Tourism Business Council of SA briefing on tourism growth, development and job creation

Meeting report

Tourism Business Council of SA (TBCSA)
The TBCSA briefed the Committee on tourism growth, development and job creation. Ms Robyn Christie, Chief Executive Officer of the Association of SA Travel Agents (ASATA) and a member of TBCSA, undertook the briefing.

The aim of ASATA was to move South Africans domestically, regionally and internationally. ASATA was seen as the regulator of a non regulated industry. It represented 89%-94% of travel agents. In 2005 there was a fundamental shift in the remuneration model of travel agents from commission based income to a service fee model. ASATA was also responsible for collecting the Value Added Tax (VAT) on all tickets sold. 70% of total ticket sales by travel agents were corporate and the remaining thirty percent was leisure. There was a 50/50 split on the corporate tickets sold between the public and private sector. According to the International Air Transport Association (IATA) sales figures for South Africa from January 2011 - October 2011 were international gross sales (R10.5bn); domestic gross sales (R2.7bn); number of tickets issued for international routes (1 776 580) and number of tickets issued for domestic routes (1 816 402).

The approach taken to address issues on tourism growth, development and job creation was in terms of the National Tourism Sector Strategy (NTSS). To start with there was a need to grow the tourism sector’s absolute contribution to the Gross Domestic Product. There were indications that the economy was showing some recovery. Globally 2012 began with strong growth in air travel, up by 5.7%. However, fuel prices surged ahead in February 2012, which was 14% higher than a year ago. It had a direct effect on ticket prices. There was a need to align the NTSS with all government departments. To grow the tourism sector’s contribution to the economy an increase of 5 million foreign tourist arrivals plus 3.4 million domestic tourists was being pursued. For example Angolans came to SA either for business or to shop. Hence shopping centres and hotels needed to be built in places like Polokwane. Why should they travel all the way to Gauteng? Too much emphasis was placed on the traditional tourists visiting SA like for example Germans. SA should focus more on new markets like the African continent. The intention was furthermore to provide approximately 177 000 more job opportunities by 2020 plus another 48 000 directly linked to government programmes totalling 225 000. The current economic conditions had negatively impacted on the creation of new job opportunities. A great threat was the growing trend to make ticket bookings using on-line markets.

Foreign airline carriers were perhaps cheaper than domestic airlines but they also brought with them cheaper passengers. Foreign airlines did not have the same restrictions as South African Airways and other local airlines had. The open skies policy had its benefits but it also had its down side. The online booking industry took way job skills.

There were still too many gaps on the labour issue in tourism. Students graduated from tourism studies but were unable to find work. The TBCSA wished they could speak to parents to advise them on what their kids should study. What students were taught was not necessarily what the industry needed. She stated that the weakest link in tourism was in skills.

There should be greater implementation of more regional tourism programmes. Greater co-operation was also needed amongst provincial tourism agencies. Provincial marketing slogans should align with SA marketing slogans. Another step in the right direction was to deliver a world class visitor experience. The TBCSA had an initiative called the Tourism Business Index (TBI) the purpose of which was to provide individual tourism businesses with regular, up to date information on the performance of tourism businesses, including the outlook for performance over the next three months.
A culture of tourism was drastically lacking in SA. An increase in SA brand awareness should be brought about. People should take holidays and go and tour SA. The TBCSA also administered the collection and marketing of the Tourism Marketing Levy SA (TOMSA). TOMSA was a private sector initiative aimed at raising additional funding for the marketing of destination SA, locally and internationally. Transformation within the tourism sector was also encouraged. 10% of ASATA’s members were black owned businesses and not many had travel agency experience. These members were mentored within the New Member Programme created by ASATA. The TBCSA created a category of membership for small businesses that would not have access to companies and institutions that may make an impact on the bottom line of the company. The initiative was called “supportive member category”.

It was also felt that the current regulatory environment in which the tourism found itself in was not conducive for small businesses. There was also a need for alignment of marketing activities between SA Tourism and provincial tourism agencies. The aim should be to promote SA and not just a province. On responsible tourism the South African National Minimum Standard for Responsible Tourism (NMSRT) highlighted the role of sustainable tourism practices in creating better places for people to visit, work, invest and live in. Greater collaboration within all government departments, tourism authorities and agencies was needed. One of the biggest challenges was a lack of co-operation by government departments. They did not make payments for services rendered when they should. For example there was one government department which owed R1m for the past 2 years. It was a common problem with government departments. Government departments had close to 100 travel agents from which to choose. If they owed money to one then they just moved on to the next one and so the cycle continued.

Discussion
The Chairperson highlighted issues which he felt the discussion should cover. Amongst the issues were fuel prices, the issue of vat rebates offered by Ireland to tourists, e-tolling, Angolan tourists, working on what a country had to offer, job creation, competition between local airlines and other airlines, domestic tourism, business tourism specifically pertaining to India, brand alignment between provinces and national government, co-operation, the development of a tourism culture, non-payment within 30 days by government departments after services were rendered, carbon tax on airlines and lastly the mentoring of young people.

Mr S Farrow (DA) was concerned about the provinces competing amongst each other in marketing themselves for tourism. It was clear to him that everyone was doing their own thing. Even district municipalities advertised their regions. It was an issue which needed to be addressed. The issue was by whom it would be dealt with.
He pointed out that Ms Christy seemed not too keen on the open skies policy. Given the current economic climate everyone was on a tight budget. Being a free marketer he believed that no one should be prevented from coming to SA. Whether the visitors spent small or huge sums of money it did not matter. The visitors on the lower end of the spectrum were more likely to support the smaller bed and breakfasts. There were many people who wished to visit SA; the only problem was SA’s visa requirements. For example Indians wished to visit SA but stringent visa requirements put them off.

Ms Christy responded that SA Tourism was the marketing arm of SA. SA’s Tourism catchphrase was “leave ordinary behind”. There were talks that the catchphrase was going to be changed. SA Tourism marketed SA and did a very good job. It was a dynamic organisation with good skills. The question to be asked was why provinces marketed themselves abroad. The answer was that they did not feel recognised by SA Tourism. SA Tourism should be asked why this was so. Provinces and municipalities could better utilise the funds spent on marketing themselves elsewhere where it was more needed.
On open skies, she stated that she was all for open skies as it was a good thing but it also had a downside. She added that she promoted low cost carriers. The problem that she had with foreign carriers was those who acted as low cost carriers. They could come in at low cost because they did not comply with requirements which SA carriers had to comply with for example labour laws, tax payments and high fuel costs. She had met with Egypt Airlines three years earlier and had spoken to it about the issue of open skies. Egypt had an open skies policy but not in Cairo and the bigger centres. SA could also have such a policy which would allow airlines to land at Hoedspruit. The Committee had to ensure that local carriers were not diluted by foreign carriers. Low cost carriers like Kulula and Comair did a lot to promote SA. The problem was that even low cost carriers in SA were not consistently low cost, only when it suited them. For example if one looked for cheap flights at present with the Cape Argus Cycle race coming up shortly it would be practically impossible as even the supposed low cost carriers charged premium prices. She was not too convinced that low cost carriers were good for SA. Low cost carriers worked well in Europe where countries were more or less an hour’s flight way from one another. Europe was a totally different environment.
The visa issue had been raised with the Minister. Memorandums of Understanding had been concluded between the Home Affairs’ departments of SA, India and Angola. She also pointed out that SA businessmen did a great deal of business in Nigeria. Nigeria adopted a difficult attitude to SA travellers regarding visas as SA did with their travellers. SA needed to become more diplomatic.

Ms M Njobe (COPE) stated that Small Medium Micro Enterprises (SMMEs) had complained that negative reporting by the media on townships had adversely affected them. She asked what could be done about the negative reporting about SA abroad especially in Africa. Africa was a potential market for SA. On the issue of the quality of skills produced at learning institutions, she pointed out that in Mexico there was close co-operation between the departments responsible for tourism and education. The issue was about the content matter of the courses offered. How could TBCSA assist in dealing with the issue? The Committee would also try to find a solution.  She pointed out that both provinces and municipalities had small budgets for tourism. Tourism was also often linked with other sectors like for example economic development. How could TBCSA be of assistance on this? A great deal of education still needed to be done.
She asked Ms Christy to concretise the concept of “supportive member category”.

Ms Christy spoke to the issue of negative reporting by the media. There should be responsible reporting. When xenophobic attacks were reported on, the report would speak about three foreigners killed. Specifics must be given to say for example that the foreigners killed were not tourists. By leaving out specifics, prospective tourists could be scared off.
The content of tourism education and training was an issue that needed to be addressed. The TBCSA was a brand that was not really recognised. It was not promoted. It was a collective voice of the private sector with government. The TBCSA represented tourism bodies. The TBCSA could not have an influence but its members could. Hence ASATA wished to determine what was being taught. Tourism bodies had to determine the skills and content that was needed.
If local government tourism budgets were so low then they should not be engaged in marketing. Was the return of investment a justification for the expenditure? There was a need to understand that tourism at provincial level touched on issues of water, electricity and transport.
She explained the concept of supportive member category. Within the TBCSA the needs of tourism business owners like Southern Sun, the Protea Group, Bidtravel, South African Airways and South African Breweries were represented. The TBCSA had different membership categories for big, medium and small businesses. Those smaller businesses who could not afford memberships were excluded. Hence the step was taken to put smaller businesses in touch with bigger businesses. The arrangement was working successfully. Smaller businesses were being assisted by big businesses to take their businesses to the next level.

Mr R Shah (DA) asked how Ms Christy would describe the level of synergy between members of TBCSA themselves and the level of co-operation between government departments and the Association of SA Travel Agents (ASATA). He also referred to the level of common vision between national, provincial and local government and asked could a level of co-operation in terms of mission, vision etc be seen.
What was the level of co-operation between SA neighbouring states like Swaziland? He asked how effective had TBCSA been. Which government department was not co-operating? What legislative impediments were there? He also asked what was expected of the Committee by TBCSA. What specific recommendations could the TBCSA make to the Committee to improve matters? He referred to the concern that Ms Christy had raised over online markets and asked what the Committee could do about it legislatively without impacting upon constitutional issues.

Ms Christy stated that the Consumer Protection Act benefitted the industry. However the bodies that had to deal with issues and complaints by consumers needed to be beefed up as there were backlogs.
In relation to the TBCSA’s synergy with government departments there was a good relationship with the National Department of Tourism (NDT). The same could not be said for the relationship with the Departments of Education and Labour. For that matter she did not believe that there was synergy between the NDT and the Department of Education. The TBCSA also worked with the Department of Trade and Industry. There was a common vision between national, provincial and local government. On co-operation with other countries like Swaziland on tourism there most probably was not but there was co-operation more so in business. She was not sure whether there were any legislative impediments but would go back and ask TBCSA’s members if they felt there were. On making recommendations to the Committee she wished to think about it and get back to the Committee.

Ms L Mpontseng (ANC) referred to the issue of provinces competing with one another in promoting themselves and asked whether dual logos could not be used. Domestic tourism should be promoted.
Sector Education and Training Authorities (SETAs) and the Department of Education had to promote local tourism. Preschoolers and scholars should be geared towards tourism. 

Ms Christy addressed the issue of logos and said that there should be a common brand for SA. Mexico and Thailand had had its fair share of challenges in the past yet their tourism industries were booming.

Ms X Makasi (ANC) pointed out that from the presentation it would seem that things looked bleak for those businesses that had just started out in the tourism industry. Only those who were long established would most probably survive. How could things be changed to assist those who had just started out?

Ms C Zikalala (IFP) asked what could be done to encourage South Africans to go on holiday. What could be done to boost domestic tourism? She stated that in countries like Mexico and Brazil tourism seemed to be everywhere. Unfortunately this was not the case in SA. In SA tourism still needed to be developed. In Mexico funding was provided to small businesses and follow ups were done to check on those businesses. They checked on how and where those businesses operated. SA needed to adopt this approach. Perhaps there could also be training offered to small businesses which entered the tourism industry.
She pointed out that no matter at what airport she was she always saw large groups of Chinese visitors. How did they manage to do this?

Ms Christy stated that in order to promote tourism one hard to start at the core ie the media, schools etc. There needed to be alignment with other brands. It was about brand management. There was a need to speak in a language which everyone understood.

The Chairperson stated that tourism needed to be developed slowly but smartly. It would only be possible if everyone worked together. Co-operation between national, provincial and local government was needed. All stakeholders must be brought onboard.

Ms Christy stated that if she had missed the answering of any questions written responses would be forwarded to the Committee.

Draft Committee Reports on the Diagnostic Overview of the National Planning Commission and the International Study Tour to Mexico
The Chairperson stated that the Reports would be dealt with by the management committee and would be tabled the following week.

Committee Minutes
Minutes dated the 21 February 2012 was adopted as amended. Minutes dated 14 February 2012 was not adopted as certain issues required clarification.

The meeting was adjourned.