The announcement that South Africa had won the right to host the FIFA Soccer World Cup in 2010 brought a wave of euphoria to the country that, in sporting terms, has been matched only by the Springbok rugby team’s successes at the Rugby World Cup in 1995 and 2007. Bafana Bafana, the national soccer side, had a slice of glory in the 1990s though, apart from a few recent wins, their form leaves much to be desired two years before the tournament. Sport aside, it is likely that one of the biggest winners to emerge from the tournament will be business in South Africa.
Bill Lacey, a consultant with the South African Chamber of Commerce and Industry (Sacci) says that those sectors likely to benefit from opportunities related to the tournament are hospitality and tourism, construction, information technology (IT) and, to a lesser degree, retail. (FIFA is closely guarding retail rights associated with the tournament and there are a number of legal implications that prevent just anyone benefiting there.)
Scaling up hospitality operations and staff skills
Brett Dungan, chief executive of the Federated Hospitality Association of South Africa (Fedhasa), says that the industry is on track in its preparations for 2010 and is in fact ahead of schedule. This is largely because it is going to be busy in the run up to the tournament in any case as the number of international tourists arriving in the country continues to increase year-on-year.
Occupancy rates for hotels around the country are currently at 80% and most are booked up for the coming December season. The main difference in relation to the soccer tournament is that for that period they will need to operate at 100%. As many hotels have sold their accommodation to Match, the FIFA-sanctioned accommodation reservation service, this level of operation is virtually guaranteed.
In this regard, says Dungan, other hospitality subsectors, such as restaurants and bars, must realise that they will need to change their business practices to some degree. “They can’t close up shop at ten at night as most people will only be getting back from the matches at two in the morning – they need to stay open to cater for these clients.” During the World Summit for Sustainable Development in 2002, relates Dungan, delegates would return to their hotels late at night, only to find there were no services available.
With regard to investment in the sector, Dungan points out that “no one is going to get into the hotel business solely for the sake of 2010 – it wouldn’t make business sense. Of course there are a number of new hotels going up in Sandton and the rest of the country, but this is business as usual.”
Dungan advocates a holistic approach to preparing for the tournament, and that smaller players, such as bed and breakfasts should exploit their competitive niche advantages. He reckons that the most significant downstream opportunities are going to come in supply chain management as businesses scale up their operations to cope with the influx of visitors. For Dungan the most prominent area where hospitality investment opportunities exist in any great quantity is staff skills training, “from the bottom to the top. All hotels will be busy and in order to make money they will need to increase the level of staff skills.”
Building the dream – making opportunities
The Industrial Development Corporation (IDC) has a strategic business unit (SBU) to deal with investment related to the Soccer World Cup specifically, and construction across the country generally. Headed up by Sicelo Sikakane, the SBU provides a liaison link between stakeholders and the IDC. For 2010, the state-owned development finance
institution provides finance for companies that have been awarded contracts to build infrastructure, such as stadiums and roads.
According to Sikakane, while there is no shortage of cash for ‘big-ticket items such as the stadiums, the FIFA offices and Gautrain’, there has thus far otherwise been modest 2010-related investment. Closer to the time there will be a rush to provide funding for companies that have been awarded contracts to fulfil ‘back-office’ functions that are out of the limelight, such as IT (e.g. installation of high-speed networks), transport and consulting services, expansion of call centres, conversion of venues to create media facilities and the like.
Some of the possibilities here include German-, French- and Portuguese-speaking students from regional countries manning multilingual call centres. However, the biggest downstream opportunities in the World Cup have to do with the advertising the country gets as a result of hosting the tournament. The value of this is unquantifiable, holds Sikakane: “Once we have hosted the World Cup, we will be able to host anything – the Olympics and other major events. This legacy is the greatest spin-off.”
The IDC is currently talking to companies that will eventually provide services to the World Cup, such as broadcasting, printing of tickets and management of the opening and closing events. Some of the local spin-offs Sikakane envisages include landscaping, painting, security, plant hire, event management and the like at the stadiums, as well as cleaning services at the venues.
The IDC relies on entrepreneurs to come forward with proposals for projects seeking finance. To this effect, says Sikakane, gaps for further investment “could be anywhere”. Last year the LOC advertised for people to present ideas and plans, and Sikakane further encourages entrepreneurs to look and listen at the business opportunities conferences that are being held ahead of the tournament, as well as proactively bring proposals to the IDC.
Those that do should have a robust business plan that will provide a road map for the business owner. “In the short term they would need to be able to meet their financial obligations; in the medium term, they should have sufficient reserves for growth; and in the long term they should be able to provide decent returns for shareholders.”
Entrepreneurs and businesses that are interested in talking to the IDC about financing should contact the call centre on 0860 693 888, email callcentre@idc.co.za or visit the IDC website - www.idc.co.za.
