T O U R V E S T D E S T I N AT I O N MANAGEMENT
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TOURVEST DESTINATION MANAGEMENT
Proudly South African Tourvest Enjoys
Global Success PRODUCTION: Karl Pietersen
Industry leading integrated tourism group, Tourvest, is furthering its reach around the globe by opening up in East Africa and entering new markets including Australia and New Zealand. CEO of Tourvest’s Destination Management division, Martin Wiest talks to Enterprise Africa about the company’s future plans. www.enterprise-africa.net / 3
INDUSTRY FOCUS: TOURISM
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As the largest tourism business in the Southern Hemisphere, Tourvest is riding the wave at the top of a travel and tourism industry that is showing no signs of crashing anytime soon. The company, which has roots firmly planted in South African soil, is now home to more than 5000 people and incorporates several major brands across a range of sectors. Tourvest is ambitious, and the company is hoping to grow into an international travel and tourism powerhouse over the coming years. Martin Wiest is CEO of the group’s Destination Management division and he tells Enterprise Africa that the future is very exciting for this historic African powerhouse. “The only limitation that we have is the availability of cash for acquisition or organic growth. We are in the fortunate position of being substantially cash generative. There’s always more ideas than there is available cash so it’s our job to identify the cleverest places to invest our cash.” Tourvest was founded in 1997 as an entrepreneurial experiment to create a tourism-specific business that incorporated various African focussed activities. After growing quickly in its first years, the business accelerated its growth by going on an acquisition extravaganza. “In South Africa, in the late 90s, there was a listing boom,” recalls Wiest. “Various stakeholders, mainly from the jewellery and inbound leisure sectors, agreed that it was a great way of creating cash to grow a tourism business rapidly. “The key person at the time was Steve Griessel who was group CEO and he took a few jewellery businesses
and some inbound tourism businesses and brought them together as one. “It was listed in 1997 before going on a wild shopping spree, purchasing 200 businesses over a two-year period. Through that, we streamlined, installed business pillars and applied logic to the situation, resulting in the Tourvest you see today – the biggest tourism player in the Southern Hemisphere.” The companies purchased by Tourvest range in size and style. Wiest had been part of a business formed in 1981 before moving into Tourvest upon acquisition. The oldest business in the portfolio is Wilson Collins Travel, founded in 1901. Right now, attractive investment opportunities are being presented in East Africa and Wiest sees this as an ideal region for Tourvest to attack. AFRICAN EXPANSION “The core driver behind that is mainstream destinations like South Africa have new competition in the digital environment such as booking. com or Expedia,” he says. “While they don’t kill us, they certainly apply a lot of pressure in our mainstream destinations. In niche destinations,
// WE BELIEVE THAT THE CULTURE OF AN AFRICAN COMPANY IS HIGHLY ENTREPRENEURIAL AND OPPORTUNISTIC BUT NOT AS BUREAUCRATIC AS MANY EUROPEAN COMPANIES // 4 / www.enterprise-africa.net
that the consumer considers exotic, no one wants to work there without a partner.” Currently, the company operates a highly successful operation in Kenya, Tanzania and Uganda, and Wiest explains that this will be used as a breeding ground for growth further north. “We are taking our east African operation as the incubator for expanding north into Ethiopia and south into Rwanda - the infrastructure is there, the vehicles are there, the corporate structures are there, and the registered companies are there. The same applies to Mozambique.” He also highlights Madagascar as an opportunity because of its beach tourism offering and potential extensions to holidays into Namibia and South Africa. “The principle is not because Ethiopia or Madagascar are heaving, the principle is that those countries, because of their exotic nature, will be a home for DMC (destination management company) for decades to come and mainstream destinations do not have the same level of sustainability.” But it’s not only Africa where the CEO sees potential. Although tourism across the continent has been highlighted as an industry with major possibilities, Tourvest is an international business and continues to look further afield for growth opportunities.
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INDUSTRY FOCUS: TOURISM
“We are focussing very strongly on expanding, not only on the African continent, but elsewhere too. We want to get into countries where the business model offers a high-service, high-hand holding destination management concept, where we can remain relevant for decades to come,” says Wiest. GLOBAL PLAYERS Four international markets in particular have been identified by Tourvest as locations which could offer up expansion opportunities for the company. “We are busy with expansion strategies in New Zealand and Australia. The logic behind that is the consumer profile travelling to those destinations is identical to those travelling to South Africa. The same applies to Argentina and Brazil. Those four countries are where we
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want to acquire businesses in the next 24 months, and then synergise our customer base while moving into those environments,” says Wiest. Tourvest’s existing international partnerships a rife for expansion of this nature. “In South Africa we deal with hundreds of worldwide customers in terms of our overseas wholesalers. We have around 150,000 trips to South Africa from wholesalers and at least half of those wholesalers also have products for New Zealand and Australia, so it’s only logical to try and gain a platform there.” As well as growing in new regions, Tourvest will look to bolster its operations in existing foreign markets. This means acquisition to build revenue so that the balance is more international and less African. “We want to remain Africa’s
largest tourism entity and grow our base in Africa, but we feel very strongly that we want to have a more diversified business with more investments globally. We run a chain of destination merchandise stores in the Caribbean, we are investing in Cuba, we are running a retail environment in Spain, we are running a retail environment in India, but Tourvest still generates more than 70% of revenue on the African continent. We will always be an African company at heart, we believe that the culture of an African company is highly entrepreneurial and opportunistic but not as bureaucratic as many European companies. We would like 50% of our turnover generated outside of the continent, mainly because we are running out of growth opportunities in Africa,” says Wiest.
TOURVEST DESTINATION MANAGEMENT
// WE ARE BY FAR THE BIGGEST HANDLING DMC IN RUSSIA FOR THE WORLD CUP; WE WERE THE BIGGEST IN BRAZIL, WE WERE THE BIGGEST IN SOUTH AFRICA AND PART OF OUR TEAM WILL MOVE ONTO QATAR // Currently, the Tourvest group generates turnover of around $1 billion but, through international expansion, the hope is that this will be doubled over the coming five years. A key part of this growth ambition will be Team Destination Management (TDM), where the group is already strong. TEAM DESTINATION MANAGEMENT “The business model is very unique,” details Wiest. Tourvest started its TDM to contribute to the German FIFA World Cup in 2006. “We started the business for TDM as a learning project for the 2010 World Cup in South Africa.”
He describes the business as a ‘globally mobile event specific DMC that moves from event to event’. Currently, the team is as busy as ever, handling the FIFA World Cup in Russia and already preparing to move on for future major sporting events. “Our team in Russia is over 600 staff and we are handling around 50,000 passengers, mainly for sponsors where our key accounts are Visa and Budweiser. We are also handling 15 of the 32 participating football federations with their friends and family programmes, and their own sponsor programmes and media groups. We are by far the biggest
handling DMC in Russia for the World Cup; we were the biggest in Brazil, we were the biggest in South Africa and part of our team will move onto Qatar, part of our team will move onto Tokyo for the summer Olympics and Rugby World Cup. What we’ve created is a business model of a globally mobile sports-focussed DMC and we are the only one in that environment.” Asked if the group has become reliant on big sporting events, considering their inconsistent nature, Wiest says that a deliberate split between TDM and inbound leisure keeps the company moving. “This year, the World Cup is our
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INDUSTRY FOCUS: TOURISM
// I BELIEVE VERY STRONGLY THAT TOURISM HAS A MATERIAL PART TO PLAY IN SOUTH AFRICA, RECTIFYING MANY OF THE SOCIOECONOMIC PROBLEMS WE HAVE HERE // single biggest and most profitable project by far. It’s in the region of $50 million which is around a third of our total turnover for the year. But in the next three years it is not. If you annualise it, it’s still important but not comparable to inbound leisure. The combination between big sporting events and inbound leisure is what makes us tick – both are equally important. This year, Russia will form around 50% of our EBITDA but in the
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next three years, that unit will lose money until we get into the Qatar World Cup. Sports is feast or famine and inbound leisure is bread and butter, but the combination is what keeps us healthy.” TOURISM CREATES JOBS Investment in the tourism industry has been pushed heavily in South Africa recently, with Tourism Minister, Derek Hannekom and even President
Ramaphosa talking of the tangible benefits that a strong tourism industry can have for the wider economy. Wiest agrees and hopes investment will continue. “On the continent, there is no better mainstream destination than South Africa,” he says. “The South African economy is heavily weighted towards agriculture and mining. Agriculture will continue but mining is on the decline with the mines getting deeper and less cost efficient. We need new drivers of employment and the theory is for every eight tourists, there is one job created. It’s a job creator in a meaningful, decentralised fashion. It doesn’t only create employment in the urban centres, it creates jobs in the
TOURVEST DESTINATION MANAGEMENT
rural areas where the hotels, lodges and safaris are. Tourism has a material role to play but we don’t think we should look for mass tourism – volume tourism, but not mass tourism. We need to continue offering great value and service for little money.” Currently, South Africa is placed highly in the world tourism competitiveness index, looking at what it offers for what it costs. It offers fantastic value for money, perhaps a function of the currency which has depreciated over the past few years. “I believe very strongly that tourism has a material part to play in South Africa, rectifying many of the socioeconomic problems we have here,” says Wiest. Talking of the economic-political situation that has caused headaches for many business leaders in South Africa over the past few years, Wiest explains that the tourism industry saw the benefit of a weak Rand, encouraging large numbers of international tourists into South Africa. “South Africans as a whole are far more upbeat about the future of their country than they were before. Strangely enough, for us, 2016 and 2017 were two record years in a row and that was largely down to the previous administrations cunning ability to destroy the currency,” he says. “This made our business better than ever. Now that we have a more stable government, we see a slight weakening of our international markets in the face of a stronger Rand. As a South African, I am very happy that the changes have occurred but for inbound leisure it is not necessarily the best thing. We must get used to a new reality – we are not going to have another record year, but we don’t want to have record years every year. I would prefer a stable country, with a future for everybody, with slightly lower trading levels rather than a corrupt country with high trading levels but no future for my children.” And the future does look bright for this very African but international
Martin Wiest, CEO
organisation. Acquisition activity will continue and movement into new markets will allow Tourvest to spread its expertise and success far and wide. Wiest, who arrived in South Africa from his homeland Germany in 1983, says that he is confident about times to come because of the experience that has been built up. “Anybody can trade while the market Is buoyant. I’m a strong believer that the management team
we have is better than anybody else, and that team has in the last 20 years grown the business consistently in good times and bad. We have a proven track record of being able to grow despite circumstances, and when everything aligns like it did last year, we can deliver humdinger years.”
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July 2018
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