Tourism Growth, Development and Job Creation: input by Southern Africa Tourism Services Association (SATSA)


28 February 2012
Chairperson: Mr D Gumede (ANC)
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Meeting Summary

The Southern Africa Tourism Services Association (SATSA) made a presentation on tourism growth, development and job creation to the Committee. SATSA highlighted some of the misconceptions that small businesses tended to have about the tourism industry such as tourism was an easy industry to enter. SATSA provided advice on how small businesses could be supported both financially and non-financially. Realities were that the cost of travelling in SA was high. It was evident in the decline in figures from 2007 to 2009 for domestic trips in provinces. However, in 2009 tourism’s contribution to SA’s economy was 3% and when compared to Australia and New Zealand it actually performed well. SATSA encouraged government to lead the way in supporting Small, Medium and Micro Enterprises (SMMEs). Government should encourage its officials to use bed and breakfasts rather than pricey five star hotels. Tourism in SA was still dominated by the traditional markets like the USA, UK and Germany. New markets like China and India however needed to be looked at as well. Stringent visa requirements by SA were however considered a hassle by Indians and Chinese. Another issue which SATSA felt was affecting tourism in SA negatively was the high landings costs that the Airports Company South Africa was charging airlines.

Perceived challenges to tourism were for example the Liquor Bill which did not allow liquor to be served after 11pm. In addition the application process for SANPark permits to enter their parks was also considered too bureaucratic. Permits for tour operators transporting passengers took up to six months to obtain. The delay was detrimental to a small business. The dismal state of affairs regarding Robben Island was also concerning as it had always been a major tourist attraction. SATSA said government did not recognise the importance of Edu-tourism. It was a missed opportunity for SA as countries like Russia, Spain and China fully sponsored its citizens to learn English abroad.

Members pointed out that the statistics provided by SATSA was a bit outdated. The Committee was well aware that much more needed to be done to promote domestic tourism. There was agreement that tourism cut across various government departments and hence greater co-operation was needed. Some of the Departments mentioned were Transport, Education and Home Affairs. In as much as SATSA stated that SMMEs had various options available to access funding, members felt that it failed to mention was that SMMEs had a hard time actually getting the funds. The Chairperson noted that a meeting with all stakeholders in tourism would be arranged to address issues. The Committee would draft a report, make recommendations and forward the report to the National Department of Tourism and other government departments.

Meeting report

Southern Africa Tourism Services Association
The Southern Africa Tourism Services Association (SATSA) briefing was given by Mr Martin Jansen Van Vuuren National SATSA EXCO member and Mr Howard Johnston SATSA Western Cape Chairman.

Mr Johnston spoke about enterprise development at grassroots level. He was glad that tourism now had its own portfolio. In the past it had a shared portfolio with the Department of Environmental Affairs. Generally people perceived tourism as one of the easiest businesses to enter. Disillusionment soon became a reality when the realisation came that the industry was difficult.

What did SATSA do to assist small businesses? SATSA provided advice on how small businesses could be supported financially and non-financially. Structures and resources had been put in place. Options available were the RED Door, Tourism Enterprise Partnership (TEP) and Department of Trade and Industry (DTI) Incentives. Tourism toolkits were offered through TEP. RED Door gave advice on how to start a business, the training that was needed and when DTI should be approached. DTI Incentives were more for companies who wished to expand their businesses and not for entry level businesses. Access to finance was through a number of organisations. For example there was the Khula Fund, TEP, Business Partners, DTI and the traditional banking institutions. There was also a mentorship programme which was offered by local provincial departments of tourism. Its duration was 12 months. The programme entailed coupling up small businesses with established businesses. The initiative had been started by SATSA and incorporated the Department of Tourism in the Western Cape. The mentor businesses were paid a small monthly stipend of R1000. SATSA provided the mentors to the small businesses. The only problem with the programme was that mentors had to tender to become mentors. Many businesses did not feel like going through the tendering process. Another issue that SATSA found was lacking was that people did not know how marketing channels worked. More guesthouses were opened without opening up more marketing channels. There was a need to create more marketing channels. The problem was that all operators fished in the same pond. Where assistance was given to operators, the question should be asked from where the operator intended to get business. SATSA had not long ago signed its second Memorandum of Understanding with the National Department of Tourism. The skills levy was collected from SATSA’s members and paid over to the appropriate Sector Education and Training Authority (SETA).

Mr Van Vuuren stated that tourism needed to be looked at wholistically. He identified certain issues that needed addressing. The reality was that the cost of travelling was increasing. Travelling was a discretionary spend and people would cancel trips if money was short. Hotels and bed and breakfasts were battling, as the time people were staying at establishments were shorter. The increase in spending on infrastructure especially in rural areas as stated in the State of the Nation Address and the Budget of 2012 was welcomed. People would travel more if the quality of roads and rail was better. He noted that there was a fair amount of duplication of marketing activities of domestic tourism between SA Tourism and provinces. Funds were being wasted as efforts were duplicated. The funds could be put to better use elsewhere. A national survey was being done to determine how domestic tourism could be improved. There was a decline in the number of domestic trips from 35.9m in 2007 to 29.7m in 2010. On annual trips to each province, the main destination was Kwazulu-Natal followed by Gauteng and the Eastern Cape. Day trips should not be forgotten as a source of tourism revenue. In some provinces spend by day trippers could be higher than spend by overnight visitors. The Free State and Northern Cape had high figures for day spend whereas Kwazulu-Natal was high on overnight spend.

Another question to be asked was what the contribution share of tourism was on the SA economy. He noted that in 2009 tourism contributed 3% to the economy. On employment for the same year, tourism provided 4% of the jobs. However a distinction needed to be made between direct and indirect jobs. Of the 2.3m employed in the tourism industry in 2009 roughly 550 000 had been directly employed. In terms of tourism’s contribution to the SA economy, SA did fairly well when compared to countries like Australia and New Zealand. The presentation contained further statistics.

Emphasis was placed on matters that needed to be addressed. Support for SMMEs was needed. Government should set the example by buying local and buying from SMMEs. Government officials should stay at bed and breakfasts rather than five star hotels. SATSA encouraged clustering by businesses in terms of what was offered in their common area. What activities and attractions were nearby? Businesses in a common area should make the entire area attractive to the tourist. The concept of Joint Association Members Meetings (JAMMS) had also been introduced. It was where stakeholders like SATSA,
Federated Hospitality Association of Southern Africa (FEDHASA), Southern African Association for the Conference Industry (SAACI) and Cape Town Tourism met to discuss topics that were relevant to all. It was an interactive information-sharing session which was attended by about 200 people.

SA’s traditional tourist markets were USA, UK and Germany and these countries still dominated. New markets were China and India but visitors from these countries complained about strict visa requirements. The SATSA together with SA Tourism and the Department were involved in the training of SA’s officials to encourage persons they encounter to visit SA. Members were given a breakdown of figures of overseas tourists that visited SA in 2010. For example there were 450 000 tourists that had visited from the UK and 71 000 from India. OR Tambo International Airport was still the main entry point into SA. Gauteng, Kwazulu-Natal and the Western Cape still got most of the tourists. Mpumalanga used to be a tourist hotspot. Due to ACSA charging excessive landing costs, in the region of R80 000, airlines did not land in Mpumalanga. Airports at neighbouring countries to SA were starting to develop. Airlines no longer flew via SA to neighbouring countries but flew directly to those countries. High landing costs at airports in SA was becoming a serious problem. SA was no longer considered to be the gateway to Africa.

Another issue was oversupply of hotels. In Durban, Cape Town and Johannesburg there was an oversupply of hotels. The economic downturn in the economy happened not too long after many new hotels had opened their doors.

Mr Johnston stated that the 2010 FIFA World Cup had been a success, but what had been its legacy? SA should have built on the success of the World Cup which it did not. SATSA had at the time of the World Cup met with airlines and hotels and had asked them not to charge exorbitant prices. SATSA’s plea was ignored and prices skyrocketed, hence tourists at that time perceived SA to be an expensive destination.
The improvements at airports like OR Tambo, Cape Town International and King Shaka were all great but the downside was that the cost of travelling to SA was high.

My Citi buses and the Gautrain were great examples of improvements in public transport but much more needed to be done. Safe, reliable, efficient public transport was needed to boost tourism. Some other successes were that Cape Town had in 2011 won the right to host the World Design Capital in 2014. The conference covered all facets of design. On responsible tourism, Western Cape SATSA had signed a tourism charter in 2010. Table Mountain was also named one of the seven wonders of the world.

Some challenges that had arisen was the Liquor Bill which did not allow the trade in liquor beyond 11pm. It had far reaching consequences on tourism. SANParks had a great deal of red tape in terms of requirements to enter its parks. It would surely affect tourist numbers to their parks. It took SATSA seven years to get the Department of Transport to understand that there was a difference between a permit for a mini bus taxi and a permit for a tourist tour operator. It took six months for tour operators to obtain permits which detrimentally affected their business. Crime needed to be looked at. However, a Tourism Safety Initiative had taken off which had a call centre which allowed for information sharing to take place. The information collected would be fed into a system which would identify hot spots in many provinces. Another major setback for tourism in SA was the problems at Robben Island. Many brochures did not even list Robben Island as a tourist attraction any longer. Cape Point which was under SANParks was heading in the direction that Robben Island was in. Other challenges were changing exchange rates and high bank charges.

He felt that government did not recognise the importance of Edu-tourism. His business taught English to people who come from other parts of the world. The package included accommodation as well as tours. The Department of Education did not recognise language centres. Countries like Russia, China and Spain sent fully sponsored persons to study English abroad. It was an opportunity which SA was missing out on.

Mr R Shah (DA) stated that the statistics given by SATSA were outdated and did not give the full story. He asked what contributed towards the trends as was reflected in the statistics. For that matter everyone that arrived in SA was not a tourist. A great deal of refugees fell into the category of arrivals but what were they contributing towards the economy of SA.

He felt that domestic tourism was of key importance. If locals did not wish to tour their own country then why should foreigners do so? Government needed to step in and do more about local and regional tourism. How could countries like Mauritius and Botswana be doing better at tourism than SA? Perhaps the issue should be discussed in the House by Members. The potential for tourism was great. There were different types of tourism such as medical and language tourism. He felt the issue to be about branding. India vigorously marketed itself at its embassies overseas. SA could be doing the same.

Mr Van Vuuren conceded that the statistics were a bit dated.

Mr S Farrow (DA) felt that the cruise liner industry was an opportunity that SA was missing out on. The cruise liner Queen Mary came to Cape Town but was not allowed to dock at the V&A Waterfront, but far away in the docks. It was unacceptable as there was 2000 passengers on board that could have spent huge amounts of money at the V&A Waterfront and elsewhere in Cape Town. Tourism impacted across a wide range of departments such as the Departments of Education, Home Affairs and Transport.

He noted that when a tourist landed in SA and he hired an operator to take him to the various provinces, the operator had to obtain permits. The process was too bureaucratic. The Department of Transport had to look into this issue. By law, ACSA would derive its income from tariffs but he felt an amendment to the legislation was needed. Landing fees charged by ACSA were ridiculously high. The state of affairs at SANParks and at Robben Island also needed to be addressed.

The Chairperson stated that the challenge was the paradigm shift that was needed in tourism. He felt that members should do more advocacy within their political parties.

Mr L Khorai (ANC) referred to the presentation stating that tourism created more jobs for skilled and semi skilled persons. What about unskilled persons? Were the jobs that were created permanent or not?
He pointed out that government departments had already undertaken to use bed and breakfasts more often instead of expensive five star hotels. He referred to the issue of the Liquor Bill being considered as adversely impacting upon tourism. However, he understood the rationale for the legislation was to lead to a decrease in crime.

Mr Van Vuuren said that pieces of legislation were often made for specific industries but the consequence was that tourism got caught in the crossfire. Tourism needed to be taken into consideration when pieces of legislation were drafted.

He explained that most of the jobs in tourism were permanent but there were also seasonal jobs. A great deal of temporary staff tended to be unskilled.

Whether the Liquor Bill actually brought down crime could not be answered without having statistics available. With the current Liquor Act for example honeymooners would not be able to have early champagne breakfasts or guests returning late from a long day on a game drive would not be able to have a late night cap. These were perhaps the unintended consequences of pieces of legislation on tourism.

Ms M Njobe (COPE) stated that SATSA made it sound so easy for SMMEs to obtain funding. It could not be further from the truth. SMMEs found it hard to access funding.

She referred to SATSA stating that new businesses and operators were entering the tourism sector irrespective of whether the demand was there. Everyone was per se fishing from the same pond. In Mexico there was participation by stakeholders before a new product was to be launched. The stakeholders would make inputs as to whether the product was needed in the industry.

Mention was made in the presentation about indirect and direct jobs created in tourism. The main issue was tangible jobs being created for South Africans. There should be industries where South African products were being manufactured.

The Committee had already identified the visa issue as one that needed to be discussed with the Department of Home Affairs.

ACSA charging high landing costs was pricing SA out of the market. SA was already losing its status as the gateway to Africa. Egypt and Nigeria were vying for the title.

On crime she felt that local government should do more. The protection of tourists should be done at local level. She mentioned the recent spate of attacks in East London and said it was the responsibility of the Buffalo City Municipality to take action.

Mr Van Vuuren agreed that there was a need for more local infrastructure. Local producers should be used.

Mr F Bhengu (ANC) stated that there needed to be a broader meeting. The issue was not only about tourism but about nation building. The Committee needed to subpoena relevant departments. Why were there issues at Robben Island? Why was the Castle not even mentioned as a tourist attraction? He pointed out that vacation bungalows at coastal resorts were still reserved for certain people. There were pockets of individuals which wanted segregation.

The Chairperson said that a meeting with the different role players could be arranged. The issue had been discussed with the Chairperson of Chairpersons and the chances of it happening looked good. A huge task lay ahead to promote South Africa. Mexico even targeted American celebrities. Photos with celebrities were taken and used to promote the country. A common solution needed to be found. Everyone needed to work together. Parliament needed to question departments. Leaders within political parties needed to drive the paradigm shift in tourism. All stakeholders needed to speak a common language.

Mr Van Vuuren agreed with the comments made by members.

The Chairperson said that dialogue in tourism was needed but the process needed to be sped up. The Committee would develop a report, make recommendations and thereafter send it to NDT and other departments.

Mr Shah suggested the Committee have a brainstorming session in order to come up with a strategic plan to deal with issues. Perhaps chairpersons of other parliamentary committees and departments could also be invited.

The Chairperson concluded with the words, “Let’s build a stronger and better SA”.

The meeting was adjourned.


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