Cape Town Routes Unlimited: Non-renewal of City of Cape Town contract & funding

Meeting Summary

The Western Cape Provincial Department of Economic Development and Tourism and the City of Cape Town briefed the Committee on the reasons behind the cessation of funding by the City of Cape Town to Cape Town Routes Unlimited. Members were informed that there was not in fact a withdrawal of funds. Cape Town Routes Unlimited had been given a three-year contract by City of Cape Town, but one year’s notice had been given, already in June 2007, that the contract would not be renewed in June 2008. City of Cape Town had felt that its needs were not being met, that there was too much duplication in marketing Cape Town, which was identified as the destination of choice and thus the focus of the branding, and that Cape Town Routes Unlimited was top-heavy. The City of Cape Town had also found its budget constrained by the focus on the 2010 World Soccer Cup. It had wanted to redefine the marketing campaigns, and achieve better alignment of budgets. Some Members had raised concerns that perhaps there had been a political agenda behind the withdrawal of the funding, given that there was a new administration in place in the Western Cape, but both the City of Cape Town and other Members pointed out that there was nothing sinister in the arrangement, which was a simple non-renewal, of which notice had already been given under the previous administration. It was stressed that the purpose of the meeting was merely to share information on the tourism entities and their relationship with each other. Members stressed the need also for cooperative governance across all tiers, and wished to find out how integrated tourism really was, where the meeting points would be, what was used as the main drawcard when marketing Cape Town, whether previously disadvantaged persons were brought into the tourism industry, and what the focus of South African Tourism across other provinces was. It was noted that other tourism entities would also be briefing the Committee.

Meeting report

Cape Town Routes Unlimited: Briefing on withdrawal of funding by City of Cape Town: CCT and Provincial Department of Economic Development and Tourism (the Department) briefings
Ms Felicity Purchase, Member of MAYCO, City of Cape Town, briefed the Committee, on behalf of City of Cape Town (CCT) and the Western Cape Provincial Department of Economic Development and Tourism (the Department), on the reasons why the funding to Cape Town Routes Unlimited from the City of Cape Town had ceased.

Ms Purchase noted that the Constitution required municipalities to lead, manage and plan for development. Local municipalities had the responsibility to exercise this developmental mandate across all functions delivered at local level, which included the development and marketing of the tourism sector.  The Tourism Act of 2004 provided for the establishment of the Destination Marketing Organisation (DMO), and made provision for its composition, powers and functions. The aim was to provide for the promotion of tourism and related economic development of the Western Cape. The Tourism Act made provision for this without infringing upon the rights of municipalities regarding local tourism.

Ms Purchase noted that the City of Cape Town had a three-year service-level agreement with Cape Town Routes Unlimited (CTRU), which ended on 30 June 2008. The City of Cape Town had, in June 2007,  given the CTRU one year’s notice that the service level agreement was not to be renewed. The Provincial Government had requested the CTRU to address certain issues during the year of notice, including clarification of confusion on the destination development mandate, increasing the City of Cape Town representation on the CTRU Board, and strengthening legislation in order to ensure that board members had the capacity to deliver on the CTRU’s mandate.

The current state of affairs was that Cape Town Tourism (CTT) was mandated to deliver destination marketing and visitor services for the City, in terms of Section 78 of the Municipal Systems Act of 2000. The 2009/2010 budget to fund the delivery of these functions by CTT, in preparation for the Fifa Soccer World Cup of 2010, had been approved.  Joint marketing initiatives by the City of Cape Town with CTRU and CTT had been planned and executed. An international best practice model of city destination marketing had been followed. The City of Cape Town had partnerships with various stakeholders including the Western Cape Provincial Department of Economic Development and Tourism, SA Tourism (SATOUR), CTRU, CTT, communities and other governmental bodies.

Ms Purchase pointed out that funding to CTRU was not actually withdrawn. The contract had expired, and had not been renewed. A one-year notice period had been given. The reason for the non-renewal of the contract was that CCT felt that its needs had not been met. It was additionally felt that the CTRU was top heavy. CCT had a focus on Cape Town, and because its budget was mostly Soccer World Cup-driven it was feeling some financial strain. CCT did however recognise that the CTRU had some successes, including some joint venture subcontracts with the CTRU. There was a need to refocus on what individual needs were, and to prevent the duplication of expertise. CCT felt that in order to achieve the best for Cape Town and the Western Cape, it needed to redefine its purpose. It had aimed to achieve a win / win situation for all.

Ms Nombulelo Mkefa, Director of Tourism, City of Cape Town, said that in the Western Cape the destination brand was still Cape Town. She acknowledged that there was a need for alignment of marketing strategies of the City of Cape Town and the CTRU. Common initiatives needed to be identified. All efforts were being made towards identifying the best practice model. A model was needed to leverage private sector spending. Currently the entire budget in question was funded through government funding.

Ms Labeeqah Schuurman, Chief Director: Western Cape Provincial Department of Economic Development and Tourism, said that the funding issue between CTRU and the City of Cape Town had emerged under the previous administration in the Western Cape. She said that a meeting was called with the City of Cape Town, and it was agreed that there should be joint marketing initiatives. The aim was to work in an integrated manner and to align budgets. She reiterated the need to look at a best practice model. Ms Schuurman noted that the first issue was that municipalities should become involved and the second issue was to address the issue of representivity as against funding. The fact of the matter was that institutional arrangements needed to be strengthened. She said that apart from the CTRU, the Provincial Department spent R300 million on other public entities.   

Discussion
Mr F Adams (ANC, Western Cape) said that the CTRU and the CTT had been in existence for a long time. He asked why, when the Province was now under a new administration, these issues were arising. He felt that both organisations were doing great jobs. He pointed out that most municipalities were tourist destinations and had their own tourism desks. Mr Adams asked why the Province was wanting to exercise oversight or control over them, pointing out that municipalities were autonomous and unique, and there was no reason for the province to impose its view.

Mr Adams also stressed that it was good to have inter-departmental co-operation. He said that both the CTRU and the CTT had worked well until the new administration had come into power. He had the impression that “purging” was happening and asked why it was necessary to tamper with something that was working.

Ms Purchase responded that the issue had not arisen because there was a new administration. CTRU had been given notice of the City’s intention already in 2007. The City of Cape Town needed to market Cape Town as a hook to attract tourists. It was not the intention of the Province to try to be in control. Other municipalities could brand themselves locally. However, Cape Town was seen as the starting point. The whole package needed to be ready by 2010. Ms Purchase noted that since April 2009 there had been a mindset change. The idea was to work together on developing Cape Town and rural town tourism. Cape Town would be the base and then each area would do its own marketing. She conceded that problems did arise, but all those involved needed to work together to come up with solutions.

Mr A Nyambi (ANC, Mpumalanga) referred to the role of municipalities and asked whether they were part of the joint initiatives and programmes.

Ms Purchase said that unfortunately the municipalities did not have budgets, as most of their funds were used for local economic development. The Province, however, did have a larger budget. Cape Town no longer had a major manufacturing sector, as it had in the past, which would attract investors, so all that it could safely rely upon was tourism.

Mr M Maine (ANC, North West) asked what needs of the City had not been met by the CTRU. He agreed with Mr Adams that politics should not play a role in the decision-making. Mr Maine asked if it was in the best interest of Cape Town to politicise issues.

Ms Purchase said that the CTRU had a special department for the staging of big events at Cape Town conference centres. The City of Cape Town was trying to prevent duplication. If an exhibition on Cape Town was to be held at a specific event then there was no reason why so many organisations representing Cape Town should be sent, as only the best should be sent. The issue must be looked at from a Cape Town perspective.

Ms E Van Lingen (DA, Eastern Cape) asked how the CTRU funding issue had found its way to the Committee. She noted that she was very involved within the tourism industry. Marketing tourism was expensive and had to be on the cutting edge. Local municipalities simply did not have the budgets to do marketing as most of the funds went towards local economic development and priorities. She believed that the solution lay in getting the private sector involved. With specific reference to the CTRU, she pointed out that the three-year contract had expired, that the one-year’s notice was duly given of non-renewal, and that comments regarding politicisation were inappropriate, particularly since nobody could have foreseen that the Democratic Alliance would be victorious in the Province.  

Mr K Sinclair (COPE, Northern Cape) also asked how the issue had found its way before the Committee.
 
Ms Purchase said that this meeting was called in the spirit of information sharing and co-operation. She reiterated that the CTRU contract had expired and had not been renewed. There was no withdrawal of funding as such, merely a non-renewal.

Ms Mkefa said that the City of Cape Town had always worked with the Province in a collaborative manner. The City and the Province were funding all the tourism entities. Each had its own “look” and all were from Cape Town. The foremost question was how people chose a destination. There was agreement and acceptance that Cape Town was the known brand. Throughout the world it would be the cities, and not the provinces, that were considered the marketing brand. She also pointed out that the agreement that the City had with CTRU was separated from its institutional arrangements. By the end of the third year of the contract, CTRU had been paid R30 million by CCT. The challenge was about maximising funding, and the main issue was around how much money should be put towards destination marketing, and how much was going towards institutional arrangements. The initial model was supposed to have pooled resources, but in practice this did not happen, which was the reason why CCT had wanted to re-examine the model.

The Chairperson emphasised that the reason for the present briefing was purely so that information could be shared. Western Cape was seen as a first choice for tourists. Many Members of the Committee were new, and wished to familiarize themselves with the institutions as well as with the issues at hand. The CTRU and the CTT would also be appearing before the Committee in due course.

The Chairperson asked that copies of the service level agreement between the City of Cape Town and the CTRU should be forwarded to the Committee. He noted that both local mandates and provincial legislation had been mentioned in the briefing, but nothing had been said about national levels, and he would like to hear about cooperative governance. He asked how integrated tourism really was, and where the meeting points would be. He asked what would be used as a drawcard when marketing Cape Town, and how previously disadvantaged persons were brought into the tourism industry.
 
Ms Purchase said that SA Tourism would market South Africa internationally, and was considered to be the platform. There was a need to prioritise where the most marketing was needed. It was important to complement each other’s efforts but not to duplicate them. The destination-marketing mandate needed to be clarified, and there was a need to specify who would do what, so that there was not competition for the same space. The challenge was to negotiate collaboration within SA Tourism. Ms Purchase said that issues of black economic empowerment were being driven hard, and that the developmental component was being done by the Department.

Ms Schuurman noted that when funding was not forthcoming from the City, there was tension between the City of Cape Town and the Province, and the result had been that there was a shortfall on the funding for the CTRU, of R24 million. It was necessary to find a platform to work together, and the Provincial Department had to look at the whole strategy of tourism. The Provincial Department had, over the past two years, established a Western Cape Tourism Developmental Partnership. Meetings were held with more than 100 stakeholder, and with the Minister, and issues ranging from local tourism to national tourism were discussed. Ms Schuurman emphasised that there was a lot of detail not covered in the present meeting that could further inform Members. She agreed that there should not be a duplication of efforts on the international platform, but rather a united and concerted effort. She also concurred that there was a disparity in funding of tourism by local municipality. She agreed that there must be collaboration between the three spheres of government.

The Chairperson said that the Committee would continually engage with stakeholders to elicit information. He stressed the need for co-operative governance between the City of Cape Town and the Provincial Government.

Ms Adams agreed that the Committee needed to meet with more stakeholders within the tourism industry as there seemed to be a great deal of confusion.

Mr Sinclair said that more information was needed about the marketing policies of SA Tourism, pointing out that each of the Members represented his or her own province.

The meeting was adjourned.

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