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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. Introduction Economic impact in context Direct opportunities – the reality Direct opportunities – drilling down Other events

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HOSPITALITY, LEISURE AND TOURISM

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  1. HOSPITALITY, LEISURE AND TOURISM Unlocking the economic impact of the World Cup™ for South Africa Chris Patricios 22 February 2006 ADVISORY

  2. Agenda • Introduction • Economic impact in context • Direct opportunities – the reality • Direct opportunities – drilling down • Other events • World class hosting – world class performance? • Sustainability • Conclusion

  3. Introduction

  4. 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

  5. Economic impact in context

  6. 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

  7. Economic impact in context

  8. Economic impact in context

  9. Economic impact in context

  10. 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

  11. 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?

  12. Direct opportunities – the reality

  13. 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!!

  14. Direct opportunities – drilling down

  15. 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

  16. 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

  17. 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

  18. 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™

  19. Other events

  20. 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

  21. 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

  22. World class hosting – world class performance?

  23. 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?

  24. World class hosting –world class performance?

  25. 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!

  26. Sustainability

  27. 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?

  28. 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

  29. Conclusion

  30. 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

  31. Thank you

  32. Chris Patricios KPMG Hospitality, Leisure and Tourism +27 11 647 – 6434 chris.patricios@kpmg.co.za

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