Coming out fighting

It’s been a rough couple of years for Cape Town, largely due to the Western Cape’s water crisis, but the Mother City has come out the other end determined to put its troubles behind it and re-establish itself as South Africa’s destination of choice.

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The water crisis may be over, but the hard work for Cape Town has only just begun.

That’s because there is much to claw back after a forgettable few years.

The drought in the Western Cape began as far back as in 2015 and resulted in a severe water shortage in the region, most notably affecting the city of Cape Town. With dam levels predicted to decline to critically low levels, the city announced plans for ‘Day Zero’, when if a particular lower limit of water storage was reached, the municipal water supply would largely be shut off, potentially making Cape Town the first major city to run out of water.

Through water-saving measures and water supply augmentation, by March 2018 the city had reduced its daily water consumption by more than half to around 500 million litres per day, resulting in the initial forecast of Day Zero in April being re-forecast to 2019, before eventually being scrapped.

But the damage was done.

South African Tourism went to great lengths to reassure the world that Cape Town was open for business and that all visitors were welcome, throughout the crisis, as long as they were willing to play their part in conserving water.

But the statistics tell a story.

Figures released by Cape Town Tourism in January showed a mixed performance for 2018 and clarity that the city’s recovery in terms of tourism was stabilising, notwithstanding a poor performance in the early part of the year.

Cape Town Tourism identified a couple of key factors that influenced travel choices in 2018, including a third quarter recession and the drought as primary factors.

“Tourism in general is in a period of slow recovery following the drought and recession, and the figures reported bear this out,” said Cape Town Tourism CEO, Enver Duminy. “The recovery of water supplies in the latter part of 2018 following healthy rainfall and the implementation of additional water supplies came a little too late to counteract bookings to the city, although December, in general, offered an indication that tourism is on track to becoming a more stable economic environment once again.”

Cape Town’s operators would seemingly agree, having been on the receiving end of a challenging few years that forced them to re-look their offerings and make some adjustments, in terms of their expectations and projections.

“Despite the current relaxation of the water restrictions in Cape Town, we lost traction as a global destination at the time of the drought,” says Gary Koetser, Joint-CEO of Century City Conference Centre & Hotel. “Given the longer lead times this market segment enjoys, Q1 and Q2 of 2019 has been incredibly difficult, as we are still suffering from the hangover of the drought.”

Koetser, though, is bullish about the rest of the year.

“That being said, Q3 and Q4 are poised to be record-breaking months as a result of the entrenched relationships we share with our loyal supporters,” he says.

Strong relationships aside, plenty of work remains, with all the major players required to put in a shift to turn around a situation that has had a serious impact on Cape Town’s tourism.

“It has been a mammoth task on the part of stakeholders to work towards sustainability within the tourism sector throughout 2018, and the figures for December offer some reassurance that this is paying off,” said Alderman James Vos, Mayoral Committee Member for Economic Opportunities and Asset Management.

CAPE TOWN AIR ACCESS

Cape Town, though, still has much to be positive about, and it’s interesting that despite the hangover from the drought, Cape Town International Airport still showed some growth, in terms of its numbers, in December.

International passengers, according to Airports Company South Africa, were recorded as being up by 4% in December (year-on-year) and by over 9% in total for 2018.

Those numbers were a reminder that Cape Town remains a serious tourist drawcard, despite its perilous situation over the past few years.

A lot of credit must go to Wesgro, the official tourism, trade and investment promotion agency for Cape Town and the Western Cape, and some of the measures it has put in place.

One of those measures is Cape Town Air Access (CTAA), the “focal point for international air route development in the Western Cape and a collaboration between the Western Cape Provincial Government, the City of Cape Town, Airports Company South Africa, Cape Town Tourism, South African Tourism, Wesgro and private sector partners.”

Since its launch in 2015, Cape Town Air Access has contributed to the landing of 13 new routes and 19 route expansions. This has resulted in Cape Town International Airport doubling its international seat capacity by more than 1.5 million seats, which helped the airport reach the 10.7 million passenger mark in 2017. International terminal passengers grew by 20% in 2017 reaching a total of 2.4 million.

The latest addition is that of United Airlines, which will begin flights to and from New York in December. United will operate three weekly non-stop flights to Cape Town, which will decrease the current travel time between the two cities by more than four hours and provide customers from more than 80 US cities with easy one-stop access to Cape Town.

“Cape Town was not on the map,” says Paul van den Brink, Project Lead for Cape Town Air Access, speaking to Daily Maverick about the programme. “No-one attended events like World Routes, which every airline, airport and aviation stakeholder attends annually. Now we engage with the right decision makers.”

It took Van den Brink’s team two years to convince United Airlines that returning to Africa to fly the New York-CT route would be viable and profitable.

What shouldn’t be under-estimated is the role the private sector has played in the success of Cape Town Air Access, with an obvious incentive for those corporates with a significant presence in the Mother City.

“Data proves that increased international air traffic and access have a direct impact on economic growth, and increased jobs anddecreased unemployment. These are challenges we believe cannot be solved by government alone and are best addressed through public-private partnerships,” says Anika Ebrahim, Corporate Impact Director at Naspers.

There are now four new African airlines flying in and out of Cape Town, in the form of Angola’s TAAG, Kenya Airways, Ethiopian Airlines, and RwandAir. This means eight African cities are directly accessed from Cape Town.

The Western Cape market is also being opened up to Latin American travellers who fly from Rio de Janeiro or Sao Paulo via Luanda.

Opening up travel routes stimulates the economy beyond tourism. To date, the CTAA initiative has added R6-billion to the local economy, according to research conducted by Wesgro. The opening up of the New York route – and by extension, the North American market – will be a further “game changer,” says Van den Brink.

Another consequence of the increased traffic is that Cape Town International has embarked on a R7-billion expansion project that will see a new runway being built together with extensive upgrades to the domestic and international terminals.

Construction is expected to begin early in 2020 and will take five years to complete.

HOTEL DEVELOPMENT

Despite the impact of the drought, Cape Town’s hotel supply has actually grown in the past two years, off the back of the positive sentiment enjoyed in 2016 and 2017, before the water crisis fully took hold.

As a result, at least five new hotels have opened in Cape Town over the past two years – a period that coincided with the worst drought in decades and a drop in the number of overseas tourists.

The result has been that hotel occupancies in Cape Town decreased by an overall 6.5% in 2018 to 65% (from 71.5% in 2017), according to figures from global hospitality research group STR. Revenues, as measured by average daily room rates, declined by 1.7% to R1,765 over the same period.

Figures released by Stats SA in January showed a similar year-on-year decline (-1.6%) in overseas tourists to South Africa between January and November. That followed a bumper 2016 and 2017, when the tally of overseas visitors rose by 12.8% and 7.2% respectively after a 6.8% drop in 2015.

The 2016/2017 uptick was seemingly driven by the relaxation of visa regulations.

Last year’s decline in Cape Town occupancies and revenues coincided with a number of new projects opening in the city, pushing the estimated number of hotel rooms in central Cape Town to just over 11,000. These included the 188-room AC Hotel by Marriott at the Yacht Club, the 252-room Radisson Red and the 87-room Signature Lux — all near the V&A Waterfront.

There was also the 214-room Radisson Blu Hotel & Residence in the CBD and Tsogo Sun’s SunSquare and StayEasy hotel complex at the intersection of Buitengracht, Strand and Bree streets (504 rooms in total). Gorgeous George, a 32-room boutique hotel, opened on St George’s Mall in central Cape Town earlier this year, whilst Hilton Hotels & Resorts is set to add to the supply.

It recently announced that it had signed a management agreement with Growthpoint Properties to open a hotel under its lifestyle Canopy by Hilton brand.

The 150-room Canopy by Hilton Cape Town Longkloof is expected to begin welcoming guests in 2021 and will be the brand’s debut property in Africa. Canopy by Hilton launched in 2014 to appeal to travellers seeking locally-inspired stays and wishing to immerse themselves in the culture and history of local neighbourhoods.

Also recently, Best Western Hotels & Resorts and Fountains Hotel announced the rebranding of the Fountains Hotel.

With 156 guest rooms and suites, the Best Western Fountains Hotel is located in the heart of Cape Town’s CBD. Ideal for both business and leisure travellers, the hotel offers a choice of comfortablebedrooms, the majority with views over the harbour, the bustling Thibault Square or Table Mountain.

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, and this year has once again seen the city come out on top, with 42 international association meetings – 16 more than second-ranked Kigali and 26 more than sixth-ranked Johannesburg.

It’s been an interesting few years for Cape Town’s conferencing industry, with CTICC completing a massive expansion project in 2017, barely 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 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.

With a different offering to CTICC, the industry consensus seems to be that the two venues do indeed 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.

Further to that, Century City Conference Centre & Hotel is going to make another addition to that offering, after unveiling plans to build a second hotel in close proximity. The new hotel will increase the inventory from 125 rooms at Century City Hotel to 205 rooms in total.

“Century City Hotel Bridgewater is a direct result of the positive impact that the award-winning Century City Conference Centre has had on the node, driving a significant increase in footfall for the area. Built in response to the market demands – which have now been met and exceeded – the conference centre remains a primary contributor to promoting business travel to Cape Town, and a key source of pride for the precinct,” said a Century City Conference Centre & Hotel statement.

Century City Hotel Bridgewater guests will enjoy the same benefits of Century City Hotel’s convenient location, as well as picturesque views of the Century City Canal and a ground floor deli that will serve as a relaxed leisure space for casual dining and business meetings.

CONCLUSION

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.

But that has counted for nothing in the face of the water crisis of the past few years, and the numbers back that up.

However, with that now hopefully behind it, Cape Town has enough solid building blocks in place, across both the leisure and business travel spaces, to ensure it bounces back and once again becomes South Africa’s number one destination.

SOLVING WINTER

Cape Town Tourism has launched a digital campaign to promote the city and its surrounds as an ideal winter getaway destination with a tongue-in-cheek video parodying Mother City clichés and good-naturedly teasing its residents.

The video features cameos by a number of celebrities and the idea was to develop a concept to increase the number of domestic tourists to the city during the winter period – in doing so, achieve the ultimate aim of flattening out the curve between high and low season arrivals, so that the industry stays buoyant throughout the year.

“Cape Town in winter is more inviting than upcountry South Africans think, with loads of great deals and things to do,” says Cape Town Tourism’s Marketing Executive, Leigh Dawber. “We wanted to communicate this in an innovative and brave way, especially as our key target market is millennials who are inundated with content every second of the day.”

To complete the full content experience, viewers are encouraged to explore further and start booking and planning their trip immediately by ‘cliquing’ through to an e-book featuring special deals delivering great value on travel, accommodation and numerous activities.

Cape Town Tourism’s ‘A Winter Song’ can be viewed at: https://youtu.be/kqY6y971goo.

JO’BURG MORE POPULAR THAN CAPE TOWN?

Johannesburg has emerged as the most popular destination city in Africa for the fifth consecutive year, according to the annual Mastercard Global Destination Cities Index.

The City of Gold attracted 4.05 million international overnight visitors in 2017. Close on its heels was Marrakech in Morocco. Polokwane (1.88 million), Cape Town (1.73 million) and Djerba in Tunisia (1.65 million) rounded out the top five African cities ranked in the index.

The Mastercard Global Destination Cities Index ranks the world’s top 162 destination cities in terms of visitor volume and spend for the 2017 calendar year. It also provides insight on the fastest growing destination cities, and a deeper understanding of why people travel and how they spend around the world.

Cape Town and Polokwane ranked third and sixth in terms of the African cities with the highest international overnight visitor expenditure in 2017, with visitors spending $1.62 billion and $760 million respectively. Visitors to Cape Town stayed 12.5 nights and spent $75 per day on average. Shopping is also a drawcard for visitors to both Cape Town and Polokwane, accounting for 22% and 60% of their total spend respectively.

The Mother City attracted the largest proportion of long-haul visitors in South Africa, with travellers coming from the United Kingdom (14.4%), Germany (12.4%), United States (10.9%), and France (6.6%). Cape Town’s highest number of African visitors came from Namibia (6.2%).