HOSPITALITY, LEISURE AND TOURISM
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HOSPITALITY, LEISURE AND TOURISM. Unlocking the economic impact of the World Cup™ for South Africa. Chris Patricios 22 February 2006. ADVISORY. Agenda. Introduction Economic impact in context Direct opportunities – the reality Direct opportunities – drilling down Other events

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Hospitality leisure and tourism

HOSPITALITY, LEISURE AND TOURISM

Unlocking the economic impact of the World Cup™ for South Africa

Chris Patricios

22 February 2006

ADVISORY


Agenda

Agenda

  • Introduction

  • Economic impact in context

  • Direct opportunities – the reality

  • Direct opportunities – drilling down

  • Other events

  • World class hosting – world class performance?

  • Sustainability

  • Conclusion


Introduction

Introduction


Introduction1

Introduction

  • Experience

    • Assisted the 2010 Bid Company

      • Input for tourism section of the bid book

      • Hotel contracting

      • Financial model

    • Assisted provinces in identification of tourism assets in the lead up to 2010

    • 2010 business planning for provinces


Economic impact in context

Economic impact in context


Economic impact in context1

Economic impact in context

  • FIFA World Cup™ benchmark

    • 2002 FIFA World Cup™ (South Korea and Japan)

  • Recent major international events of relevance

    • 2003 Rugby World Cup – Australia

    • 2003 Cricket World Cup – South Africa

  • Recent international event hosted in SA

    • A1 Grand Prix – Durban

  • Smaller scale example - International football event hosted in SA

    • Bafana vs England – Durban 22 May 2003


Economic impact in context2

Economic impact in context


Economic impact in context3

Economic impact in context


Economic impact in context4

Economic impact in context


Economic impact in context5

Economic impact in context

  • Smaller scale example – International football event hosted in SA

    • Bafana vs England – Durban 22 May 2003

  • 2 500 tickets sold in the UK via the England FA

  • UK Tourist’s average (most common) length of stay of 14 nights (SAT 2003)

  • UK Holiday Tourists average spend per day of approx R 900 (SAT 2003)

  • 50% time spent in KZN, 50% of time spent in rest SA

Revenue: 2 500 x 15 days x R 900 per day = R 33.7 million

Revenue: R 16.85 m KZN

R 16.85 m rest SA


Economic impact in context6

Economic impact in context

  • The FIFA World Cup™ is the biggest sporting event in the world

  • It follows that the associated opportunities are significant

  • How do these opportunities present themselves?

  • How should these opportunities be approached?


Direct opportunities the reality

Direct opportunities – the reality


Direct opportunities the reality1

Direct opportunities – the reality

  • Official partners/sponsorship

    • FIFA grants rights to six official partners for the 2010 FIFA World Cup™– for up to $ 250 million each

    • At R 1.5 billion, unrealistic for South African sponsors to get involved at this level

    • FIFA does however, provide for four to six ‘national’ or local partners at approximately $ 30 million each

  • Broadcast rights

    • Broadcast rights to the value of $ 1.2 billion to European countries signed for 2010

  • Big numbers – exclude SA participation?

    Limited direct opportunities!!


Direct opportunities drilling down

Direct opportunities – drilling down


Direct opportunities drilling down1

Direct opportunities – drilling down

Soft drink supplier

(Official FIFA partner)

  • Direct opportunity:

  • Second tier opportunities:

    • Direct suppliers to official soft drink

      supplier in respect of its World Cup™

      initiatives (examples include):

Marketing

Promotions

Logistics

Bottling

Packaging

Host visitor groups


Direct opportunities drilling down2

Direct opportunities – drilling down

Host visitor groups

  • Second tier opportunity:

  • Third tier opportunities:

    • Supplies or services provided to second

      tier suppliers (examples include):

Air travel

Accommodation

Transport

Gifts

Activities

Forex


Direct opportunities drilling down3

Direct opportunities – drilling down

Accommodation

  • Third tier opportunity:

  • Fourth tier opportunities:

    • Supplies or services provided to third

      tier suppliers (examples include):

Food

Beverage

Cleaning

Laundry services

Entertainment

Guest amenities


Direct opportunities drilling down4

Direct opportunities – drilling down

  • Requires an element of thinking ‘outside the box’ i.e. beyond the direct football or FIFA opportunities

  • Efforts must support the FIFA ambush marketing regulations

  • Initiatives must be well planned (including market research) prior to the investment of any capital

  • Expectations must be realistic

    • Mistake to expect a huge windfall merely because SA is hosting the World Cup™


Other events

Other events


Other events1

Other events

Opportunities are not limited to the 2010 FIFA World Cup™ itself:

  • Events off the field:

    • 2006 – Launch of South Africa for 2010

    • 2007 – Draw for the preliminary competition

    • 2009 – Draw for the final competition

    • 2010 – March – various football workshops (32 finalist teams and referees)

    • 2010 – FIFA Congress

    • Other events such as security meetings etc

Source: 2010 Bid Company


Other events2

Other events

  • Events on the field:

    • 2009 – FIFA Confederations Cup – FIFA Dry Run

      • Teams (8), Officials, FIFA delegation, Press, Sponsors, Fans

      • 2 weeks of football

      • FIFA official workshops, meetings etc

    • 2009/10 – Pre World Cup™ Friendlies

      • Teams and their entourage

      • Training camps

Source: 2010 Bid Company


World class hosting world class performance

World class hosting – world class performance?


World class hosting world class performance1

World class hosting – world class performance?

  • South Africa will host a unique, successful and world class 2010 FIFA World Cup™

  • BUT………………..

  • What of Bafana’s on-field performance?


World class hosting world class performance2

World class hosting –world class performance?


World class hosting world class performance3

World class hosting – world class performance?

  • Economic impact attached to the host nation’s team not performing?

    • Already Bafana’s non-qualification for Germany may be a marketing opportunity lost

  • Local interest shown during Rugby World Cup 1995 or AFCON 1996 versus that during World Cup Cricket 2003

  • French performance in 1998 – winners

  • South Korean performance in 2002 – semi finalists

  • Vital that our off-field hosting performance is matched by our on-field football performance

  • It is not ‘just a game’ in the South African context!


Sustainability

Sustainability


Sustainability1

Sustainability

  • Post 2010:

    • World class facilities

    • Experience gained

    • Skills acquired

    • Invaluable exposure for the country

  • What is required to sustain the momentum?

  • To further unlock the economic impact post 2010?


Sustainability2

Sustainability

Considerations in terms of post-2010 sustainability:

  • Hosting of further ‘world stage’ events

  • Hosting of further team-specific events

    • e.g. Manchester United training camps or friendly matches

  • Proposal to create new events (and to act as host)

    • e.g. Pro20 World Cup

  • ‘Unlocking the skies’ – increased international flight capacity


Conclusion

Conclusion


Conclusion1

Conclusion

  • Unlocking the economic impact – commercially

    • There is a requirement to divert focus away from the obvious direct opportunities presented by the 2010 FIFA World Cup™

  • Unlocking the economic impact – domestic population

    • On-field performance is vital in order to benefit from local interest to the greatest extent

  • Unlocking the economic impact – sustainability

    • A strategy BEYOND 2010 is required to capitalise on the momentum created

  • Hosting the event is the catalyst – careful planning and application is required to maximise benefits at all levels


Thank you

Thank you


Hospitality leisure and tourism

Chris Patricios

KPMG Hospitality, Leisure and Tourism

+27 11 647 – 6434

[email protected]


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