INLSA
Julie-May Ellingson, the chief executive of Durbans Inkosi Albert Luthuli International Convention Centre complex.
Durban’s Inkosi Albert Luthuli International Convention Centre complex (ICC) had increased profitability with a “concerted effort at managing costs more efficiently”, and not just through growing revenue from conferences and events.
Chief executive Julie-May Ellingson said this had seen the facility had set a new record with revenue of R237.08 million for the 2012 financial year.
In an interview with The Mercury, Ellingson said 2012 was a “significant year” for the centre, with the record revenue translating into a net profit |before tax of R69m.
“This made the facility, which includes the main ICC, the ICC Arena and the ICC Exhibition Centre (Durban Exhibition Centre) the best-performing conference centre in the country.
“The ICC has been a very important asset for the city of Durban since its opening in 1997. It was always meant to be an investment that generated broader economic and exposure benefits for the city.
“But I believe that we can achieve the twin goals of running profitably and generating the positive knock-on economic benefits locally and for the country through hosting major conferences, meetings and events.
“The 2012 financial year was great for us. We hosted the UN COP17 Climate Change Conference, which was massive, but we can’t expect to host such events every year and to make this kind of profit,” she said.
“As part of increasing the ICC’s profitability, in general, we also did a comprehensive comparative analysis of other centres in South Africa and discovered we were charging below the market rate.
“We realise that we can’t always compete on price, but we wanted to be more in line with the market,” said Ellingson.
She said the ICC was now reinvesting its profits into the facility to ensure high standards and its competitiveness. About R6m had been spent on revamping the ICC’s expansive kitchen recently, with more money being spent on maintenance and other upgrades.
“Ordinary citizens don’t know how the ICC and conventions industry work and we need to educate them about the positive impact that the centre has on Durban.
“We, as management, need to build credibility, with the ICC historically having been seen as a burden on the city. But the fact is that the ICC has always been operationally |profitable.
“We have addressed the depreciation-of-assets issue and, in fact, pay the city around R7m in rates annually,” said Ellingson.
“If the ICC were to shut down tomorrow, hotel occupancies would drop dramatically in the city, and even investment decisions such as the R220m redevelopment of the Southern Sun Maharani and Elangeni hotels would not have been made,” she added.
“The ICC’s increased profitability means that it has more money to reinvest in the business. However, that does not mean that the city does not have to reinvest in major developments at the centre like it did when it developed the ICC Arena at a cost of R460m in 2007.
“If and when it wants to expand the facility, the investment decision in major redevelopments at the centre ultimately lies with the city,” she said.
Asked about plans for another hotel for the ICC precinct that were signed with the Durban-based Coastlands Hotels group years ago, Ellingson said the city and hotel group had agreed to opt out of the deal. However, she said there was a “potential opportunity” for a hotel to be developed at the exhibition centre site.
This, she said, could act as a catalyst for redevelopment of the site, but such a project would need to be part of plans around the development of the Centrum site, next to The Workshop shopping centre.
“Any such development needs to boost urban regeneration of the city with better |linkages between the centre and CBD,” she said.
Ellingson said that since the ICC was opened by Nelson Mandela in 1997, more than 20 million conference delegates and others had gone through its doors. In the past six financial years, the ICC’s cumulative contribution to the country’s GDP was calculated at R14.5 billion.
Commenting on the ICC’s annual report, board chairman Mato Madlala said its financial performance for 2012 was very strong, thanks to the passion and commitment of the team.
“The ICC has performed at record levels, contributing significantly to the development of the city in terms of economic impact, transformation and job creation,” she said.
BEE
Meanwhile, the ICC said last week that it had dramatically improved its broad-based BEE rating. It had improved from a “level seven contributor” to a level three in terms of the BEE scorecard, which has seen more business going to black-owned businesses.
Ellingson said the rating “sends a clear message to the market that we are committed to transformation” in the country.
“Broad-based BEE is not only about compliance, but being committed to making a positive impact in the broader community in which we operate,” she said.
Ellingson said the improved rating was the result of a concerted effort by the ICC’s management to support the local community when selecting suppliers and vendors as well as investing meaningfully in the development of its staff.
These efforts resulted in 74 percent of the ICC’s expenditure going to black-owned businesses, as well as an improvement of almost 400 percent in the skills development element of the BEE scorecard.
