South African Tourism briefed the Committee on its 2013/2014 Annual Performance Plan and Five Year Strategic Plan. The entity’s 4th Portfolio Review Outcome was implemented from the 1 April 2011 up until 30 March 2014. The Review identified different types of tourism markets based on the numbers of tourists visiting South Africa. All the current plans of South African Tourism were based on the 4th Portfolio Review Outcome. South African Tourism already had its 5th Portfolio Review Outcome which was to be implemented from the 1 April 2014 up until the 30 March 2017.
An Africa Growth Strategy was in place in order to generate growth from the African continent in order to meet National Tourism Sector Strategy targets. Furthermore South African Tourism would look at growing arrivals in key regional markets in Africa using a hub strategy.
South African Tourism furthermore had a Domestic Tourism Strategy the objective of which was to increase and grow domestic tourism’s contribution to the tourism economy.
Figures were also provided on the number of graded establishments as at the end of March 2013. In total there were 6194 graded properties. The annual target that had been set was 6172. A total of 87 bids had been secured for South Africa for the period 2013 – 2017. The Committee was provided with a breakdown of South African Tourism’s budget. Of interest was the increase in the budget for the Africa Growth Strategy from R50m in 2012/13 to R84m in 2013/14. The staff complement of SAT was also expected to increase from 189 to 194.
The Committee was pleased that South African Tourism had a strategy on domestic tourism but nevertheless felt that more could be done to promote domestic tourism. There was too much reliance on international tourists. The pricing structure in the tourism sector was another concern. Accommodation prices were far too high and locals could not afford to pay the prices charged at heritage sites in South Africa. Members accepted the fact that South African Tourism marketed South Africa abroad but was curious about its relationship with the Department of International Relations and Co-operation regarding co-operating so as to prevent duplication of activities. Transformation of the tourism sector was important to the Committee and members wished to have assurances that work was being done to ensure that it happened. Members shared concerns about the negative impact that crime in South Africa was having on tourism, especially the manner in which it was reported by the international media.
South African Tourism (SAT)
South African Tourism briefed the Committee on its 2013/2014 Annual Performance Plan and Five Year Strategic Plan. The delegation from SAT comprised of Mr Thulani Nzima Chief Executive Officer, Mr Tim Scholtz Chief Operating Officer, Ms Jane Hutton, Chief Marketing Officer, Ms Thembi Kunene, Chief Quality Assurance Officer of the Tourism Grading Council of South Africa and Ms Belu Mdlalo, CEO Office Manager. The National Department of Tourism (NDT) was represented by Mr Dirk van Schalkwyk, Chief Operations Officer, Ms Nomzamo Bhengu, Chief Director: Business Performance and Management, Ms Petra van Niekerk Parliamentary Liaison Officer and Mr Johann Durand, Director: Office of the Ministry.
The briefing was undertaken by Mr Nzima. He touched on the mission and vision of SAT and the values that that underlie SAT. The mandate of SAT was also elaborated upon. He set out and explained the SAT’s 4th Portfolio Review Outcome which was implemented from the 1 April 2011 up until 30 March 2014. The Review identified different types of tourism markets based on the numbers of tourists visiting South Africa. The categories identified were core, investment, tactical and watch list. Countries from various continents were then categorised in the types of tourism markets which SAT felt they ought to fit into. For example some of the core market countries for South Africa were Botswana, USA, India and Germany. All the current plans of the SAT were based on the 4th Portfolio Review Outcome.
SAT already had its 5th Portfolio Review Outcome which was to be implemented from the 1 April 2014 up until the 30 March 2017. In the 5th Portfolio Review, Botswana no longer formed part of South Africa’s core market. China on the other hand moved up into the core market category. Most of the watchlist market countries formed part of SAT’s hub strategy. The objective of the hub approach was to link and combine markets of strategic importance as hubs to realise a greater return on investment. It was to commence from the 1 April 2014 up until 2017.
SAT also had an Africa Growth Strategy in order to generate growth from the continent to meet National Tourism Sector Strategy targets. In addition SAT would look at growing arrivals in key regional markets in Africa using a hub strategy. SAT furthermore had a Domestic Tourism Strategy the objective of which was to increase and grow domestic tourism’s contribution to the tourism economy. SAT used 2009 figures as a baseline and set targets for 2015 and 2020. For example the number of adult travellers in 2009 was 14.6m; the forecasted targets for 2015 and 2020 respectively were 16m and 18m. Some key initiatives aimed at boosting domestic tourism was a complete brand audit of the current Domestic Tourism Campaign, the application of digital best practice into the new campaign execution and to engage low cost airlines to improve regional distribution.
The Committee was provided with a breakdown of SAT’s Strategic Objective Annual Targets and Performance. Strategic objectives set were elaborated upon. One of the strategic objectives was to increase foreign visitor arrivals to South Africa. The idea was to implement an international marketing strategy to increase arrivals from more than 9m in 2009 to 15m in 2020. More foreign visitors would yield more tourism spend resulting in increased Gross Domestic Product contribution.
Figures were also provided on the number of graded establishments as at the end of March 2013. In total there were 6194 graded properties. The annual target that had been set was 6172. A total of 87 bids had been secured for South Africa for the period 2013 – 2017.
The Committee was provided with a breakdown of SAT’s budget. Figures were given on revenue and expenditure estimates. Of interest was the increase in the budget for the Africa Growth Strategy from R50m in 2012/13 to R84m in 2013/14. The staff complement of SAT was also expected to increase from 189 to 194.
Mr R Shah (DA) commented that a great deal of marketing was done in target markets like the USA and the United Kingdom to promote South Africa. This was not a long term sustainable venture. South Africa needed to move away from its reliance on the international market for tourism. A staggered approach was needed to promote domestic tourism. The focus should be on domestic tourism and regional tourism. India was a perfect example where domestic tourism was flourishing. There was not so much reliance on international tourism.
Mr Shah referred to slide 16 of the briefing document and pointed out that on some of the figures there were no baseline set. He asked what type of research was being done on domestic tourism patterns. If there was research, who was doing it and what research models were being used? In the briefing mention was made of five segments, what was intended to be achieved with the five segments? He got the impression that domestic tourism was not taken seriously, South Africa relied too heavily on international arrivals.
Mr van Schalkwyk replied that SAT was responsible for marketing South Africa domestically and internationally. Tourism was a concurrent function. Provinces could drive certain processes. A Domestic Tourism Policy was in place. There were deliverables for the NDT, provinces and SAT. The interaction between the NDT and provinces took place at Ministerial Provincial Technical Committee (MIPTEC) level. During public hearings on the Tourism Bill it came to light that there was limited funding for tourism at provincial level.
Mr Nzima conceded that it was correct that markets did shift over time. The trend at present for South Africa was that the European market was returning to what it was in the past. A balance was needed between what South Africa already had in Europe and between what growing markets was offering. Emerging markets had made huge contributions but core markets were coming to the party. The European market was 1.3m at present. From 2009-2012 Europe had grown by 10% overall. The UK was the only country in 2011/12 that had not shown growth but had remained flat. Figures were now showing increases compared to 2009.
Mr Nzima further noted that domestic tourism had made a 76% contribution to tourism in South Africa. The idea was to strengthen domestic tourism. He felt that people had money but that they were just spending it discreetly. South Africa as a long haul destination was getting its fair share. The trend in Europe at present was to travel in the short-term. Segments in domestic tourism were being increased. The disposable incomes of groups had to be taken into consideration. Domestic Tourism was taken seriously.
Mr S Farrow (DA) said that the Committee often spoke to industry players such as hotels and bed and breakfasts. The problem seemed to be that there was a lack of ‘bums in beds’. The reason why accommodation places were not booked up was because of affordability. The cost of accommodation was far too high. There were many South Africans who had not set eyes on major heritage sites like Table Mountain. The issue for locals was affordability.
Mr Farrow referred to the various markets in which SAT categorised countries. For example the USA and the UK were considered as South Africa’s core markets. What was used by SAT to come up with these statistics? He pointed out that there were many foreigners in South Africa not as tourists but to find employment and for various other reasons. How reliable were the figures? Did SAT have figures to justify the expense of R12m to open up offices in African countries? Would there be sufficient tourists visiting South Africa from those countries? He also asked whether SAT worked closely with the Department of International Relations and Cooperation (DIRCO) and its embassies to prevent a duplication of work taking place. Why did SAT not share offices with South African Airways (SAA)? SAA had offices in most countries. He asked whether the National Department of Tourism and SAT was aware that SANParks was not paying the TOMSA levy any longer. It surely meant a loss of revenue for SAT.
He noted that many establishments did not get graded for the simple fact that it was too expensive. What was being done to address the issue?
Mr van Schalkwyk on the reliability of statistics said that the Minister of Tourism had interactions with industry, the NDT and SAT.A task team was established and together with StatsSA the reliability of statistics was checked. He noted that a few weeks earlier a meeting had been held where the issue was put to bed. He pointed out that the Director General of the NDT had driven the process over the issue. When the NDT briefed the Committee the following week the issue could be elaborated upon.
He agreed that affordability did impact upon the numbers of bums in beds. The issue of the Tourism Marketing Levy South Africa (TOMSA) Levy and SANParks would be addressed by the NDT.
He pointed out that on 1 April 2012, the NDT had launched its international relations section. There was no duplication between the NDT and SAT. The NDT also had good relations with DIRCO. It was true that SAT only had 12 international offices whereas DIRCO had much more. He noted that there was alignment so as not to duplicate what DIRCO was doing.
Mr Nzima noted that the pricing issue was impacted upon by the value chain. Everybody in the tourism industry had to play their part. Nobody should be making a quick buck at the expense of others. He noted that there were different formulas for returns on investment. There were formulas to drive volumes and formulas to drive spend. On SAT’s relationship with DIRCO, if there was a gap which SAT could not fill then DIRCO would take responsibility. DIRCO officials visited SAT and attended workshops that they offered. SAT had a dedicated person to keep an eye on watch-list markets. There would be cities abroad in which SAT would be forced to share offices with South African embassies. SAT was currently sharing offices abroad with Brand SA. Office space could also be shared with SAA and the Department of Trade and Industry (the dti).
Ms Kunene responded that it was correct that establishments found it costly to get graded. The idea was to incentivise establishments to get graded. There were many advantages to being graded. For one, a graded establishment would appear on the Tourism Grading Council of South Africa website which in turn would be reflected on other reputable websites as well. Hence there was positive exposure for the establishment.
Mr Nzima emphasised that the SAT and NDT only used graded establishments from a procurement perspective. The rest of government should also follow suit. There was a need to increase the revenue base from the TOMSA Levy.
Ms M Njobe (COPE) said that from the briefing it would seem that transformation was part of SAT’s mandate. The mandate encompassing transformation was very broad. The Committee had discussed the issue of transformation very passionately with stakeholders during public hearings on the Tourism Bill. Stakeholders had felt that transformation should have been captured in legislation. The Committee however came to the conclusion that transformation would be too difficult to legislate. Everybody including SAT should ensure that transformation in the sector took place.
Ms Njobe referred to the issue of airlinks and asked what the current situation in Africa was. SAA and SA Xpress had added more flights to countries in Africa. The briefing alluded to the fact that radio personalities were being used to promote tourism in South Africa. She asked whether the Motsepe family could be approached by SAT to assist in this regard. In terms of the National Development Plan, 225 000 jobs were to be created by 2020 from the tourism sector. It was an average of 22 000 jobs per year. What was the progress? The negative impact of crime in South Africa on tourism was something that could not be fixed easily. There needed to be greater intergovernmental relations on the issue and a concerted effort was needed. The NDT together with municipalities should try to address the issue. What role was the NDT playing in encouraging other departments to attract business tourism to South Africa? Were South Africans also contributing to business tourism?
Mr van Schalkwyk said that he would flag the transformation issue until the following week when the NDT was to brief the Committee. He conceded that there were costs attached to grading. The Tourism Bill however made provision for an incentive scheme. The incentive scheme affected National Treasury and all government departments. On the issue of the constitution of the SAT Board, he noted that the matter of geographic spread of the Board had been debated. Marketing issues were dealt with at MIPTECS and communicated to Ministerial Members of Executive Committees (MinMECs).Even the National Tourism Sector Strategy (NTSS) had targets for national government and provinces.
Ms Bhengu addressed the issue of jobs and stated that the Statistician General had released a provisional satellite account for 2011. She noted that in 2010, 567 000 direct jobs had been created. The figure at present was 598 000 jobs. The first task of the NDT had been to finalise the NTSS. The NTSS was ahead of the NDP. The NDP had to create 11m jobs by 2030. The 225 000 jobs by 2020 was the NDT’s input. The NTSS would be reviewed as it reached its end. She assured the Committee that no policy digression had been identified. The NDT had already aligned its NTSS to the NDP.
Mr Nzima addressed the question on regional hubs. South Africa had viable efficient airlines that operated. Engagement on the issue of airlines was taking place. One issue that was being discussed was the viability of low cost airlines. Regional African skies were regimented. There was no open skies policy as yet.
Concerning crime, Mr Nzima informed the Committee that the Director-General of the NDT participated in a security cluster. The issue was about responsible reporting by the media. Journalists from abroad were often invited to festivals and indabas to see the positives which South Africa had to offer.
It depended on the context of the reporting that was done. For example the recent bombings at the Boston Marathon the emphasis on the reporting was not about how unsafe the USA was but rather what steps the USA was talking to catch the perpetrators and to protect its own. South Africa was not the only country that had crime and other issues. The establishment of the National Conventions Bureau was pushed by NDT. Every event had a tourism element attached to it.
Whether there was a government or private sector conference both contributed towards South Africa’s Gross Domestic Product. Provinces also had a role to play in domestic tourism.
Mr van Schalkwyk noted that the Airlift Strategy of South Africa which had been developed by the National Department of Transport had expired a year ago. A new strategy was being worked on but the progress was slow. The Department of Transport was responsible for the strategy. He asked that the Committee intervene and request the Department of Transport to present the strategy to the Committee so as to speed up the process.
The Chairperson asked how SAT was addressing the issue that there were allegations of certain products and destinations not being advertised by SAT as others were. The issue was also about the composition of the SAT Board and that each of the provinces should be represented. He asked whether it was possible to categorise crimes say for example as non-public crimes so that it did not affect tourism so drastically.
Mr Nzima responded first to the question why certain destinations were promoted over and above others. He cited that Table Mountain was promoted over Moses Mabida Stadium, because it was a recognisable icon. It was far too expensive to promote Moses Mabida Stadium. The problem was that South Africa was competing on a global platform. Table Mountain was easily recognisable as being in South Africa. The SAT had to utilise what it had at its disposal.
Mr Farrow asked what the function of tourism boards at city level were. How did they partner with SAT?
Ms C Zikalala (IFP) noted that she often stayed at bed and breakfasts establishments. It seemed that these establishments did not understand the benefits of being graded. She asked what would be normally expected from a three and four star establishment. She was also concerned about the incidences of crime that was so vigorously reported on by the international media.
Mr Nzima noted that the role of cities had been clarified. Both cities and provinces had the right to establish tourism agencies. Each city and each province felt it was its own responsibility to market itself.
On crime he felt that there were gaps in communication. Context was always the issue. South Africa needed a country communication strategy. It would release media reports on a weekly or monthly basis.
Ms Kunene explained that a three star establishment swould have basic things like a usual television set whereas a four star establishment was expected to have a flat panel television. It was acceptable for a three star establishment to have shower curtains but a four star could not. A four star establishment had to have a bar fridge but for a three star there was no need.
The meeting was adjourned.
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