Mega-events and small enterprise development: the 2010 FIFA World Cup opportunities and challenges

¹The phrase ‘FIFA World Cup’ is acknowledged to be a trademark of FIFA.

An earlier version of this paper was presented at the International Tourism Association Conference, Shanghai, November 2008.

Abstract

A mega-event can be a catalyst for long-term outcomes for its host locality or country. Such events are thus of growing importance in the global economy. However, scholarship on mega-events has paid little attention to their implications for small enterprise development. This article addresses the way scholarship dealing with sport mega-events has neglected the small tourism firms. It examines the planning for the 2010 FIFA World Cup in South Africa. A key objective of the 2010 tourism planning is to spread the opportunities offered by this event widely, so as to include small tourism enterprises rather than just the large ones that control and dominate South Africa's tourism economy. The article presents evidence from a range of sources to highlight several challenges national government must deal with to achieve this goal.

Keywords:

• Mega-events
• small enterprise development
• tourism small firms
• 2010 FIFA World Cup

1. INTRODUCTION

‘Mega-events’ that are convened for a short duration, such as the Olympic Games, World Expos or the FIFA World Cup, are increasingly significant phenomena in this era of globalisation (Hall, 2006; Getz, 2008). Both national and subnational governments have identified mega-events as significant vehicles for attracting or retaining mobile capital, in particular foreign direct investment. These events are gaining significance because they can generate long-term outcomes for a host locality by enhancing and regenerating it and promoting or re-creating its image (Smith, 2005; Torisu, 2006; Galdini, 2007). Getz (2008:403) observes that they are ‘an important motivator of tourism and figure prominently in the development and marketing plans of most destinations’. Destination managers recognise ‘the value of adding events to their attraction portfolio in the push to differentiate and compete in an increasingly competitive marketplace’ (Dickinson et al., 2007:301). Indeed, mega-events are a central element of new regimes of urban governance, intensified inter-urban competition and strategies of place entrepreneurialism (Harvey, 1989; Hall, 2004, 2006). They are thus an integral part of strategies designed to promote cities as tourism destinations (Law, 1993, 1996; Hall & Page, 2009). In particular, bidding for the right to host sport ‘mega-events’ is considered a critical element of urban place entrepreneurialism as cities seek to gain advantage in the global economy (Hiller, 2000; Hall, 2006; Torisu, 2006).

Notwithstanding their growth in significance in the global economy, it is only recently that the study of events and their management has been consolidated and become acknowledged as an academic entity in its own right. The growing research scholarship on mega-events is dominated by issues of event planning, event management and event tourism (Getz, 2003, 2005, 2007, 2008). Managing mega-events and connected activities is increasingly considered a demanding and specialised job with specific requirements and standardised professional codes of practice (Getz, 2007; Bouchon & Thong, 2008). Among the research themes that have been investigated in developed countries are: the economic impact of events, destination branding, bidding for events, visitors' experiences, event legacies and host residents' attitudes to the staging of events (Hiller, 1998; Hultkrantz, 1998; Spilling, 1998; Jones, 2001; Getz, 2003, 2005, 2008; Jago et al., 2003; Baade & Matheson, 2004; Lee & Taylor, 2005; Preuss, 2005; Bell, 2008; Ma et al., 2008).

Distinctive themes in research on mega-events in the developing world are economic or social development, identity building and politics (Black & Van der Westhuizen, 2004; Du Preez, 2008; Henwood & Pretorius, 2008; Pillay & Bass, 2008; Van Wyk, 2008). The distributional benefits of hosting these events have come under critical scrutiny (Black & Van der Westhuizen, 2004). Considerable evidence suggests that widespread development benefits are not necessarily a consequence, and the events can attract significant opposition from marginalised or powerless communities to whom little material benefit accrues (Bass & Pillay, 2008; Nadvi, 2008; Pillay & Bass, 2008). Moreover, as governments in developing countries are circumscribed by the unequal global competitive arena for hosting mega-events, often they use such events to support nation-building projects, to meet specific political or foreign policy goals, for image enhancement or as a way of signalling particular messages to the international community (Cornelissen & Swart, 2006; Theron, 2008; Van Wyk, 2008).

Across both developed and developing countries, a common research thread is the vital position of mega-events for boosting local economic development and urban tourism (Law, 1993, 1996; Rogerson, 2006; Galdini, 2007; Rogerson & Visser, 2007; Rogerson, 2008a; Hall & Page, 2009). Although it is widely acknowledged that a mega-event can be a catalyst for business development (Getz, 2005; Hall, 2006), a recent review of the ‘state of the art’ of event tourism scholarship is silent about the implications of mega-events for small firms (Getz, 2008). This paper thus aims to address this neglect of small tourism firms in the existing literature of sport mega-events by examining the planning challenges the 2010 FIFA World Cup in South Africa faces. A notable objective of the 2010 tourism planning is that opportunities associated with hosting this event should be widespread and encompass small tourism enterprises rather than simply benefiting the large ones that control and dominate South Africa's tourism economy (Cornelissen, 2005). The paper presents evidence from a range of sources to highlight the challenges the national government must deal with if it is to achieve its stated goal of spreading the anticipated benefits more widely.

2. THE FIFA 2010 WORLD CUP AND SHARED GROWTH IN TOURISM

The continent of Africa is considered peripheral to the growing circuit of international sport mega-events (Cornelissen, 2004), but South Africa leads when it comes to proactive bidding for them (Cornelissen, 2007). This country is a prime example of a developing country that has actively sought to host sport mega-events in the belief that they bring a range of benefits, including infrastructure development, positive media exposure and an opportunity for high-profile promotion of tourism products (Swart & Bob, 2007). Cornelissen and Swart (2006) aver that since 1995 a ‘more or less’ sustained campaign has been undertaken by political and other elites in South Africa to make competitive bids, with varying degrees of success, to host major sports events. Underpinning this campaign has been the national government's perception of sport mega-events as ‘key social and political instruments: on the one hand events are regarded as one mechanism to support the government's nation-building project; while on the other, they are viewed as economic and development catalysts’ (Cornelissen & Swart, 2006:109).

The 1995 Rugby World Cup is regarded as a watershed event in South Africa's quest to join the international market for mega-events. It was interpreted as extremely successful in heralding the country's re-entry into the global community, an affirmation of the ‘new’ South Africa and a demonstration of its international acceptability after nearly three decades as a global pariah (Henwood & Pretorius, 2008). It is argued that hosting this event set in motion an activism around sport mega-events that was ‘cumulative in its ambitions and objectives’ and driven by a demonstration effect that led to a growing confidence that the nation had the capacity to host such international sport mega-events (Cornelissen & Swart, 2006). Furthermore, national government recognised the important role of international sport in feeding the growth of tourism, which, because it could absorb labour in a context of high urgency for job creation, was targeted as a priority sector for development and promotion in the new democracy (Rogerson & Visser, 2004).

In May 2004 South Africa won the bid to host the 2010 FIFA World Cup, the first time an African country had been selected to host such a prestigious sport mega-event (Department of Environmental Affairs & Tourism [DEAT] & South African Tourism [SAT], 2005). Coming in the aftermath of Cape Town's earlier failed bid to host the 2006 Olympic Games, the positive developmental expectations of hosting this mega-event in South Africa are ‘very high’ (Donaldson & Ferreira, 2007:354). However, the build-up has been characterised by exaggerated claims and over-estimation of the expected consequences of the event (Pillay & Bass, 2008). Several observers point optimistically to its importance and the considerable economic and social benefits that could accrue from it, including the provision of small business opportunities (DEAT & SAT, 2005; Da Silva, 2008; Vader, 2008). Looking at Soweto, Krige (2006) draws attention to what are described as ‘fantasies about the possible creation and accumulation of wealth’ that have distinguished popular discourses about the 2010 event. Pillay and Bass (2008:341) assert that the ‘rhetoric swirling around 2010 tends to suggest that benefits could be widespread’ and, in extreme versions, that most of South Africa's extensive urban ‘ills’ of unemployment and inequality might even be solved by 2010!

Nevertheless, lessons learned from the international experience of such exaggerated claims about the benefits of hosting such mega-events have led other groups of researchers to offer more cautious assessments of the potential legacy of South Africa's hosting of the 2010 World Cup (Bass & Pillay, 2008; Pillay & Bass, 2008; Saayman & Rossouw, 2008). On the whole, critics believe that the actual development impacts of the event will be uneven and potentially quite circumscribed, particularly when it comes to achieving poverty reduction (Nadvi, 2008; Newton, 2008; Pillay & Bass, 2008).

Researchers are aware that the South African tourism sector is expected ‘to draw most long-term gain from the World Cup tournament’ (Cornelissen, 2007:256). Donaldson and Ferreira (2007:354) argue that multiple benefits are anticipated, including the opportunity to maximise tourism value, to brand South Africa as a tourism destination, and to improve the country's social legacy by creating employment, growth and equity. Some estimates suggest that the tourism industry may benefit from nearly 200 000 additional international visitors in 2010, which would represent a boost of approximately R60 billion (Pillay & Bass, 2008:332). The 2010 Soccer World Cup Organising Plan seeks ‘to ensure that tourism not only plays its role in delivering a memorable experience to 2010 World Cup attendees, but also leverages the event as a catalyst to create a step-up in the tourism competitiveness platforms in South Africa’ (DEAT & SAT, 2005:5).

South Africa's bid for the 2010 FIFA World Cup included a strong developmental agenda, which stressed that the tournament should spark an improvement in the life conditions of groups historically disadvantaged under apartheid (Cornelissen, 2007; Bass & Pillay, 2008; Nadvi, 2008; Newton, 2008; Pillay & Bass, 2008). A distinguishing feature of South Africa's tourism sector is its ‘transformational component’, the result of the national government's commitment ‘to provide opportunities for wealth distribution in the sector through facilitating the entry of previously disadvantaged individuals into the sector’ (DEAT, 2008:32). The development agenda for the 2010 World Cup contains a special commitment to achieving ‘shared growth’ in tourism and, implicitly, developing urban tourism (Rogerson, 2008a), and this growth should include sharing the benefits of this event with small tourism enterprises (Rogerson, 2008b).

Addressing the imperatives of development and transformation in a post-apartheid society is thus the axis of South Africa's bid to host the event (DEAT & SAT, 2005; Cornelissen, 2007). Newton (2008:147) observes that South Africa has paid serious attention to the possible legacy of the World Cup, and set a comprehensive development agenda in which the tournament is ‘regarded as a catalyst for poverty alleviation and an opportunity to undo the urban segregation of the past’. For the tourism sector, this means using the event as a lever for the ‘economic empowerment’ of those (almost exclusively black) communities disadvantaged under apartheid and formerly excluded from participation in the national tourism economy (DEAT, 2008). In turn, this leverage supports a major objective of national policy in South Africa, namely to change the existing pattern of largely white ownership and participation in the tourism sector (Rogerson & Visser, 2004). Opportunities arising from the World Cup are planned to extend benefits to emerging black entrepreneurs in the South African tourism economy (Rogerson, 2008a). The official statement is that ‘Government and the 2010 Local Organising Committee are committed to the social legacy of the World Cup and want to ensure that this opportunity is shared by all’ (Tourism Enterprise Programme [TEP], 2006a:29).

For the first time in the history of the World Cup, FIFA's official accommodation, IT and ticketing company, MATCH Event Services, has agreed to contract with non-hotel accommodation in addition to normal hotel accommodation (Krugel, 2006; TEP, 2006a). Under the terms of this agreement, MATCH Event Services is to contract a target of 10 000 non-hotel star-graded rooms from the total of 55 000 rooms required for fans and visitors attending the tournament (Swartz, 2008). These non-hotel rooms are to be provided by small tourism establishments (small, medium and micro enterprises [SMMEs]) such as bed-and-breakfasts, guesthouses and backpacker lodges.

Spatially, the opportunities to supply these contracted rooms are limited by the distribution of venues for the 64 matches. Figure 1 shows that the 2010 event will be held in the nine selected ‘host cities’ for the competition. Johannesburg will be the prime beneficiary as it is the only South African city with two stadiums planned to be used for the tournament. The major tourism benefits of the event will inevitably flow to urban tourism destinations. Indeed, it is largely in the nine host cities (and the designated ‘satellite areas’) that the 2010 accommodation sign-up campaign plans to find its 55 000 rooms.

Figure 1: Location of stadiums and host cities for the 2010 World Cup

3. SUPPORT PLANNING FOR TOURISM AND 2010

South Africa has evolved a distinctive way of supporting the development of small enterprises in the tourism sector. It does this through the Tourism Enterprise Partnership, which until April 2008 was known as the Tourism Enterprise Programme. Since 2000 the TEP has functioned as a dedicated support initiative to help develop and upgrade small tourism firms (Rogerson, 2007). One recent study produced by national government highlights the fact that ‘SMMEs constitute over 90% of the tourism sector’ in South Africa (DEAT, 2008:32).

The TEP has sought to integrate SMMEs into tourism value chains (Rogerson, 2008c). There are, however, two kinds of tourism SMME (Rogerson, 2005; Human Sciences Research Council, 2006): the established, predominantly white-owned businesses (operating travel and tour companies, restaurants, small hotels, self-catering accommodation, resorts, game farms, bed-and-breakfasts and backpacking hostels); and the emerging black-owned businesses, a mix of formally registered micro-enterprises and informal tourism enterprises, many of which function at levels of bare survival. As research conducted by the World Bank in Johannesburg's tourism economy reveals, this second category of enterprises has appeared mainly since the democratic transition (Chandra, 2002).

Initially the TEP was launched as a 4-year job-creation initiative in July 2000, with private-sector funding through the Business Trust. Its role was to identify, facilitate and ultimately foster commercially viable business transactions between tourism enterprises and other related buyer, supplier, partner and investor firms and corporations linked to the tourism sector. This transaction facilitation process pioneered by TEP could involve both a top-down and a bottom-up approach. In the former case, the TEP works with buyers of goods and services, usually corporates or large enterprises and tour operators wishing to purchase tourism products, who are the potential market for its SMME clients; in the latter, it helps SMMEs who have marketable products to access wider markets. When seeking a transaction, the TEP recognises that problems must be solved for both buyers and suppliers. On the demand side, the TEP has sought to foster business transactions with corporates and to change their mind-set and attitude in the process. Key buyers wanting to use SMMEs were often hampered by not knowing which goods and services SMMEs can supply, where to find suitable SMMEs, or that SMMEs often need special treatment such as simple documentation, speedy payment, and help with the quality and technical specifications of their offering. On the supply side, many SMMEs were unfamiliar with the way corporates or other buyers do business, were often confused by documentation and tender requirements, and did not always understand the need for reliable service (Rogerson, 2007).

From its inception in July 2000 to June 2004, the results achieved by the TEP were extremely promising. Among several achievements of its first 4 years of operation, the TEP helped South African SMMEs secure markets for their goods and services from buyers such as major hotels, casinos and national and provincial parks, and at events such as the 2002 World Summit on Sustainable Development. Compared with the uneven performance or sometimes dismal record of other government programmes for supporting SMMEs in tourism, the TEP was increasingly viewed as the most successful of a range of interventions designed to support the tourism sector in South Africa (Rogerson & Visser, 2004).

Because the results of the TEP's first 4 years were promising, a close relationship was forged between the TEP and national government through the DEAT (Rogerson, 2008c). In 2003, for the first time, the national government channelled direct funding to the TEP. Since 2004, as increasing amounts of government funding have been injected into it, the organisation has progressively taken on the role of support service provider for national government in respect of tourism. After 2003 the TEP became a joint public−private-sector partnership for the support of job creation in tourism through assisting the development of SMMEs. With expanding national government funding commitments through the DEAT, its activities were broadened to encompass more training, marketing assistance and business linkages (TEP, 2006b; Rogerson, 2007).

Although several changes and extensions in mandate were effected for TEP support operations, its main task continues to be to bridge the chasm between the well-capitalised large tourism enterprises and well-resourced white-owned tourism entrepreneurs on the one hand and the less well-resourced black entrepreneurs seeking to enter the South African tourism economy on the other (Rogerson, 2005). These new black-owned SMMEs operate at a disadvantage with respect to the large tourism enterprises' enormous market power and the established white-owned SMMEs' economic, social and cultural capital (Rogerson, 2005). Overall, the TEP helps emerging SMMEs obtain the necessary professional services for business development, including quality certification, debt and equity finance, appropriate business planning, packaging, legal advice and marketing and technology support (TEP, 2006b). As access to tourism and business-related information is ranked consistently as being of major concern for tourism SMMEs, the TEP has launched a series of ‘toolkits’ that aim to raise the level of knowledge, awareness and understanding of tourism SMME businesses (Business Trust, 2007).

Of significance has been the specific new mandate given to the TEP for planning for ‘mega-events’ in South Africa. One critical function of the expanded TEP was to support national and provincial agencies and government departments in an effort to expand the opportunities for tourism enterprises that events such as the 2010 Soccer World Cup offer (Business Trust, 2007). To help SMMEs in the South African tourism industry benefit from these opportunities, the TEP launched the 2010 Host City Programme−in which the TEP's special role is to ensure the readiness of emerging tourism SMMEs to secure these opportunities (personal communication, L Daniller, Senior Manager, 2010 Host City Programme, Tourism Enterprise Partnership, Johannesburg, 23 June 2008). Specifically, the TEP's mandate is to address the challenges of emerging black entrepreneurs in the tourism economy and to integrate these entrepreneurs into tourism value chain opportunities arising from the Cup (Business Trust, 2007). As Daniller (2007) stated, the TEP's objective is ‘to assist SMMEs in the tourism industry to benefit from the overall opportunity offered by the 2010 FIFA World Cup South Africa and to make a significant contribution to the national shared growth initiative’.

Besides the normal package of assistance made available to qualifying tourism SMMEs, as part of the 2010 accommodation sign-up the TEP seeks to improve the standard and quality of accommodation by ensuring that SMMEs are star graded by the Tourism Grading Council of South Africa. This requirement is deemed essential, since MATCH Event Services insists it will contract only to suppliers of graded accommodation (Krugel, 2006; Swartz, 2008). The rationale for this requirement is that ‘visitors would want to be assured about the standards of accommodation they are purchasing, and star gradings are an internationally recognised standard for doing so’ (TEP, 2008:49)

The minimum requirements for grading approval are public liability insurance cover, safety and security measures for clients and staff, the possession of a health and safety certificate, adherence to fire and building regulations, and registration as a legal business with the requisite authorities (Tourism Grading Council of South Africa, 2008). The costs of grading vary according to the number of rooms provided by an accommodation supplier. The TEP helps with the cost of grading as part of its support to emerging tourism SMMEs (Swartz, 2008).

4. 2010 AND THE CHALLENGES OF SHARED GROWTH

This section examines critical challenges that must be faced if South Africa is to achieve its goal of ‘shared growth in tourism’ as a result of hosting the 2010 World Cup. It analyses research on the problems of emerging small enterprises in South Africa's tourism economy and their readiness to grasp the opportunities 2010 offers. To explain these SMME entrepreneurs' business problems, two sets of material are presented, both mainly about the accommodation subsector. The first is an overview of the key national findings extracted from the TEP's Host City Programme, showing how SMMEs are involved as suppliers of tourism accommodation (TEP, 2008). The second is an analysis of micro-level or locality-based research on the challenges facing emerging SMMEs in Soweto's tourism industry, part of the wider Johannesburg tourism economy. Together, these two sets of data show that these SMMEs are having extreme difficulty securing substantial opportunities related to this mega-event.

4.1 Findings from the national survey

The broad objective of the national TEP study was ‘to identify SMMEs suitable for development assistance and advise TEP on how they should be assisted’ (TEP, 2008:3).

The study was based on a national sample survey that focused mainly on the nine 2010 host cities and their satellite areas. It aimed to identify, record and analyse emerging tourism SMMEs throughout South Africa; to identify the SMMEs that could deliver goods and services for the 2010 World Cup and beyond; and to recommend appropriate support and development interventions (TEP, 2008). Target businesses were identified using a snowball technique from starting lists of emerging tourism enterprises and operators. The overall aim was to use the findings ‘to optimise the potential impact of a major event’, especially on what the TEP calls ‘underexposed tourism SMMEs’ (TEP, 2008:14). In the light of the second aim listed above, ‘well-established tourism enterprises as well as emerging enterprises with no prospect of reaching required standards were excluded’ (TEP, 2008:3).

The national survey used a broad definition of ‘tourism SMME’. It included producers and suppliers of arts and crafts products as well as core tourism services such as accommodation, food and beverages and tours. Accommodation was the largest subsector in which emerging SMMEs were strongly active and involved (TEP, 2008:21). The kinds of accommodation they provided ranged from backpacker lodges and self-catering accommodation to small hotels, with the overwhelming majority of establishments being bed-and-breakfasts or guesthouses with the owner living on the premises (TEP, 2008). It was considered that the scale of the emerging accommodation subsector was such that potentially it ‘could play a role during the 2010 World Cup’ (TEP, 2008:24). However, the survey also showed that approximately two-thirds of the establishments did not intend to apply for any form of official grading in time for the World Cup. This effectively excludes them from being accredited by MATCH Event Services, so to attract customers during the World Cup they will have to develop their own marketing networks abroad or use online marketing channels (TEP, 2008:26).

The survey found two main reasons for the slow growth of emerging tourism SMMEs: inadequate exposure to tourism markets, as a consequence of which these emerging entrepreneurs are unable to access market opportunities; and a lack of essential skills and experience in tourism, including ‘business, technical and management skills; and the skills to maintain or grow a business once it has been started’ (TEP, 2008:47). Among a host of other reasons were crime, lack of diversity of tourism products on offer, poor local marketing resulting in insufficient tourist flows, and lack of funding for the marketing necessary to compete with established tourism SMMEs and large enterprises. A more detailed understanding of the constraints facing emerging tourism SMMEs, and especially of the extent of their readiness to take advantage of the opportunities linked to the 2010 World Cup, can be obtained by narrowing the focus to one locality that will be strongly affected by this mega-event, namely Soweto.

4.2 Local studies on Soweto

Before 1994, ‘urban tourism in South Africa was strictly confined to so-called “white areas”’(Briedenhann & Ramchander, 2006:124). Only after the transition to democracy were urban townships made accessible to tourists, opening up opportunities for black South Africans to recount stories of their struggles against apartheid to a receptive audience after decades of having their voices silenced by a hostile government (Scheyvens, 2002; Ramchander, 2004; Rogerson, 2004a). The townships’ main tourist attractions are associated with the political struggle (Scheyvens, 2002; Ashworth, 2004; Ramchander, 2004), and the clearest sign of the rise of township tourism is the new accommodation segment that provides bed-and-breakfast accommodation in the township (Rogerson, 2004a,b; Lourens, 2007). Importantly, emerging SMMEs concentrated in the specialised niche of ‘township tourism’ do not attract the wider mix of business or leisure tourists who visit the parallel accommodation establishments operated by established (white) SMME entrepreneurs (TEP, 2006b; Lourens, 2007).

Initial research on the business problems facing township tourism entrepreneurs showed most importantly a need to improve the marketing of their businesses individually and of the townships collectively as new and diversified spaces for tourism (Chandra, 2002; Rogerson, 2004a,b). Here, ‘marketing’ is an umbrella term covering at least two different areas of knowledge and skills these entrepreneurs need: firstly, knowledge of and exposure to new market trends and the tourism marketing process and how it is evolving, particularly in terms of information technology and the Internet; and secondly, an understanding of market research, tools and techniques and the capacity to absorb recent market information and use it accurately to make one's own assessments (Lourens, 2007). Another problem that was significantly hampering growth was the need for greater financial assistance with the upgrading of accommodation facilities, particularly in response to the demands of discerning international tourists (Mdoda, 2005). The established SMMEs finance the upgrading of their premises from retained earnings, but the majority of emerging SMMEs do not currently have this capacity (Chandra, 2002; Rogerson, 2005).

The demand for Soweto tourism products has grown, especially for corporate events and day tours. Recent data suggest that the estimated growth in visitor numbers in terms of day tours escalated from 170 000 in 2003 to approximately 250 000 by 2005 (Lourens, 2007:6). The results of micro-level interview research undertaken in Soweto by the TEP (2005) and Mdoda (2005) and of a follow-up investigation by Lourens (2007) together highlight the main problems and challenges of using mega-events for achieving shared growth in South Africa. The 2005 TEP audit revealed the existence of 119 tourism product owners in Soweto, including 32 accommodation establishments. The largest cluster of accommodation suppliers is found in Orlando West. Critically, as shown in Figure 2, the location of these accommodation suppliers close to the two stadium venues for the World Cup matches offers considerable potential for 2010. Indeed, given the size of this mega-event, it was rightly pointed out that it offers Soweto many opportunities for providing both daytime entertainment and overnight accommodation (TEP, 2005:43). An examination of the problems faced by these suppliers is of particular relevance considering their location in the shadow of Soccer City, the venue selected to host the 11 July final of the 2010 World Cup.

Figure 2: Location of Soweto in relation to the 2010 stadiums in Johannesburg

The 2005 audit revealed a number of key problems holding back the expansion of these tourism SMMEs. In common with the results of the national survey, improving the volume and quality of destination marketing was identified by Soweto product owners as a priority issue (TEP, 2005). Emerging tourism entrepreneurs argued that despite their individual efforts to market their establishments (mainly by word of mouth), insufficient effort had been made by local, provincial and national tourism marketing authorities ‘to promote Soweto as a desirable destination in both the domestic and international markets’ (TEP, 2005:39). Small tourism businesses suffer from the lack of an integrated powerful national information platform to offer them access to the latest tourism products (Grundlingh, 2006; Lourens, 2007).

Notwithstanding that Soweto is a world-renowned tourist attraction, local businesses struggle to get their products to the tourism markets and especially to persuade visitors to stay overnight (Lourens, 2007:6). During 2005 the estimated occupancy level of the 32 Soweto accommodation establishments investigated by the TEP survey was a meagre 8.3 per cent (Lourens, 2007:7). An obvious issue for tourism authorities is to address tourist perceptions (and misperceptions) of safety and the fear of crime that is putting them off visiting Soweto (Mdoda, 2005; Lourens, 2007). This is undoubtedly a major factor behind the preferences of most international tourists to stay in Sandton or Johannesburg's northern suburbs and the correspondingly low number of overnight stays in Soweto (Rogerson, 2004b).

The assessment of tourism SMMEs in Soweto reveals that the problems are far more complex than simply poor marketing or issues of safety and security. There are many other reasons for the ‘low level of readiness of tourism products in Soweto’, from macro-level issues to operational factors relating to SMMEs themselves (Lourens, 2007:7). An array of external factors must be acknowledged as significant. Basic infrastructure, such as signage or sufficient information to support tourism entrepreneurs, is either absent or of a low standard (Mdoda, 2005:24). The marketing literature for Soweto cautions visitors that ‘Soweto is a vast urban sprawl where signage can be poor’ (Johannesburg Tourism Company, 2008). In addition, as only graded accommodation has approved signage from Johannesburg authorities, at least one-half of Soweto's bed-and-breakfasts function ‘without any form of signage, be it directional or on the property’ (TEP, 2005:18). This means that self-driving to township accommodation is a complicated process, resulting in potential clients being lost in unfamiliar surroundings (Lourens, 2007). For international tourists, who represent the largest segment of overnight stays, transfer costs from OR Tambo International Airport to accommodation in Soweto are high and in many instances even exceed the price of accommodation itself (Lourens, 2007:8).

Despite an increase in marketing, by both individual owners and external institutions, it is evident that successful growth of businesses ‘cannot be achieved until the product is fashioned to what the market needs and expects from Soweto’ (TEP, 2005:9). Although many Soweto business owners have a basic knowledge of how to run a business, they are not necessarily equipped with all the service management procedures for successfully running a tourism enterprise (TEP, 2005:44). Several studies show that most of Soweto's bed-and-breakfast entrepreneurs have not been in the tourism or hospitality industry before and have not received any formal training in service management (Rogerson, 2004a,b; Mdoda, 2005; Lourens, 2007). In 2007 research it was revealed, for example, that owners do not always have staff available to take bookings during quiet periods, making late bookings or ‘walk-ins’ difficult. In addition, owners are not always available to their guests during their stay, which means that management responsibility is often left to ‘a family member (e.g. younger son/daughter) who is inadequate or inexperienced with checking guests in or assisting with additional requirements’ (Lourens, 2007:8).

Tourism products as a whole in Soweto often fall short of the expected standards for the tourism industry in several respects (Mdoda, 2005; TEP, 2005). Poor systems are in place in many venues, and few establishments are linked to the Internet (Lourens, 2007). The skills base for tourism service provision is limited, with 70 per cent of employees classed as unskilled. Further, ‘80 per cent of people employed in currently operating establishments are not sufficiently trained to provide the level of service required in the tourism and hospitality industries’ (TEP, 2005:7). Although the leading accommodation establishments offer relatively high-quality services, most of the smaller ones cannot provide the same level of service and product quality. For example, many Soweto bed-and-breakfasts do not comply with minimum requirements in terms of providing separate ablution facilities, off-road parking and fire extinguishers. Indeed, the survey showed that one in eight of the sampled SMMEs does not have the required legal status to operate as a tourism business (TEP, 2005).

Further critical issues of product quality emerge in terms of regulatory compliance by Soweto tourism entrepreneurs with insurance, health and safety regulations. The TEP 2005 audit found that 74 per cent of accommodation establishments have no form of insurance. The main explanation offered by entrepreneurs for their lack of licensing or product compliance was that they did not know about the necessary requirements, regulations and procedures. Unless these licensing and compliance conditions can be addressed and legal requirements adhered to, emerging Soweto tourism entrepreneurs will be excluded from accessing the business opportunities linked to the supply of services for the 2010 FIFA World Cup because of the contractual requirements laid down by MATCH Event Services that ‘accredited suppliers’ be graded according to the criteria applied by South Africa's Tourism Grading Council.

A final set of operational constraints on tourism SMMEs relates to the failure of local enterprises to cooperate effectively with one another in order to enter the tourism channel – a situation that means lost opportunities for tourism in Soweto as a whole (TEP, 2005). The small tourism industry of Soweto is fragmented, with four different tourism associations (TEP, 2005). Although Soweto tourism product owners' membership of associations is recorded as high, there is widespread dissatisfaction with the functioning of the four associations. Since the local tourism industry has an oversupply of certain tourism products, such as accommodation, alongside under-demand for these products there is intense rivalry between the product owners and between the associations, since they believe that well-established and well-known businesses receive preference from tour operators (TEP, 2005). Overall, it is apparent that Soweto tourism associations are inexperienced and fragmented and need help to develop their capacity and play an important role in marketing Soweto as a tourism destination, not least for maximising the opportunities the 2010 World Cup brings (TEP, 2005:37).

5. CONCLUDING REMARKS

In looking at globalisation and of tourism in cities, Hall (2006) and Hall and Page (2009) identify the importance of events. Within the growing global scholarship of mega-events, however, scant attention has been accorded to issues of how small enterprises can participate in or are participating in opportunities associated with particular mega-events. This article is an initial contribution to this aspect of research on mega-events tourism.

For scholars of mega-events, the South African example of the 2010 World Cup is interesting for at least three reasons. First is the strong commitment made by national government to ensure that the benefits of this mega-event are spread widely or, in other words, to achieve shared growth in tourism. Second, for the first time in the history of the World Cup, an agreement has been made with MATCH Events Services, the FIFA agency, that 10 000 of the estimated 55 000 rooms to be contracted for the 2010 World Cup are to be reserved for non-hotel rooms that will be offered by small tourism establishments and will include bed-and-breakfasts, guesthouses and backpacker lodges. Third, as part of its commitment to a development agenda, national government has initiated an active support programme for assisting and upgrading opportunities for emerging tourism entrepreneurs through the Tourism Enterprise Partnership (TEP).

Overall, the findings from both the national survey on the state of emerging tourism SMMEs and the constraints they face and a cluster of detailed micro-level research on Soweto are not promising. Although the potential opportunities for urban tourism associated with the 2010 World Cup in South Africa suggest that this event could be a lever for transformation and offer an expanded role for new black entrepreneurs in the tourism value chain, the potential impact of the Cup on the South African tourism economy is likely to be reduced, as is its legacy, by the lack of readiness of most emerging tourism SMMEs to reach the grading standards demanded by MATCH Events Services. Enormous challenges confront the TEP and the national government if they are to achieve their optimistic objectives for a developmental World Cup and shared growth through involving small enterprises in tourism. In the final analysis, the reduced possibilities for small enterprise development linked to this particular mega-event reflect the wider control exerted by FIFA over the host countries for the World Cup (Cornelissen, 2007; Van Wyk, 2008). In turn, these limitations will reduce the potential for maximising local economic development spin-offs in South Africa both prior to and during the event.

Thanks are due to two anonymous referees for their critical comments, to Wendy Job for the diagrams and to the University of the Witwatersrand RINC fund for research support.

Notes

¹The phrase ‘FIFA World Cup’ is acknowledged to be a trademark of FIFA.

An earlier version of this paper was presented at the International Tourism Association Conference, Shanghai, November 2008.