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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

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



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 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 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 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 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 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!



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



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



Chris Patricios

KPMG Hospitality, Leisure and Tourism

+27 11 647 – 6434

[email protected]


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