South African Tourism provided assistance to the Department of Environmental Affairs and Tourism and financed the marketing of
The Chief Operating Officer of South African Tourism briefed the Committee on the 2008/09 annual report. The main objectives of SAT were to promote
The presentation included overviews of the non-financial achievements during 2008/09 and the financial position at the end of the year. SAT received an unqualified audit report for the eighth consecutive year. Expenditure increased by 15% to R724.27 million, funding increased by 13% to R586.09 million and other revenue increased by 11% to R154.86 million. Targets were set for the number of arrivals and the average ‘spend’ per tourist inside
The briefing covered SAT’s methodology for measuring the return on investment in markets and for selecting markets to invest in, an outline of the key steps of the review process and the core markets in Africa, Europe, America, Asia, the Far East and Australasia. An executive summary of SAT’s five-year strategic plan and a detailed outline of the six major strategies to achieve the four high-level objectives were included. A detailed breakdown of the marketing expenses per country office and business unit was provided. After 2010, SAT planned to invest more in marketing
The Tour Grading Council of South Africa (TGCSA) graded accommodation facilities in nine categories. The presentation included statistics on the number of establishments and rooms per accommodation category per province. As at the end of September 2009, a total of 7710 establishments provided 108182 rooms. An update on transformation in the tourism sector, compiled by the Tourism Council of South Africa (TECSA) concluded the briefing.
Members asked questions about achieving a more balanced spread of visitors to all areas in the country, developing tourism in rural areas to benefit poor communities, the gender and racial composition of SAT employees, the acquisition of Meetings Africa, the vacant CEO post and the earnings of the previous CEO, the challenges experienced in marketing South Africa in other African countries, the involvement of local and provincial Government authorities in promoting tourism, the provision of roads and signage to tourist attractions, the dearth of information on tourist attractions at ports of entry, the lack of facilities for selling craft work and curios at border posts and airports, cultural tourism, domestic tourism and the “Sho’t Left” campaign, the relationship with travel agencies, the grants made available by the Department of Trade and Industry to promote business travel, the targets and achievements of TECSA, the ownership of tour operators, the process followed by the TGCSA and the efforts made to improve the standard and quality of accommodation.
Members commended SAT for its achievements but recommended that the organisation applied for additional funding and expanded its operations. More needed to be done to promote tourism by provincial and local Government entities.
Opening remarks by the Chairperson
The Chairperson explained the Committee’s oversight responsibility. He advised that, according to the Estimates on National Expenditure (ENE), South African Tourism provided assistance to the Department of Environmental Affairs and Tourism and financed the marketing of
South African Tourism was responsible for assuring the quality of the products and services offered and facilitated transformation of the tourism sector. According to ENE, the objectives of South African Tourism were transformation, the promotion of
The objectives of the Tourism Group Strategy for the period 2008 to 2010 were to increase the number of tourists visiting the country and to promote tourism in the less-frequented areas of
The Chairperson referred to the executive letter from the Chief Executive Officer contained in the 2008/09 annual report of South African Tourism. The implementation of the Tourism Group Strategy was not very clear as no reference was made to transformation. He asked the Chief Operating Officer to provide an analysis of the targets set and the actual outcomes in the presentation (see page 40 of the annual report). He requested further details of the human resource issues mentioned on pages 114 and 115 of the annual report.
The Chairperson asked the Tourism Empowerment Council of South Africa (TECSA) to provide a comparison of the targets and achievements of TECSA) (see page 132 of the annual report). He commended the department on its financial status and for achieving a clean audit report but asked for an explanation of the Chief Executive Officer’s earnings as reported on page 143 of the annual report.
Presentation by South African Tourism (SAT)
Ms Didi Moyle, Chief Operating Officer: South African Tourism, briefed the Committee on the 2008/09 annual report (see attached documents). The main objectives of SAT were to promote
The detailed and comprehensive presentation included overviews of the non-financial achievements during 2008/09 and the financial position at the end of the year. SAT received an unqualified audit report for the eighth consecutive year. Expenditure increased by 15% to R724.27 million, funding increased by 13% to R586.09 million and other revenue increased by 11% to R154.86 million.
SAT’s performance against the targets set for the four major objectives was summarised. Targets were set for the number of arrivals and the average ‘spend’ per tourist inside
Ms Moyle briefly covered SAT’s methodology for measuring Return on Investment in markets and for selecting markets to invest in. SAT conducted a Portfolio Review Process at regular intervals and the outcomes of the fourth review in July and August 2009 were summarised. She gave an outline of the key steps of the review process and the core markets in Africa, Europe,
The presentation included an executive summary of SAT’s five-year strategic plan and a detailed outline of the six major strategies to achieve the four high-level objectives. A detailed breakdown of the marketing expenses per country office and business unit was provided. After 2010, SAT planned to invest more in marketing
The statistics collated by the Tour Grading Council of South Africa (TGCSA) were summarised in tables indicating the number of establishments and rooms per accommodation category per province. As at the end of September 2009, a total of 7710 establishments provided 108182 rooms.
The final section of the presentation was an update on transformation in the tourism sector, compiled by the Tourism Council of South Africa (TECSA).
The Chairperson thanked Ms Moyle for the presentation. He asked what how the budget in the ENE was justified. He wanted to know what SAT was doing to balance the spread of tourists visiting the country. He asked SAT to respond to the oversight issues raised by the Committee.
Ms V Bam-Mugwanya (ANC) remarked that generally, rural communities did not benefit from the successes achieved. She wanted to know what efforts SAT made to address the expectations of rural communities. She noted the differences in the standard of hospitality and facilities in the urban and rural areas. She was of the opinion that the lower standards in the rural areas was as a result of a lack of supervision, direction and knowledge. She said that people in the rural areas were interested in entering the industry but lacked resources and financial management skills. She felt that there needed to be a focus on the improvement of facilities in the rural areas. A successful tourism industry was dependent on a coordinated effort but rural communities were not as developed as those in urban areas. She asked to what extent SAT was involved in coordinating efforts with the Department of Environmental Affairs and Tourism (DEAT) in the development and improvement of rural communities.
Chairperson pointed out that the DEAT and SAT played different roles in the tourism industry. He mentioned that the Committee planned to meet with the Department at a later date.
Ms Bam-Mugwanya replied that she understood the differences between the Department and SAT. She felt that SAT needed to correlate efforts with the DEAT.
Ms M Shinn (DA) wanted clarification on the equity chart. She asked for an explanation of the acquisition of Meetings Africa referred to on page 63 of the annual report. She wanted to know why SAT had purchased the company and who was operating it. She asked why the post of Chief Executive Officer was still vacant six months after the previous incumbent had resigned.
Ms M Njobe (COPE) complained that she was unable to prepare for the briefing because she did not receive the annual report in time. She felt that too little was done to promote
Ms X Makasi (ANC) had recently visited certain ports of entry to
Mr G Krumbock (DA) also complained about the lack of time available to study the annual report before the briefing. He remarked that there were no tourism offices at the ports of entry and thought that SAT was not making use of this opportunity to market the country. He acknowledged that SAT was one of the better-run institutions but felt that it was not enough to obtain an unqualified audit report. He asked if SAT was investing enough funds in the marketing of the country. He recently spoke to a tourism operator in the
The Chairperson confirmed that the annual reports were circulated on Friday, 9 October 2009.
Mr Mabuza, Chairperson, South African Tourism, mentioned that the annual report was published in August 2009.
The Chairperson requested further details of the human resources issues mentioned on pages 114 and 115 of the annual report. He requested a comparison between the targets set and the achievements from TECSA. TECSA had not included the achievements in the report. He asked for the reasons for the non-achievement of targets and how the resources allocated to TECSA were utilised.
Ms Moyle explained that, on average, visitors arriving overland visited one province whilst visitors arriving by air visited 1.8 provinces. The average for first-time air arrivals was 2 to 2.5 provinces. SAT targeted first time air arrivals as these visitors wanted to see more of the country and visited more provinces. SAT worked with tour operators and suggested that the operators extended the range of products and services to attract more visitors to the less-visited provinces. SAT was on target in terms of seasonality and the number of out-of-season visitors to
Responding to the Chairperson’s question concerning the equity figures on pages 114 and 115 of the annual report, Ms Moyle explained that SAT recruited South Africans who resided in the countries where the ten overseas offices were situated and required personnel in those offices who could speak the language of the country concerned. Few black South Africans applied for the positions and the equity figures reflected a greater proportion of white personnel.
Ms Mosupye, CEO: TECSA, explained that the 17 equity deals listed in the presentation were BEE deals based on ownership. The majority of the deals were based on the broad-based score card that had been gazetted and applied the guidelines of the good practice framework. There was a shift in the industry towards becoming more inclusive.
Ms Shinn asked who owned the companies that operated in the South African tourism industry and whether TECSA chose to work with companies simply because they had a good BEE status.
Ms Mosupye explained that TECSA had to ensure that the codes were aligned and had to develop tools to enable compliance by the private sector and had to create an environment where entities in both the private and public sectors could submit their compliance reports. TECSA used to function as a secretariat before moving to the tourism department of the DEAT. The Advisory Board played a role in the development of institutions and a legal process had to be followed to establish the tourism sectoral charter. The charter was gazetted in May 2009. As a facilitator of transformation, TECSA had to develop tools to assist the private sector to implement the elements of the score card. TECSA’s role was to monitor transformation and the first report would be submitted in 2010.
Responding to Ms Shinn’s question, Mr Mabuza said that SAT had a well-defined succession plan in place. The previous CEO resigned unexpectedly in March 2009, before the end of the term of his contract. An Acting CEO was appointed and the vacant post was advertised. 150 applications were received, of which 15 were short-listed. To date, six of the short-listed applicants had been interviewed. At the end of the interviewing process, a short-list of recommended candidates would be submitted to the Minister. The Cabinet approved the appointment of the new CEO. The programmes for 2010 were developed before the previous CEO resigned and were not affected by his resignation.
In response to the Chairperson’s question, Mr Mabuza advised that the remuneration of the CEO amounted to R143 million and was R1 million more than the amount paid in the previous year. The amount paid upon resignation included a bonus of R300 000 and R400 000 as the gross salary for two months. A further R300 000 was paid by the International Marketing Council (IMC) as an acting allowance. All payments made were in accordance with the terms and conditions of the CEO’s contract of employment.
Ms Moyle explained that Meetings Africa was a business tourism exhibition company owned by Thebe. SAT had considered extending the Indaba (the annual leisure travel exhibition) to include business tourism. However, SAT found that the markets for business tourism and leisure tourism were different and there was no additional space available at the Indaba. SAT decided to develop its own platform for business tourism and thought that
Ms Kunene, Chief Quality Assurance Officer: SAT, replied to the question on the statistics provided by the Grading Council of South Africa. She referred to the slide titled “Growth and Decline by Province” included in the presentation and pointed out that the number of establishments had grown by 2.3% in recent months.
Ms Shinn referred to page 44 of the annual report and noted that 500 establishments had not renewed their registration. She asked if the reason for this was the global financial crisis.
Ms Kunene replied that the figures fluctuated from month to month as some establishments went out of business and others cancelled their registration because they were upgrading their facilities. In general, the number of new establishments registered had increased.
Responding to Mr Krumbock’s questions, Ms Moyle said that the cost of acquisitions needed to be determined. SAT wanted to find the most cost-effective way of attracting visitors to
Ms Bam-Mugwanya asked who qualified for the Government grants mentioned on page 152 of the annual report.
Ms Moyle explained that the grants were provided by the Department of Trade and Industry as part of a business development initiative to host potential business partners and buyers attending the business tourism exhibitions arranged by Meetings Africa.
Mr Krumbock remarked that the Minister believed that SAT was underperforming and could generate at least 14% more revenue. Tourism currently generated 8% to the economy of the country and it was clear that more can be achieved. He felt that efforts to expand the tourism sector in the country could be accelerated.
The Chairperson asked for further information on cultural tourism. Studies suggested that there was a lack of authentic cultural tourism experiences available to visitors. There was also a lack of night-time activities as many tourists were reluctant to venture out at night because of the high crime rate. He said that
Ms Singh, Chief Marketing Officer: SAT, explained that visitors needed to have a reason for visiting a certain place. Provinces such as the
Ms Singh advised that SAT selected ten ports of entry every year, where a welcome campaign could be launched. SAT was responsible for erecting welcome signage at ports of entry. SAT worked with the border authorities and wanted to install information kiosks at border posts. SAT arranged for private companies to provide fridges and bottled water at border posts. Border officials had received training on welcoming visitors and on customer service. SAT had approached the provincial authorities with proposals to form partnerships but, to date, had not received any response. SAT was willing to work with the Committee on finding ways to improve. Domestic tourism was an important sector of the industry for more reasons than the global financial crisis. All countries needed a healthy domestic market. The “Sho’t Left” campaign was intended to develop the domestic market. SAT aimed the marketing strategy at young people and at people who currently did not travel, but might do so in future. SAT had introduced the Emerging Tourism Entrepreneur of the Year Award (ETEYA) and received 300 applications from small to medium-sized tourism operators. The sponsors of ETEYA were South African Breweries and the Tourism Enterprise Program (TAP). TAP presented a twelve-month programme to develop emerging operators and ETEYA was promoted in the rural areas to provide the small operations situated there with better access to the market
Ms Moyle explained that SAT had to submit applications for funding from Government. Tourism created many jobs, not only in the tourism industry but in the agriculture, financial, retail, construction and service sectors as well. The overall impact of tourism on the economy was significant. Visitors from neighbouring countries travelled to
The Chairperson remarked that the efforts to improve the spread of tourists in the country would require an alignment of the marketing campaigns with the development plans of the provincial and local authorities to ensure that the places visited by tourists had access roads, sanitation facilities and were adequately sign-posted.
Ms Moyle replied that SAT worked closely with the provinces. Ms Singh ran discussion forums with all the provincial marketing officials and the managers responsible for research. Much work was done at the local level through the South African Local Government Association (SALGA). SAT had developed good relationships with certain metros, for example
Mr Krumbock remarked that, during a recent tour of the ports of entry, he saw some welcome signs but none of the other facilities mentioned by Ms Singh at a recent visit of the ports of entry. He suggested that a fixed information kiosk stocked with brochures and pamphlets did not require a full-time or even a part-time person to man it. He said that Ladybrand was a booming town in the
Ms Makasi referred to page 19 of the annual report and asked why one person occupied more than one position at SAT.
Ms Moyle explained that the weakening exchange rate forced SAT to freeze certain posts. As a result, one person took on the responsibility for more than one job function. She was responsible for the duties of both the Chief Operating Officer and the Acting Chief Research Officer (she was previously the Chief Research Officer).
The Chairperson had read in an environment and tourism study that the
Mr L Khoarai (ANC) referred to page 121 of the annual report, where it was stated that the Annual Accommodation Guide had been renamed to The Star Guide, which was to be launched at the Indaba held in May 2009. He asked if the Grading Council visited hotels in
Ms J Maluleke (ANC) asked how SAT engaged with travel agencies and if the agencies made use of a list of recommended accommodation facilities. She mentioned that a travel agency had recommended the Highlands Hotel in Ficksburg to Members. She wanted to know what SAT was doing about improving the standard of accommodation in
Mr B Zulu (ANC) remarked that many tourist attractions were situated in rural areas and asked if any research had been done on the adequacy of the signage to the sites. He suggested that Members provide assistance as they knew the attractions in their constituencies and where the signage could be improved. He felt that more needed to be done to ensure that national tourism entities worked closer with their counterparts in the provinces. He said that a great deal of craftwork was done in rural areas and there was a general expectation that a lot of money would be made in 2010. Substantial stockpiles of craftwork had been accumulated in the rural areas but there was a lack of craft and curio shops at the major airports. He agreed with the comments made by other Members regarding the lack of cleanliness and the litter left lying around at tourist attractions.
Ms Njobe asked how the Grading Council decided on which areas would be visited. She wanted to know if the process was fair, in particular the grading of establishments in the rural areas. She asked why no foreign currency gains were reported for the current year (see page 147 of the annual report).
The Chairperson was informed by the municipal manager of a small town that SALGA did not adequately represent small towns and villages in rural areas. The manager had suggested that a tourism Indaba was arranged for the smaller towns as SALGA focused on the larger cities.
Ms Moyle did not wish to comment on SALGA and asked to be excused from responding to the Chairperson’s question.
Ms Njobe remarked that SAT had submitted a good financial report and had done much to generate revenue from tourism for the country. However, more was required to increase tourism to the country. She asked if SAT had the capacity for expansion and whether the assistance of the Committee was required to apply for additional funding.
Mr Van der Walt, Chief Financial Officer: SAT, explained than a foreign exchange loss of R8.7 million was incurred for the 2008/09 financial year. SAT had adopted a conservative approach to foreign exchange management. SAT had a unique relationship with the Reserve Bank that allowed them to obtain approval earlier in the financial year to transfer funds to the overseas bank accounts. The arrangement reduced the risks associated with foreign exchange transactions. SAT complied with international financial accounting and reporting requirements. There were two types of foreign exchange risks – one was the difference in the applicable exchange rate on the day the funds were transferred and the day the expense was actually incurred and the second risk was the differences in the valuations of the assets and liabilities of the ten overseas offices required for the year-end balance sheets.
Ms Moyle agreed that the issue of signage was very important but road signs were the responsibility of the Department of Transport. She would love to see local authorities doing more to improve the towns as many were in a sad state of repair. She suggested that the DEAT did more to encourage awareness of and appreciation for the environment. She said that SAT would like to have more funding and to expand operations but took cognisance of the responsibility to manage tax payers’ funds well. There were many attractive opportunities for future expansion.
Ms Kunene noted that there was some confusion around the publication of the Annual Accommodation Guide. The annual report was for the financial year ending March 2009 and the guide was launched by the time the annual report was released. The guide was published annually. Graded establishments were charged a small fee to appear in the guide. Any owner of an establishment could apply for a star rating. There were various ways for visitors to submit comments on establishments. Graded establishments were visited by assessors on an annual basis. The Grading Council had to determine if the Highlands Hotel did not meet the required standard of a three-star rating and if the hotel was officially graded.
Mr Krumbock asked if a backpacker hostel could apply for a star rating.
Ms Kunene confirmed that establishments catering for backpackers could qualify for a rating. The current grading system had 9 categories and establishments were rated from 1 (lowest score) to 5 (highest score) in each category. The Grading Council had reached an agreement with the industry on the grading system and was working on improving the quality of accommodation offered in
Ms Moyle advised that there used to be provincial forums for tourism and SAT used to pay regular visits to the provincial authorities to present talks on tourism. SAT was considering reinstating the visits to provinces. It was important that provincial authorities understood the importance of tourism and the need to provide adequate funding to the provincial tourism departments.
Ms Singh had organised the SAT presence in the Big Brother Africa programme. The Big Brother house was in
Ms Mosupye explained that BEE focal points had been established to aid the implementation of BEE at the local and provincial Government levels. Discussions were held with various municipalities and metros. A meeting was held on 12th October 2009 to discuss the progress made in the implementation of the legislation and the impact of the amendments. She was aware of the challenges at the local and provincial levels in respect of tourism. A Local Government conference was held in January 2009, where a toolkit was developed to aid responsible Departments to develop tourism in their areas. Another conference was planned for January 2010.
Ms C Zikalala (IFP) reported that she had attended the recent Macufe festival and found it very interesting. She asked if the DEAT was represented at the festival. She requested information on the status of the “Sho’t Left” campaign and how it operated.
Ms Shinn commended SAT on doing a magnificent job on a tight and perhaps inadequate budget. She observed that SAT had requested relatively modest increases in funding and suggested that applications for funding were more ambitious. She felt that the Committee needed to support SAT as an expansion of their operations would benefit the entire country, including the rural areas.
Ms Moyle confirmed that SAT worked with travel agencies. The travel agencies decided which establishments would be recommended or promoted by them and SAT could only provide information. In small towns like Ficksburg, there tended to be a dearth of hotel accommodation. A better-informed travel agent might have recommended a hotel in the nearby town of
Ms Singh explained that that “Sho’t Left” was a domestic tourism campaign launched four years ago. The campaign aimed to increase awareness of travel opportunities in
The Chairperson thanked South African Tourism for the great work done with limited resources. He said that the institution was well managed and positioned for ongoing improvement. He assured SAT of the Committee’s support. He said that resources had decreased globally but if available funds were allocated according to priority, more can be achieved with limited funds. Despite the challenges, he believed that SAT could make
The meeting was adjourned
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