Accommodation state of readiness for 2010 FIFA World Cup: FEDHASA & SANParks briefing

Federated Hospitality Association of Southern Africa (FEDHASA)
Mr Brett Dungan, CEO: FEDHASA, briefed the Committee on its ‘www.Rooms4u.travel’ tourism legacy project. It was a purpose built South African online real time accommodation listing and booking portal for all tourism players. It was a tool for all accommodation service providers to get to market on the web real time and gain exposure to potential web customers. From the 1 December 2009 – 1 March 2010 all registered users would be loading their available stock onto the system for sale. He made the observation that SMMEs were not on able to play on the same ball field as the bigger hotels. The problem was that many SMMEs did not know about the portal and those that were aware of it did not know how it worked. Hence very few SMMEs were registered on the portal. All that was needed to register was internet access and a bank account. The problem was worsened by the fact that national and provincial structures did not work together. There was a charge to register on the site that went towards covering administration costs. Mr Dungan noted that currently the industry was in turmoil. The Queensgate Hotel was for example under liquidation.

Committee members said that the apparent shortage of accommodation was simply not true; there was enough accommodation but the challenge was in dealing with MATCH. FEDHASA recommended that people contract to MATCH. It allowed a sense of security at least where pricing was concerned. Where people booked accommodation separately chances, were that they would be overcharged. Right now the tourism industry was not in a worse position than before the global recession. Given the tough times it was costly to travel to SA as it was a long haul destination. Travel distance issues were prevalent in SA and hence value had to be added. Another issue was that after the event there would be an excess supply of accommodation with no demand. The ripple effect was that jobs might be on the line.

South African National Parks (SANParks)
Mr Glenn Phillips, Managing Executive: Tourism Development and Marketing, spoke on the SANParks 2010 Strategy. SANParks developed accommodation as per Infrastructure Development Plan (IDP).It had implemented a tented product for use over the 2010 event period. MATCH did not buy into the concept and therefore due to the uncertainty of the product being sold, it was considered prudent to shelve the project. SANParks wished to ensure optimal occupancy in its parks over the event period. Approximately 30% of SANParks inventory was contracted to MATCH but 80% of it had been released back to SANParks in February 2010. SANParks believed that MATCH was unable to sell its type of product due to it being self catering accommodation. MATCH had decided to hold onto 10% of the SANParks stock. SANParks had successfully sold the 80% returned stock on its own site. Mr Phillips believed that all SANParks accommodation would be sold by the time of the event. The majority of the accommodation that had been sold was to South Africans. The 2010 World Cup coincided with school holidays hence the good uptake. As far as SANParks state of readiness was concerned, it continued to work with MATCH to optimise visitor experience and ensure that logistical arrangements were closely managed. A task team addressing issues such as safety, transport, catering, accommodation and emergency services was already operational. Camps at the Kruger National Park were virtually fully booked. About 60% of the newly released accommodation, excluding camping, was sold on the day of release. (For greater detail, see documents.)

Discussion
Mr G Krumbock (DA) said that even though SANParks had been disappointed by MATCH, they had dealt effectively with the situation. It would have been great if persons from overseas could have experienced the beauty of South African parks by taking up lodgings within them. The fact was that only South Africans were willing to stay in the parks. He asked if SANParks was putting special effort into filling their job vacancies. He asked what was FEDHASA’s opinion on the overcharging by SAA for airline tickets. SAA was more expensive than any other airline. What was the impact of this type of pricing?

Mr Phillips replied that foreigners were still visiting parks irrespective of the World Cup.

Mr Dungan commented that flight would be the most common means of transport used by tourists. Airlines were holding back bookings so that it could charge premium prices. Tourists would use normal flights or aeroplanes would be chartered. There were only 93 days left up until the World Cup. SA would be packed with tourists by the time of the World Cup. SAA like all other airlines were under financial pressure. If one airline was cheaper than the other, people would buy the cheaper tickets. If MATCH found that airline tickets were too expensive, charter flights would be used.

Ms M Shinn (DA) clarified it was correct that 30% of SANPark’s accommodation inventory had been handed over to MATCH to sell and that 80% of the 30% had been returned unsold. Was it correct that only 10% of the 30% had been sold by MATCH and another 10% was still being held by MATCH?

Mr Phillips said that the percentages were correct. He was confident that any vacancies in the parks such as Addo and Tsitsikammawould fill by the time the World Cup arrived.

Mr Dungan, speaking about the handling of accommodation bookings by MATCH, said that the hospitality industry should not have given up other avenues of sales. However, back then nobody would have believed that not all accommodation would be filled up at present. He said that accommodation would be fully booked by the time of the World Cup but it would not necessarily be soccer fans.

Ms V Bam-Mugwanya (ANC) asked FEDHASA if any of the 187 verified establishments in the Rooms4u Project were in the Eastern Cape. Many SMMEs in the Eastern Cape had been willing to link up with MATCH. The only problem was that MATCH had stringent standards. Nothing had been done by FEDHASA to uplift these SMMEs. The SMMEs were essentially being left behind. What was being done to uplift these SMMEs? Team base camps in those areas had also been cancelled. She also asked SANParks which parks were MATCH compliant.

Mr Dungan replied that it was in fact true that in the hospitality industry business was business. The issue around SMMEs was difficult. If people wanted business, they had to find it. Marketing needed to be done. FEDHASA had sent emails to SMMEs to register. Some SMMEs had registered, but most had not. He could not understand why SMMEs had not registered. It was a simple trip to an internet café if internet was not available at home. Help was available to persons who helped themselves. He was tired of discussing the issue of SMMEs. The hospitality industry was a tough industry. FEDHASA had spent R50 000 on sending emails and smses to SMMEs. Only a fraction of SMMEs had registered. SMMEs had to make an effort. The Committee had to ask the question what the provinces were doing. Port Elizabeth had games, hence accommodation would be needed. The tools were there - all that SMMEs had to do was to register. The provinces were not doing their jobs. Provinces must set up platforms. The hospitality industry was a business. It was about supply and demand at the right price.

Ms Bam-Mugwanya felt it unfortunate that Mr Dungan had such a negative attitude about SMMEs. SMMEs by their very nature needed to be uplifted and baby sat. It might be true that the provinces were not marketing SMMEs as they perhaps should be. SMMEs should be taken on board as they did not have much faith in MATCH. The focus should be on the beneficiation of communities. MATCH had very high standards. Someone had to come to the rescue of SMMEs in order for them too to benefit from the 2010 FIFA World Cup. The system seemed to have dumped SMMEs.

The Chairperson said that perhaps presenters should state what their mandates were.

Mr Dungan noted that FEDHASA was an association tasked with assisting its member organisations in the industry. The presentation was merely providing an overview of what was happening in the tourism industry. SMMEs were welcome to join FEDHASA at a lesser membership fee. A system needed to be put in place. He pointed out that MATCH initially only wanted 3, 4, and 5 star accommodation. Only after negotiations with MATCH, were SMMEs and bed and breakfasts taken aboard. The bottom line was that SMMEs should not have spent money on renovations without securing bookings.

Mr Krumbrock asked the Chair to see to it that only questions pertaining to the presentations should be asked.

The Chairperson suggested that the Committee address issues within the mandate of the organisations present.

Ms Bam-Mugwanya responded that if the presenters strayed onto the mandate of another organisation then the discussion was open. SMMEs were a broad issue. The Committee was specifically discussing the hospitality industry of which SMMEs were part. She felt that it was not necessary to denigrate persons because they were not competent. 

Ms C Zikalala (IFP) asked FEDHASA whether there were rooms that cost as much as R5000 per night. How did a hotel become liquidated? She reiterated concerns that SMMEs especially in rural areas were being left behind and were not benefiting from the 2010 World Cup. Many of them had made renovations to their properties with the hope of accommodating tourists during the World Cup. What was FEDHASA doing to bring these people on board? SANParks was asked where the Kruger National Park was situated. Was it in Mpumalanga or Limpopo?

Mr Dungan said that R5000 for a room was cheap in comparison. What room, where and when was important. Pricing was complex. It was about what was offered in the package. Hotels were public orientated. If creditors could not be paid, hotels could be liquidated. Hotels closing down were a newsworthy event. He gave the example of Queensgate being liquidated. Monies received for bookings should be placed in an escrow account. Queensgate had not placed monies in an escrow account.

Mr Phillips said that the Kruger National Park was partly in Mpumalanga and Limpopo. Many municipalities were affected by the Park’s borders.

Ms M Njobe (COPE) asked SANParks why tents in parks were even considered for accommodation when SMMEs had proper accommodation available. Why were marginalised persons not allowed to benefit from the 2010 World Cup? These SMMEs should participate in the provision of accommodation. She said that there were still negative perceptions about pricing. Reference was made to a media article which stated that landlords had turned down offers of R50 000 for 16 days of accommodation. FEDHASA was asked to comment. SANParks was asked whether distances between soccer venues and parks made a difference when bookings were made. Port Elizabeth and the Eastern Cape had parks all over. She asked whether SANParks wished for the Committee to bring SANParks disappointment with MATCH to their attention. Was MATCH aware of SANParks disappointment?

Mr Dungan said that R50 000 for 16 days seemed like a huge sum of money but it was not. There were many things to consider. It was complex. He said that foreigners were not yet aware that one could travel between cities like Cape Town and Port Elizabeth. Tourists were used to traveling through three countries on a three-hour trip through Europe for the World Cup in Germany.

Mr Phillips noted that one of the reasons given by MATCH for not selling the SANParks accommodation was that the parks were too far from match venues. Hence distance did play a role. MATCH was aware that SANParks was disappointed with its performance but there were no hard feelings.

Ms M Maluleke (ANC) asked what was FEDHASA doing to assist SMMEs in rural areas. She asked SANParks to comment about the granting of coal mining rights to an Australian mining company at Mapungubwe which was a heritage site.

Mr Phillips said that mining rights was within the realm of the Department and not SANParks.

The Chairperson asked what the role of government was in partnerships between SMMEs and FEDHASA. The reality was that business was considered business. Partnerships should be encouraged and there had to be mutual benefit. SANParks was asked what initiatives it was involved in to assist small operators. What could government do to help?

Mr Phillips said that there were initiatives that SANParks were involved in. Park and ride pilot projects had been started in Phalaborwa. It was a partnership with AVIS Car Rental. SANParks had to be seen as a facilitator and not a development agency.

Ms Schinn said that a guest house owner had informed her that that MATCH had cancelled bookings of her rooms. Bookings in Soweto and Khayelitsha were apparently full.

The Chairperson pointed out that everybody had expectations. Some were realised and some were not. Many SMMEs were unhappy. The Committee should look at ways to solve the problems. It should be a concerted effort.

Mr Dungan said that FEDHASA and the Department had worked on the ‘Rooms4u’ concept. At this point it was necessary for SMMEs to register. Only 3,500 out of 120,000 had registered. Provinces also needed to come aboard. The ‘Rooms4u’ site was the definitive accommodation portal. There were only 93 days left before the tournament. What had not been placed on the site within the next 60 days would not be available to foreign tourists. Tourists would thus not know that accommodation was on offer. How did the Committee intend to assist SMMEs in the Eastern Cape if only 93 days were left?

The Chairperson said that the intention was to develop people and industries. The South African brand should be protected at all costs. The assistance to SMMEs in the Eastern Cape was just one part of a bigger picture. It had become evident that the Western Cape, KZN and Gauteng were the provinces that had benefited the most from the FIFA 201O World Cup. Government had to ensure that some benefit filtered down to the other provinces as well. The what, how and by whom was what needed to be figured out. The private sector could not be forced to come on board. Hence many a time government would offer incentives. Partnerships were the key to success.

Mr Dungan impressed it upon members that there was only 60 days left to do anything. The time for action was now. The SMMEs in the Eastern Cape had to be placed on a platform that was accessible to foreigners.

Ms Schinn agreed that action was needed. Members could use their influence in their constituencies. The media could be used to spread the word that SMMEs had to register.

Mr Krumbock said that it was disappointing that only 3,500 out of 120,000 SMMEs had only registered. As it stood 97% of SMMEs were going to miss out. He pointed out that the Department had a R1 billion budget. It should therefore play a major role in spreading the word and assisting. Organisations like FEDHASA were considered experts in the tourism industry. He asked for suggestions on what the best way forward was. Should the Minister or the Department make announcements that SMMEs should register.  

Mr Dungan said that the Rooms4u concept was a private sector initiative. The Ministry had agreed to enter into a Memorandum of Understanding (MOU) but it would not do marketing. A central place was needed to advertise accommodation. Hence the website was created. There should be a strong message that persons should visit the website and register. FEDHASA had tried its best but it had had limited success.

The Chairperson said that it was now about managing expectations. The leadership should come from government and not from organisations like FEDHASA. The Committee had to interact with the Department over the issue.

Meeting ended.