Post-2010 FIFA Soccer World Cup: oversupply and location of luxury hotel rooms in Cape Town

Abstract

An excess of hotel rooms in cities preparing to host a mega-event such as the FIFA Soccer World Cup is not a new occurrence. Between 2007 and 2010 the number of five-star hotel rooms in Cape Town increased by 50% and four-star hotel rooms by 20%. A spatial database of three-, four- and five-star hotels was compiled for the hotel sector of Cape Town. This paper reveals the global–local nexus of luxury hotel development in Cape Town (South Africa) and three different contexts in which the oversupply of hotel rooms must be understood. First is South Africa as a developing country engaged in hosting a hallmark event and engrossed in concomitant inflated tourism-related expectations. Second is the vulnerability of Cape Town's hotel sector with its overdependence on long-haul holiday tourists from a narrow northern-hemisphere market experiencing the worst economic recession since the 1930s. Third is the favourable economic trends in South Africa from 1999 to 2007 that have trapped hotel developers in a ‘fallacy of composition’.

Keywords:

• hotel sector
• mega-event
• long-haul destination
• location of hotels
• bundle of goods/services
• developing countries 1

Acknowledgements

The authors want to express their appreciation to Dr Jane Rogerson from the University of Johannesburg for reading the first draft of the paper and for the constructive comments that she has made to improve the manuscript.

Notes

1. Hallmark (mega-) tourist events are major fairs, expositions, cultural and sporting events of international status which are held on either a regular or a one-off basis. A primary function of the hallmark event is to provide the host community with an opportunity to secure high prominence in the tourism market place (www.ask.com/question/what-is-a-hallmark-event).

2. The fallacy of composition refers to a decision taken for an individual case or unit without knowing or considering the bigger picture (www.thefreemanonline.org/columns/7-fallacies-of-economics).

3. The typical tourist from the core markets to South Africa is 60+ years old, part of a pre-booked package tour, moving in groups of small to medium size and travelling by luxury coach or minibus.

4. This Western Cape Tourism Barometer is a measurement of the travel patterns of tourists (national and international) in Cape Town and the Western Cape.

5. The Atlantic Seaboard is often referred to as Cape Town's Riviera, the coastal region extending from the V&AW along the west coast of the Peninsula to Hout Bay. It includes some of the world's trendiest and most stunning seafront or mountainside locations like Green Point, Sea Point, Fresnaye, Bantry Bay, Clifton, Camps Bay, Bakoven, Oudekraal and Llandudno (Jahedi Mapping, 2011).

6. The UK market is still Cape Town's most significant tourism market with an average of 200,000 visitors to the Mother City per year; Britons spend an average of 13 nights in South Africa and are Cape Town's biggest spending market; 70% of visitors come for leisure travel and just under 25% to visit friends and relatives (www.capetowntouristguide.com/uk-and-usa-two-of-cape-towns-top-five-tourism-key-source-markets/).

7. MICE stands for meetings, incentives, conventions and exibitions.