Alternative business operation models in South Africa

Presented by

Matifadza NyazemaExecutive Director, Sandton Convention Centre

Johannesburg

Opened July 199733 000m2 of Exhibition & Conference space

Opened September 200022 000m2 of Exhibition & Conference space

Opened June 200333 000 m2 of Exhibition & Conference space

DURBAN INTERNATIONAL CONVENTION CENTRE (DICC)

- First International Convention Centre in South Africa.

- Expanded 2011 – current space of 33 000sq metres.

- The construction was funded by the eThekwini Municipality.

- The DICC – company status with a Board of Directors.

- 100% owned by the eThekwini municipality.

- Not required to pay back capital but covers the depreciation costs.

- Has been profitable for the past few years .

- Durban Convention Bureau and Kwazulu-Natal Province.

BACKGROUND AND INVESTMENT

CAPE TOWN INTERNATIONAL CONVENTION CENTRE (CTICC)

- Opened June 2003 – 33 000sq metres.

- Funded by the City of Cape Town , a total of approximately R550 million.

- CTICC did not pay back the capital but depreciation only.

-CTICC has been profitable for the past 10 years.

- Cape Town Convention Bureau and Western Cape.

BACKGROUND AND INVESTMENT

DICC / CTICC

• Perception by City Authorities that CTICC does not need further support.

As a municipal entity, DICC is required to adhere to city procedures for all procurement - inhibits ability to be responsive to the market.

Hotels subsidise their venue space with revenue from accommodation which makes it difficult for the DICC to compete against hotels for smaller meetings.

Reliance on shareholder for major capital funding - compete for funds against other social priorities such as housing, water and sanitation (ALL).

CHALLENGES

DICC / CTICC

• Since the World Cup, a better understanding of the key role that events play.

There is a growing understanding amongst city leaders of the value of events for cities.

Funding is made available to support events in the city, although there is a bias towards sporting events (in Durban).

Easier to co-ordinate planning with municipal departments as we are regarded as part of the city (Durban).

OPPORTUNITIES

SANDTON CONVENTION CENTRE – division of Tsogo Holdings :casinos/hotels

ANOTHER TSOGO SUN EXPERIENCE

SANDTON CONVENTION CENTRE (SCC)

- Opened September 2000 - 22 000sq metres.

- Development was part of bid commitment made by Tsogo Sun Group (Casinos and hotels) to City of Johannesburg – bidding for Montecasino complex in Johannesburg.

- Capital investment by Liberty Properties of R420 million. Liberty owns adjoining hotels.

- Tsogo Sun hotels - 20 year rental agreement with Liberty properties (2000-2020).

- Management fees paid to Southern Sun.

- Outsourcing of operations – food and beverage, audio visual, security.

- Johannesburg Convention Bureau and Gauteng Province.

BACKGROUND AND INVESTMENT

SCC

CHALLENGES - High rental costs – not profitable as an independent entity.

- Tsogo link – discounts. - City priorities of Johannesburg vs. Conferencing.

- Greater competition from large venues.

OPPORTUNITIES

- The Tsogo Sun link – one stop shop for clients – 3 to 5 star hotels – 1000 Tsogo rooms adjoining.

- Sales and marketing opportunities – business referral from Tsogo Sales team.

- Business management opportunities – access to Tsogo Operations and standards, HR, training, Marketing, legal, international representation.

- City and Province support for bidding.

OPPORTUNITIES AND CHALLENGES

TSOGO SUN ADVERT

THANK YOU