Fifa meeting its match
Higher bookings show Fifa’s ‘big brother’ attitude is no key to historic World Cup event
SHINGI MUNYEZA ADMITS TO being one of the happiest businessmen in Zimbabwe. The source of his happiness isn’t only related to the stabilisation of the country’s economy brought about by its fragile powersharing government and the US dollar. The African Sun Hotels CE’s happiness stems from having put one over the arrogance of the Federation of International Football Associations’ (Fifa) hospitality arm, Match Hospitality. Late last year Munyeza did the unthinkable: by refusing to outsource his hotels to Match, Munyeza turned down an opportunity to directly participate in the historical Soccer World Cup, to be held in neighbour South Africa in five weeks’ time.
“The one-sidedness of Match’s cancellation clause in the lease contract would have damaged our business for years to come with our perennial suppliers [travel agents/tour operators],” says Munyeza of the agreement that would have handed his 700 Livingstone hotel rooms to the Fifa subsidiary. A major contributing issue was that Munyeza personally studied the lastminute booking and cancellation patterns in Germany during the 2006 tournament. “Match wanted to take all our rooms to rent out. But it would be able to cancel the bookings until up to 60 days before the World Cup, without compensation.”
That meant Match would be exposed to all the upside should demand for the rooms stay in the 450 000 foreign visitors range it had expected. African Sun had to accept all the risk should a low demand situation arise – as it has since turned out. In the hospitality industry a cancellation penalty always applies whenever a previously secure booking needs to be cancelled. A percentage of the room rate, the penalty serves to protect the hotel against the loss of revenue during the time the room was unavailable.
“They refused to make any provision for cancellation. That’s their business plan,” says Munyeza. “But that was a gamble we didn’t need for a country with Zimbabwe’s history.” What made the situation worse was that Match offered rates lower than those already offered by African Sun’s perennial suppliers.
The Zimbabwe Stock Exchange-listed hotel group had other plans. Says Munyeza: “We didn’t need to be pushed into a corner to do business with the Soccer World Cup. We refused to accept a contract that didn’t make business sense for us.” Even though Match had gone as far as Mauritius to secure hotel rooms, Munyeza knew Zimbabwe would be first to be dropped should hotel demand not match available capacity.
This year’s tournament also coincides with the peak tourism season at Victoria Falls. “Looking at our (Zimbabwe) history and situation we’d have been taking an unnecessary chance,” says Munyeza.
After failing to reach agreement with Match, African Sun went on to approach the World Cup through its “own normal business channels”. Bookings at African Sun Victoria Falls are now 30% higher than the comparable peak season last year while Match cancelled 450 000 room nights. “We had to make a business decision for the long term to benefit our relations with our perennial suppliers,” says Munyeza. However, he admits occupancy is only “around 50% and coming off a very low base” due to the economic situation Zimbabwe is struggling to free itself from.
African Sun Hotels isn’t the only company to reject Match’s bullying tactics. State-owned airline company South African Airways recently cancelled its contract of 45 000 seats due to Match’s inability to stick to the agreed number. As the event drew closer Match kept reducing its exposure to contracted SAA seats as projected visitor numbers kept falling.
Tourism operator Tourvest’s Tommy Edmond refused to engage Match early on, citing the unacceptability of its terms of engagement. Tourvest eventually secured in excess of 60 000 corporate and sponsorship guests for the Soccer World Cup. Tourvest has had no cancellations.
SHINGI MUNYEZA Taking no chances