The true value of international convention centres and their economic contribution to both the local and national economy has been understated for many years.
This is the view of Miller Matola, the CEO of the International Convention Centre Durban (ICCD) Inkosi Albert Luthuli complex, which recently commissioned UCT's Graduate School of Business, in association with Strategic Economic Solutions, to do an in-depth study of financial years 2007 to 2009.
"At the ICCD we had a simple model. The number of delegates multiplied by the average spend (which we could calculate with input from the hotel and leisure industry), and though the estimated economic impact was significant it was, however, not a true reflection," he says.
The researchers pointed out that the ICCD's simple model excluded a number of important variables such as tax and foreign exchange earnings, the effect of capital expenditure and induced tourism.
Using a more complex input-output model with specific variables, the economic impact study showed that over the three financial years (July to June) 2007 to 2009 the ICC made a cumulative contribution to gross domestic product (GDP) of more than R6bn; R1bn to the KwaZulu Natal gross geographic product (GGP); generated R717,9m in foreign exchange; R558m in taxes from activities associated with the ICC; and nearly R3,1bn to indirect household income.
It also showed that the ICC Durban has made a significant contribution to direct and indirect job creation. It sustained 3 218 direct jobs in 2007. In 2008 this dropped to 2 595, largely due to a reduction in capital expenditure between those two years, but rose again to 3 147 in 2009. The largest contributor to job creation was delegate expenditure, creating a total of 6 475 over the three years. Indirect job numbers totalled 11 883 in the three-year period.
The report and the ICCD annual report show that the international economic crisis had little effect on its business, rather its revenue growth was substantially higher than that of the industry.
Not discouraged by the crisis, the ICC conference bid team went all out to win 23 confirmed conferences from 2010 to 2012. Major conferences were awarded to the ICCD, such as The International Federation of Critical Care, which will attract more than 10 000 delegates for 2013, and the World Psychotherapy Congress, for 2014.
With a comfortable international conference "forward calendar", the ICC Durban has ensured sustainability through the diversity of the events and exhibitions it attracts.
The economic impact report showed that the exhibitions hosted at the ICCD generated a total of more than 1,3m exhibition and other event visitor days. This is an increase on the more than 1,12m of 2007 and the slightly over 1,5m of 2008, and is due mainly to an increase in the number of exhibitions held at the exhibition centre during 2009.
But Matola is adamant that their focus will remain on conferences. "Our core business is and will remain conferences. That is why we were built. It is a question of finding the optimal balance."
One facility that could alter the outlook is Durban's new multibillion rand airport. Matola says the King Shaka airport at La Mercy is going to have a substantial and positive effect on the convention centre's business.
"It will enhance the province as a conference destination and give us a foothold to target the exhibitions market as well as the incentives market, which are very time sensitive. If people have only four days to spend at a destination they can now fly into La Mercy, which is conveniently situated to Africa's oldest game reserve, Hluhluwe-Imfolozi, and view the big five without needing to extend their stay.
"There is no doubt that we will see Durban competing with Europe and Asia as an incentive destination," says Matola.
Even without direct access, the ICC Durban has remained competitive over the years. Its market share of the international association meetings market for 2009, compared with other destinations reported in the International Meetings Association (ICCA) rankings, stood at 14%.
Though as a city Durban is ranked at 128 compared to Cape Town's number 35 in the ICCA rankings, this is a reflection of the conferences held at the ICC only and not others hosted at different venues in the city, as is the case with Cape Town. This is a result of the city not yet having a convention bureau to co-ordinate the reporting of all the meetings' activities.
"Attracting conferences is not only about the ICC - it is about selling the destination" - MILLER MATOLA
The ICCD intends to increase its market share. To do this it has to sell the city. "Attracting conferences is not only about the ICC - it is about selling the destination. Many people do not understand that it is far harder to attract a large number of leisure tourists than it is to attract groups of visitors with a conference as an end goal," says Matola. To this end the ICCD is the vehicle to showcase the city to international delegates and visitors.
Another insight from the study was the significant contribution made by induced tourism, which is the result of international tourists from previous conventions returning as visitors to the country or taking part in pre- and post-conference tours.
The study estimated that this year international tourists spent more than 230 000 days in SA as a result of induced tourism generated by the ICC Durban. It also points out that this figure is probably understated because it excludes the effect of repeat tourism.
As more and more visitors will return to SA on a regular basis it is therefore expected that induced tourism will have a growing effect on total international visitors and spending, according to the study.
A survey undertaken by Tourism KwaZulu Natal (TKZN) of more than 5 000 delegates (43% international) attending conferences during 2008 shows that an average of 52% of the delegates would not have come to Durban had they not been attending a conference.
James Seymour, TKZN tourism information services GM, says it is important to note that a significant number of the delegates to these conferences said that they would possibly visit Durban again, and a further 46% of them were extremely likely to do so.
The majority of delegates to all conferences rated Durban as a good, very good or excellent convention destination and holiday destination. The survey also showed that over and above the interest of attending the conference for networking or knowledge, SA as a holiday, culture/heritage, and wildlife/scenery destination rated high among factors that influenced delegates' decision to come to the country.
Therefore, there is potential for converting conference delegates to leisure tourists, says Seymour.
This indicates that conference delegates form a new target market and need to be converted to tourists and ambassadors for the country. Naturally, this type of tourism has a two- to three-year lag, says Matola, indicating that future research will track how many delegates actually do return.
UCT has undertaken similar research for the ICC Cape Town and the Sandton Convention Centre and the outcome will give the industry a better sense of the total effect of the meetings, incentives, conferences and exhibitions (Mice) sector and convention centres on the SA economy.
"At a local level the research helps us to better understand our business and where we should place our marketing effort. At a higher level we can take a national perspective and look at the total contribution of the three convention centres and the contribution of the Mice industry to the economy. In the long run, the research will yield a lot of important information and influence our marketing and how we take advantage of events," says Matola.
Africa's share of the international conference market is 1% - of which Cape Town has a 52% share, Durban a 15% share and Johannesburg 16%. And all three centres are very competitive with the rest of Africa.
WHAT IT MEANS
 The ICC has contributed more than R6bn to the GDP over a period of three years
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Importantly, Durban's ICC has never had to compete against the ICC Cape Town or the Sandton Convention Centre. Rather the competition is against other international destinations. This has worked well for all three centres and the country, which is seen internationally as being a co-ordinated conference destination.
For those who are still sceptical about the value of ICCs, another way of looking at their contribution is to imagine how things might have been if they had not been built. ICCD has put Durban on the international convention and meetings map, profiling it as a strong destination - a value one cannot quantify.
Reports over the past two years have said that the hotel industry was faring better than expected during the recession. However, Durban hotel bosses recently informed the ICC's User Group Forum that their businesses would have suffered far more had it not been for the ICC's conference, exhibition and meeting activities. They specifically quoted events such as the International Congress of Nurses, which led to more than 5 000 delegates converging on Durban during June 2009.
