Mother City's convention centre goes from strength to strength

Posted On Monday, 29 October 2007 02:00 Published by
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When the doors of the Cape Town International Convention Centre opened in 2003, few people could have imagined the effect it would have on the city, both economically and socially

Chris van Gass

Cape Correspondent

WHEN the doors of the Cape Town International Convention Centre opened in 2003, few people could have imagined the effect it would have on the city, both economically and socially.

As a “new” venture between the provincial government, the city and SunWest International, it has surprised even those who got it off the ground.

One person, though, who was quietly confident is MD Dirk Elzinga, who has worked in the tourism industry in Amsterdam and elsewhere since 1980.

What had surprised Elzinga, initially, was that Capetonians seemed to be uninterested in the convention centre. They became interested only “after the building of the centre rose above the hoardings around it”.

Yet today, says Elzinga, they have fully embraced the centre and out of the 509 conferences held last year, more than 60 were unrelated to conventions.

“Everyone who wants to celebrate something, big or small, has found their way to the centre — even wedding celebrations for 200 people,” says Elzinga, stressing how versatile the centre can be for various purposes.

The venture has prove to be so successful that during 2006-07 the centre’s contribution to SA’s gross domestic product (GDP) was estimated to amount to R2,4bn, according to a report conducted by Barry Standish of the University of Cape Town Graduate School of Business and independent economic modeller Antony Boting.

The report shows that induced tourism — which reflects the tendency of delegates and visitors who have attended events at the centre — sees visitors return to Cape Town as leisure tourists, thus becoming repeat visitors.

This form of tourism accounts for 30%-40% of the centre’s overall economic effect, while delegates’ spending in the city and province reflects about 50%.

This contribution is the most important and comprehensive measure of the centre’s macro economic effect — not only because it represents income, but also because such income has the capacity to add to wealth. In addition, the centre is also poised for “significant” expansion, with construction starting early next year on a 10 000m² extension on the Customs House site, across the Foreshore freeway.

This proposal would become a reality by 2010, says Andrew Boraine, chairman of Convenco, the centre’s holding company.

The public works department, the owners of Customs House, have shown their interest in the project by asking to become a strategic partner of Convenco.

The department and its shareholders have entered into negotiations on the issue.

“The shareholders are discussing options for the department’s involvement in the extension. We are delighted by their interest as this demonstrates that the department wants to go further than just a conventional sale or lease of the land,” says Boraine.

The department’s move is “unique,” says Boraine. “This is a pioneering business model of three spheres of government, together with the private sector, to generate an additional R1bn annual economic spin-off for the Western Cape,” he says. Meanwhile, the centre has set new records by achieving a record turnover of more than R100m in the 12 months ending June 30.

Elzinga says that apart from contributing R2,4bn to SA’s GDP, the centre employed directly 3796 people, and an additional 5343 people indirectly.

The centre’s operating results were up 52% and its contribution to Convenco increased to R30,3m, up from R10,4m on the previous year.

“The financial results are seriously better than anticipated and the contribution to Convenco is an exceptional achievement,” says Elzinga.

He says that for the first time since operations began in 2003, the centre has been able to prove that the venue and its staff are capable of hosting “really large” city-wide conferences.

The largest event held to date was the 19th World Diabetes Congress, which attracted 12300 delegates to Cape Town in December last year, occupying the entire centre.

During the past year the centre accommodated 509 events, including 46 international conferences. In all, the conferences brought a total of 45576 international delegates to Cape Town, each for slightly more than five days on average.

The resulting number of delegate days recorded was 248163, an increase of 141% on the previous year. The number of international conference delegate days is the most important contributing factor to the economic spin-off to the province.

Standish and Boting estimate that to date the centre has generated nearly R1bn in foreign exchange. By 2012, this figure is expected to increase to almost R1,3bn cumulatively, earning SA R5,9bn in foreign exchange.

Other benefits include the generation of tax, capital expenditure and the effect on indirect household income.

This year, R222m was generated in taxes, up from R120,5m last year, and it is estimated that by 2012 a total of nearly R3bn will have been paid in taxes.

“After five years of operation, the economic effect of the centre throughout the region and nationally is patently evident, while benefits to society are just as important,” Elzinga says.

The expansion of facilities will allow more and larger events in future, further increasing the centre’s economic contribution to the city, province and country, the report states.

Business Day

Publisher: I-Net Bridge
Source: I-Net Bridge

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