Not just a pretty face

It’s taken for granted that Cape Town is a world-class leisure travel destination, but the city has been working hard to change perception of its status in the business travel space, and already it is seeing results.

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Cape Town is a bit like the beautiful actress who knows that she’s physically attractive, but wants to be taken seriously for her acting craft and not handed roles purely on the basis of her beauty.

Cape Town’s beauty is there for everyone to see, in the stunning beaches, beautiful mountains, inviting winelands and interesting forests. But whilst the city is happy to benefit from and be renowned for being one of the world’s most beautiful cities and leisure travel destinations, it has another need, and that is to be taken seriously as a business travel destination.

Cape Town Mayor Patricia de Lille acknowledged as much in May, when she said that, “we are determined to change the perception that Cape Town is only a top leisure tourism destination. We are the ideal place for the world to meet to talk business.”

De Lille’s comment was in response to the news that Cape Town had once again been named as the top city in Africa for business tourism events by the International Congress & Convention Association (ICCA), which represents the main specialists in organising, transporting, and accommodating international meetings and events, and comprises over 1,000 member companies and organisations in almost 100 countries worldwide.

Cape Town climbed 15 places to be ranked in the top 40 destinations for business tourism in the world. It is the fourth consecutive year the city has won the award as the top African city ahead of others such as Johannesburg, Marrakech and Nairobi, largely due to conference bids secured by the Cape Town & Western Cape Convention Bureau, a strategic division of Wesgro.

“Since 2012 it has been part of our Economic Growth Strategy to build the city’s reputation as a place that is open for businesses, by creating an enabling environment for economic growth and to create much-needed jobs for the people of our city,” said De Lille. “The events and conferencing sector is a key part of our economy and major job creator, and its value cannot be underestimated.”

Events hosted by Cape Town in 2016 included World Travel Market Africa, the South African Innovation Summit, the Mining Indaba, the Structural Engineering, Mechanics and Computation International Conference, and the World Energy Cities Partnership Annual General Meeting.

It’s clear that the City of Cape Town has adopted a proactive approach to attracting business to the Western Cape and it’s not just focused on the events industry. The city has already seen good results from its ‘Cape Town Air Access’ programme (see Airlines & Airport) and in November launched the ‘Invest Cape Town’ initiative, which aims to “provide stakeholders and economic roleplayers with a platform and tools to showcase the city’s commitment to boosting its profile as a leading investment destination.”

Invest Cape Town will apparently “build narratives, data and collateral relating to Cape Town’s success stories, economic performance, sector analysis and marketing materials, in an effort to unite and amplify messaging, with the purpose of positioning the city in the mind of international investors as a globally competitive business destination.”

“The city is home to many of South Africa’s and Africa’s financial institutions and, coupled with the national headquarters of many legal and consultancy firms, we offer all the services needed to underpin a global drive into Africa,” said Lance Greyling, Cape Town’s Director for Trade and Investment, at the launch.

CONFERENCE INDUSTRY

There’s no doubt that the emergence of the Cape Town International Convention Centre has played a big role in changing the perception of the city and what it has to offer in the business travel space.

Since it opened in June 2003, CTICC has helped Cape Town position itself as Africa’s top business events destination, in terms of the ICCA rankings.

CTICC hosted 39 international conferences and 28 national conferences in its 2015/16 financial year, but it is not resting on its laurels. The second half of 2017 will see the completion of CTICC’s expansion project. CTICC East is 31,148m2 in extent and will offer 10,000m2 of multi-purpose exhibition and conference space, as well as 3,000m2 of formal and informal meeting space. Facilities in CTICC East will include six exhibition halls, four meeting suites, five meeting pod rooms, two terrace rooms, a rooftop garden and a new coffee shop.

“The expansion will not only enable us to host more events and larger events, but it will also provide us with the flexibility to host large-scale events concurrently,” says Julie-May Ellingson, CTICC Chief Executive Officer. “The expansion will offer more venue options to clients and will provide existing clients with more space to grow their events.”

It’s an interesting time for Cape Town’s conferencing industry, as the anticipated completion of the CTICC expansion will come about 18 months after the opening of a second conference centre “down the road” in Century City.

The Century City Conference Centre & Hotel has the capacity to accommodate close to 2,000 guests in 19 venues, and officially opened for business in February 2016. The conference centre forms part of Century City’s R1bn ($75m) mixed-use Century City Urban Square development.

In the months leading up to the launch, Glyn Taylor, Joint Chief Executive Officer of Century City Conference Centre & Hotel said the development was in response to soaring demand for conferencing and hotels in the precinct, and had been designed to complement Cape Town and Century City’s existing facilities.

“Not only will it fill a gap in the market, but we believe it will help cement Cape Town’s established attractiveness as a conference destination,” he said.

Taylor’s business partner and fellow CEO Gary Koetser said in 2015 that the average hotel occupancy at Century City, which had a total of 460 rooms in five hotels, was running at over 73%.

“And the existing conference facilities, which range from 20- seat venues to a 300-seat facility, are unable to keep up with demand and have had to turn away business, particularly for larger conferences.”

With a different offering to CTICC, the industry consensus seems to be that the two venues complement each other, as opposed to being in direct competition, and Cape Town is set to continue benefitting from this development, which has added another element to an already attractive MICE offering.

“Cape Town is the perfect convention and business event city,” says Jaco du Plooy, Sales & Revenue Manager at the President Hotel in Bantry Bay. “We have world-class meeting and event infrastructure, offer a safe and secure environment, have one of the top leisure destinations, and offer a great variety of attractions, events and activities to keep delegates entertained pre, during and post-congress.”

“It’s a fantastic MICE destination, as the city has so much to offer,” says Ophelia Benjamin, aha Hotels & Lodges Regional Sales Manager: Western Cape. “Eight of the 10 top restaurants in the country are in Cape Town, so one can easily add on a ‘foodie’ and wine aspect. Cape Town is on most people’s travel bucket list and clients are also spoiled for choice in terms of selecting accommodation.”

What’s interesting to note is how Cape Town has been able to leverage its natural beauty and appeal in the leisure space, and use that as the foundation on which to build a compelling business travel and events offering, as picked up by Sue Petrie, British Airways’ Commercial Manager for Southern Africa.

“The recognition Cape Town has earned as a business tourism events destination indicates that it’s been able to successfully capitalise on its reputation as a leisure destination,” she says, whilst cautioning that “while there have been a number of initiatives to sustain demand outside of the summer peak, the fact is that Gauteng remains South Africa’s commercial hub and still attracts the lion’s share of business traffic.”

HOTEL INDUSTRY

An increase in interest in Cape Town in both the business and leisure travel spaces has coincided with a host of hotel development, and 2017 is scheduled to see a couple of significant openings, led by international hotel heavyweight Carlson Rezidor and local big player Tsogo Sun.

Rezidor have already opened the Radisson Blu Hotel & Residence Cape Town this year. Situated on the corner of Riebeeck and Long streets on Cape Town’s foreshore, the five-star hotel has 214 rooms and is just a kilometre from CTICC.

That took Rezidor’s presence in the city to five properties – three Radisson Blu and two Park Inn by Radisson hotels – and the group will be following that up later in the year with the opening of the group’s first Radisson Red property in Africa.

In fact, it will be the very first Radisson Red in the Middle East and Africa, and will be located at the V&A Waterfront. The hotel will also form part of the new Silo District.

“We expect this 252-room hotel to shake up the Cape Town market and offer a new hotel philosophy that connects with an ageless millennial mindset through art, music and fashion,” says Andrew McLachlan, Senior Vice-President, Business Development, Africa & Indian Ocean for Carlson Rezidor. “Its design is bold, alive and inspirational.”

Already open and in close proximity to the Radisson Red is The Silo Hotel, a luxury 28- room boutique property built in the grain elevator portion of the historic Grain Silo Complex above the Zeitz Museum of Contemporary Art Africa at the V&A Waterfront.

Completing the significant openings in 2017 will be Tsogo Sun’s development of a 200-room SunSquare hotel and a 300-room StayEasy in the same building – the site of the demolished Tulip Hotel – later this year. An important element to this development is the fact that Tsogo Sun won’t be adding more five-star rooms to Cape Town, but rather a dual offering a little further down the star scale, in the ‘limited services’ space.

All of this off the back of a highly successful 2016 for the Cape Town hotel industry.

Hospitality and Tourism International (HTI) Consulting mixed-use, real estate and leisure-focused consulting company, which has been around for a little under 15 years, and in April it released its 2016 annual report. HTI Consulting focuses on hotel development and activity, and provides fascinating insight into who – in terms of hotel brands – is doing what and where.

This year’s report provided a brief summary of the top five and bottom five performers across 13 African cities, as indicated by STR. Occupancy, ADR, rooms sold, rooms available and future supply were all taken into account.

Among the conclusions the report draws, it states unequivocally that Cape Town was the big winner in 2016, growing both its occupancy and average dollar rate (ADR).

According to HTI, Cape Town was able to grow its occupancy by 6.5% in 2016, followed in a distant second by Lagos with just 2.7%.

“Lusaka and Cape Town were the only cities to achieve ADR growth in US dollar terms in 2016,” says the HTI report. “Although the rand depreciated significantly against the dollar at the end of 2015 (USD1=ZAR15.47), by the end of 2016 the currency had strengthened to USD1=ZAR13.74, facilitating USD growth in ADR. In local currency, ADR increased by 13% in Cape Town.”

No surprise, then, that the city’s hotel operators are smiling.

“The hotel performance in Cape Town has been excellent, with the city having the highest RevPar growth in the world in 2016,” says McLachlan. “We expect Cape Town to continue to perform well in 2017 and into the foreseeable future, and as a company we believe there is still room to add more Carlson Rezidor-branded hotels to the city. In particular, our luxury brand Quorvus Collection and another two Park Inn by Radissons.”

It’s not just the internationally-branded hotels that are happy with performance over the past year.

“The President Hotel has seen phenomenal growth over the past 12 months,” says Du Plooy. “Our overall revenue has grown by nearly 25%.”

Du Plooy puts the success of the past year down to a number of factors, including the demand for Cape Town as a tourism destination, which has increased consistently since 2010.

“We have been able to capitalise on the growth in demand for Cape Town as a destination,” he says. “This has also given us an opportunity to diversify our market mix and grow our overall revenues. The President has also implemented new initiatives, which have been a resounding success and have been instrumental in recapturing the market as a destination of choice.”

These new initiatives include a new executive chef, new food and beverage offerings in the form of the Botany Café and Deck Bar, a refurbishment of the hotel’s rooms, an upgrade to the pool, faster wi-fi, and a revamped wine menu in collaboration with a number of ‘niche’ wine estates.

“Our Cape Town hotels performed really well and were up, year on year, in both occupancy and rate,” says Benjamin of aha Hotels & Lodges, which manages the Harbour Bridge Hotel & Suites and the Simon’s Town Quayside Hotel. “There was definitely a decline in government spend, but the other markets grew exponentially.”

So, that’s 2016. What about the road ahead for Cape Town hotel development and future supply?

Never mind the Rezidor and Tsogo Sun openings in 2017, late- 2016 saw Marriott announce plans for three new properties in Cape Town, under its Marriott Hotels, Residence Inn and AC Hotels brands. The 200-room Cape Town Marriott Hotel Foreshore will be the first Marriott Hotels property in the city, and will be located at Harbour Arch in the Culemborg Quarter, along with the 150- room Residence Inn Cape Town Foreshore (the first Residence Inn property in South Africa). The 189-room AC Hotel Cape Town Waterfront will be located at The Yacht Club within the city’s Roggebaai district, and will be the first hotel under the brand in the Middle East and Africa region. These hotels are scheduled to open in 2018.

“Cape Town’s booming market is likely to slow in the short-term, particularly in the midscale and upscale space as new supply comes on-line,” says the HTI report. “However, should the market continue to grow at its current pace, the impact of new supply will be short-term.”

Not everyone agrees, though.

Writing in September 2015, Guy Stehlik, CEO of BON Hotels, had this word of warning.

“Have people got short memories of how an over-supply can saturate a market, or is there something they know that we don’t?” he said. “I understand that there’s a wonderful resurgence in the CBD, but resurgence cannot guarantee bums in beds. What’s baffling me is that the lurking danger is a ‘no-brainer’ to any experienced hotelier or even anyone who survived the downward spiral of the early 2000s and after that, the ‘World Cup hangover’.”

“Nervous and inexperienced hotel owners and managers begin chopping their rates in the hope of filling empty beds, but this leads to a cannibalisation between hotels, groups and properties as we all try to keep occupancies up. The result? A revenue crash for the entire market. A hotel or revenue manager with experience, though, will not fall victim to lowering rates, opting rather to lose market share than lower rates, as we know that there is very little hope of getting those rates back up.”

“If we are building all these hotels, I truly hope that there’s a plan for the Western Cape to differentiate from the norm and from other long-haul destination options available to travellers.”

AIRLINES & AIRPORT

Whilst Stehlik’s red flag is arguably a valid one, Cape Town does continue to attract more and more visitors every year, and this is backed up by numbers supplied by Airports Company South Africa, which manages Cape Town International Airport.

What will be key going forward, though, is whether these increased numbers are sufficient to justify the number of hotel rooms added to the market and that they remain at impressive levels.

Regardless, it was significant that Cape Town International Airport welcomed 10 million passengers in 2016, including just over a million in December – obviously dominated by the leisure trade – and 2017 is looking just as promising.

“It appears as if 2017 has started off well. We are already up in passenger numbers compared to last year, with January seeing an international passenger increase of 31.16% and an overall of 6.45% compared to last year,” says Deidre Davids, Senior Manager: Corporate Affairs at CTIA.

Again, the City of Cape Town should be commended for its proactivity in setting up its Cape Town Air Access initiative.

“The City of Cape Town has been a significant role player in encouraging and promoting the city,” says Davids. “They, together with the Western Cape Provincial Government, ACSA, Cape Town Tourism, Wesgro and the private sector, make up part of the Air Access team in the Western Cape. They aim to increase air access through: the establishment of more non-stop flights to strategic markets; increasing non-stop connectivity to global and regional hubs; ensuring frequent flight schedules (a minimum of three to four times a week); anchoring year-round services to establish supply stability to key markets; and providing a more competitive landscape that reduces ticket prices.”

The results are there to see.

July 2016 saw Emirates launch a third daily service between the Dubai and Cape Town, whilst the Middle Eastern airline also opened a new lounge at CTIA in May last year.

December 2016 saw Ethiopian Airlines increase its service to 10 flights a week to Cape Town.

Turkish Airlines is another big player to be drawn to Cape Town and has been flying a daily service between Istanbul and the city since October 2015.

Similarly, KLM started operating daily flights between Amsterdam and Cape Town all year round from May last year. A few months later, Air France announced that it would serve Cape Town throughout the 2017 summer season from Paris-Charles de Gaulle with three weekly flights operated by an Airbus A330. So, 26 March-2 May this year saw additional flights operating on Wednesdays, Fridays and Sundays, whilst 7-27 October will see the same increase.

Likewise, British Airways was active in 2016, announcing that it would fly three times a week direct from Gatwick Airport to Cape Town for the northern winter period. BA was the second UK-based airline to announce Gatwick flights to Cape Town, after Thomas Cook Airlines had beaten them to the punch in November 2015.

“During the 2016/2017 summer, for the first time we further expanded the double-daily schedule to include three additional flights to Gatwick,” says Petrie. “We have already confirmed these flights for the 2017/2018 summer schedule.”

Petrie is another industry member impressed by what has been achieved by Cape Town Air Access.

“We’ve worked with the city in the past, particularly when we were trying to secure more frequencies to Cape Town, and continue to do so. The fact that we’ve been able to sustain an expanded schedule speaks to the excellent job that is being done to market Cape Town,” she says.

Also in 2016, Kenya Airways launched a Nairobi – Livingstone – Cape Town route and in February 2017 increased that service from four to six flights, whilst Lufthansa resumed operations of the Frankfurt-Cape Town route in December.

Closer to home, Airlink announced in March 2017 that it would be launching direct flights between Cape Town and Victoria Falls (Zimbabwe), offering a daily service, except on Saturdays, as well as adding a second daily flight between Cape Town and Nelspruit, except on Saturdays.

“Cape Town and Western Cape, though Wesgro and many other agencies, are constantly looking at opportunities to grow the tourism economy in the region,” says Du Plooy. “There is a great focus on access to the destination via the Air Access team.”

And apparently, that impact is being felt in other areas of the tourism economy.

“The City of Cape Town has done a phenomenal job in promoting the city,” says Benjamin. “They have noticed a gap in the market with, for example, Halaal travel. You do not find a more Halaal-friendly city than Cape Town, other than in the Middle East!”

CONCLUSION

Just a pretty face?

Probably not.

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