the UK, USA, Germany and The Netherlands, but neglecting these markets now to focus all our energy, resources and efforts on business and domestic tourism could be disastrous for the already struggling local tourism economy.
We cannot afford to lose our international leisure arrivals market share. Would any major corporation neglect its best seller to improve the sales of its weaker brands? The relationship between leisure and business tourism is interdependent and cannot be separated. Leisure tourists have been shown to become business tourists and investors once they are enticed by a destination. So there is no single formula that can be applied in this case.
Continued and significant investment is needed to grow Cape Town’s leisure tourism business, while more attention is given to improving domestic, business tourism and investment. It will take considerable time and effort to improve the balance between these sectors, but it is critical in order to drive economic growth, sustained job creation and turn the tide on seasonality.
The vibrancy and beauty of Cape Town actually hides the reality. 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.
The Communications Group from the UK describe cities as the prisms through which countries are viewed. In many international cases, city tourism marketing leads the brand-building strategies for countries. Tourism can form the umbrella that encompasses different marketing focus points such as economic development, investment, recruitment and exports. It is imperative that this umbrella shares the same brand essence or DNA. A strong tourism brand and consistent messaging must be adopted to reverberate with specific needs of individual target customer groups.
If nothing is done, for the next three years, or if we neglect our strong tourism markets, the city and tourism businesses will not generate effective returns from the significant capital investments that were made prior to the World Cup.
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.
Beauty is no longer enough to create the kind of demand to sustain year-round economic growth and more job opportunities. A strong, multi-dimensional brand positioning and strategy execution, incorporating leisure, business, investment, the academia and the creative sector is essential.
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. We believe that we require an all-inclusive strategy that runs much deeper than an attractive logo, advertising theme or a tagline. Quite simply, we believe that a successful city brand is constructed around the consumer and their total destination experience – before, during and after their visit. We are committed to driving and implementing an inspirational brand for Cape Town, rooted in evidence and the complete story of this exceptional and complex city – an inclusive process that incorporates citizens, tourism, business, academia, events, and the knowledge and innovation economies of Cape Town.
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.
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 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 in general.
The consolidated Cape Town brand, underpinned by Inspiration, is being developed by Cape Town Tourism in partnership with Accelerate Cape Town, the City of Cape Town and other sectors. By supplementing marketing communications with visitor-focused initiatives, Cape Town will elevate its relevance and generate incremental visitors and spend; thus negating the projected losses, stimulating our stagnant industry and creating jobs.
If we do not act decisively now, our industry and the economic well-being 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.
This means “business unusual”, where the focus of our resources and energy is on the market segments and platforms that will deliver the best results for Cape Town.