Benefits begin to flow from 2010 World Soccer Cup

Already, the 2010 Soccer World Cup is boosting tourist arrivals - together with guest house purchases

It looks like South Africa is already beginning to enjoy some benefits from landing the 2010 Soccer World Cup. Not simply the stirrings of massive infrastructural spending on new and revamped stadiums, roads and transport systems – but also the rewards linked to the international focus on 2010, according to the latest Intellectual Property magazine.

Tourism is on the up and up, according to the latest official statistics. Growth in arrivals each quarter continues to outperform the previous three months. Quite apart from its natural attractions, South Africa is still relatively inexpensive. Furthermore, the mid-year depreciation of the rand last year boosted its competitiveness as a destination for foreign tourism.

For 2006, the overall growth rate in airport arrivals by foreigners rose by nine percent compared with five percent in 2005 and 2,2% in 2004. Even excluding visitors from Africa, growth in tourist arrivals increased substantially.

From a regional perspective, tourism from Europe, the biggest source of foreign tourism, improved from 1,7% in 2005 to almost six percent last year. Growth in tourism from North America was steady. The biggest proportionate increase on growth of foreign tourism last year emanated from Australasia, Asia and the Middle East. A recent Econometrix bulletin comments: “This clearly reflects growing affluence in these countries.”

The Standard Bank’s group economics division comments that although the tsunami in East Asia was devastating for tourism in the area, South Africa benefited from the diverted tourist traffic.

The bank also points out that business travel is expected to increase in the coming years. “Already the 2010 Soccer World Cup has attracted increased business travel into South Africa.” The bank believes that tourism is ready for “a second phase of growth which could take its contribution to GDP from around eight percent to about 12% and increase employment by up to 400 000 people.”

Econometrix points out that the improvement in South African tourism does not appear to have been confined to foreigners alone. “Judging from tourist accommodation figures there was a general uptake of accommodation, which seemed to accelerate in the second half of last year. Occupancy rates rose from 45,9% in the second quarter and 49,8% in the third quarter to 53,3% in the fourth quarter.”

Much of the debate around the perceived benefits, which will arise from the World Cup focuses on where the soccer fans will spend their money. Police chief Jackie Selebe points to previous venues such as Germany where the “lager louts” embarked on an orgy of beer and sex. A great many spent their nights sleeping rough or camping in parks.

So how well will South African hotels and guest houses fare in 2010? General feeling is that they will do very nicely, thank you – particularly guest houses catering for the urban centres where the soccer matches will take place. B&Bs, which are not a feature in Germany, should also have a busy and, hopefully, profitable time.

Underscoring this optimism is the fact that the Pam Golding Property Group’s hotels and leisure division is experiencing an increase in the number of foreigners looking to buy guest houses and small hotels.

Peter Bruil and Leonard Bremer, directors of Pam Golding Lodges and Guesthouses, report: “In the Western Cape during March alone, we were in the final stages of concluding transactions worth R47 million. In Gauteng, a further R30 million’s worth of deals are currently being signed.”

Bruil adds that buyers are a mix of Dutch, UK, German, Kenyan, Cameroonian and Spanish investors plus, more recently, buyers from the Czech Republic. “These are established people, successful in their careers, who see South Africa as their new home and want to have their own business here. Some are already living here.

“We are successfully competing with other destinations such as the Bahamas, Costa Rica and Malta – locations where the climate is warm. In terms of the lodge and guesthouse market in Italy and France, these have become too expensive.”

Leonard Brewer comments: “The Western Cape winelands remain a major drawcard, given the high lifestyle appeal, beautiful scenery and surrounds, coupled with the sound property investment and business opportunities on offer. In Gauteng, where the market is more business-, or corporate-oriented we are catering in terms of conference venues, corporate accommodation and also resorts – while in Nelspruit in Mpumalanga, we service primarily the tourist market.

“Increasingly, we are seeing interest among BEE investors, particularly in regard to establishments in Gauteng.”

Included in recent transactions by the division is the sale of a five-star, 12-room guesthouse just outside Stellenbosch – Wedgeview Country House and Spa – for close to R15 million.
Pam Golding Lodges and Guesthouses is currently seeking investors for a number of Big Five lodges and game reserves located in the Garden Route and on the Botswana border in the price range of R15 million upwards. The division also offers establishments for rent, including a seven-bedroom licensed guesthouse in the Stellenbosch area.

Although the lion’s share of accommodation (and income) is still derived from the hotel industry, growth last year of guest houses and B&Bs improved significantly. Whereas year-on-year growth in stay unit nights sold at hotels was just 0,8% in 2006 compared with the previous year, it was 13,9% for guest houses and 17,9% for what the official statistics term “other accommodation” – mainly B&Bs.

Econometrix comments that the obvious conclusion to draw from this is that the cost of accommodation at hotels increased by far more than at guest houses and B&Bs. Resistance to these price increases resulted partly in the bigger volume of uptake of accommodation at guest houses and B&Bs.

This is going to be a key issue during the Soccer World Cup. Comparisons are often drawn with the experience of cities that have hosted Olympic Games and what South Africa must expect in 2010. This is flawed. The Soccer World Cup events will take place at centres throughout the country – not in one central spot. Moreover, the demographics of soccer fans differ enormously from those who attend the Olympics. Japan’s experience was that soccer fans flocked to workmen’s hostels seeking cheap accommodation.
South Africa’s tourism industry, particularly restaurants, and especially in Cape Town, got a bad name a few years ago for overcharging tourists. Likewise with our high rate of crime. The authorities must put in place a serious and effective plan to ensure the safety of the hundreds of thousands of visitors, soccer fans, their wives and families, players and officials, VIPs and the media hordes, who will descend on us.

South Africa does not need 2010 visitors returning to their home countries complaining of being fleeced or mugged. The real benefit of 2010 will emanate from continued growing tourism long after the last whistle has been blown.
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