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Thu Apr 24 01:50:29 SAST 2014

World Cup's R6.5bn bonanza

BUDDY NAIDU and SIMPIWE PILISO | 20 June, 2010 00:000 Comments

Opening weekend alone generates R1bn for South African businesses

South African businesses from five-star hotels to shebeens have cashed in on the World Cup to the tune of over R6.5-billion during the first week - and there is more to be made.

The Department of Home Affairs said that in the first seven days of the tournament 456000 people entered South Africa specifically for the World Cup.

And with South African Tourism conservatively estimating that each visitor will spend R12000, this means that they would have spent just under R5.5-billion to the country's economy in the first week of the tournament. This is in addition to economists predicting that a further R1-billion was spent during the opening weekend.

According to Grant Thornton research, said by the business advisory firm's staff to be "conservative", the tournament will pump an estimated R93-billion into the economy.



Grant Thornton principal researcher Gillian Saunders said: "Foreign tourism will account for at least 16% of the financial impact . and, as difficult as it may be to quantify, if you include domestic spending over the past weekend, I think over R1-billion was spent."

She said most of the money would have been spent on tourism, primarily hotels and airlines, and in bars, restaurants and shops.

Saunders said there was a "genuine feel-good factor with school holidays coupled with the patriotic fervour pushing local consumer spending right up".

Gauteng was the biggest economic beneficiary.

"Most of the coastal towns like Durban, Cape Town and Port Elizabeth were not having as much business in the tourism sector as they had hoped for."

Local organising committee chief executive Danny Jordaan said on Friday that "the service industry seems to have scored" from the initial euphoria.

The committee now expects more than the 500000 visitors initially predicted in 2007 before the global economic recession.

"If the vuvuzela is the big international story, then the story line has changed," said Jordaan. "People are seeing that we have world-class facilities, and we have delivered."

The committee also expected a "second wave" of visitors for the knockout rounds.

"What we are thrilled about is we have tourists from countries like Chile, Uruguay and Mexico, which we haven't had before.

"From only having 300 Mexican tourists a year we now have 15000 of them in the country. And, if they go through to the next round, we anticipate this to go up to 25000."

Jordaan said the marketing boost South Africa was getting, with at least 500million viewers worldwide tuning in each day to watch games and catch the latest World Cup news, could not be quantified.

South African Chamber of Commerce and Industry CEO Neren Rau said the extended school holidays contributed to high spending.

"Spending patterns are similar, if not higher, than what we'd find over the festive season," Rau said.

Visitors were also splurging on food and beverages. Rau noted extended trading hours at malls and restaurants.

Protea Hotels marketing director Danny Bryer said his group's Gauteng occupancy was high. "A majority of the fans, sponsors and media are basing themselves in Gauteng due to the number of games taking place in Johannesburg, Pretoria and surrounding areas."

Bryer said hotels in other cities experienced high demand on match days.

Legacy Hotels & Resorts marketing director Brian Davidson said more than 50% of rooms released by Match Event Services in Sandton had been booked by international guests. His group expected an increase in bookings once teams secured places in the last 16.

"Our revenues have been better than the average June and July period," he said.

But Davidson cautioned that all markets after the tournament would experience a slump.

Retailers have understandably also seen bumper sales - especially before Bafana Bafana's midweek match against Uruguay.

Hayley Kahn, Edgars executive of footwear and active wear, said sales of Bafana shirts and paraphernalia were 50 times higher than initial sold.

Her group had to keep replenishing stock at its stores around the country.

The City of Cape Town's executive director for tourism, Mansoor Mohamed, said he was not surprised at the estimated R1-billion generated by formal and informal businesses since visitors starting pouring in for the tournament.

"Last year, I estimated that the economic impact in Cape Town would be R8-billion over four weeks. I based this figure on an average of R3300 spend per day per visitor, and assumed that 350000 people would stay in Cape Town for an average of seven days.

"So, let's assume the spend goes up 20% to R4000 and the length of stay increases from seven to 10 days and visitor numbers are down 20% . the R8-billion expected would now be R11-billion. This is an increase of nearly 40% (which) is encouraging," said Mohamed.

"The V&A Waterfront shopping mall has seen a record increase in the amount of visitors in the first week since the World Cup started.

"Suburban shopping malls in Cape Town, such as Cavendish, Century City and Tygervalley, have also seen a better-than-expected spike in sales."

However, Mohamed said accommodation numbers were generally lower than expected.

"But budget accommodation is booming . the more expensive hotels in Cape Town are experiencing lower-than-expected occupancy."

Still, it was still a "bumper season", said Mohamed.

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