Tourism Summit: Commission Two: Growing Domestic Tourism

Meeting report

The second day of the summit was divided into three Commissions. The titles for each were:
Commission 1:   Unlocking Airlift Barriers for Tourism
Commission 2:  Growing Domestic Tourism [Chair: Mr L Khorai (ANC)]
Commission 3:  Transformation in Tourism.

Ms V Bam-Mugwanya (ANC) gave a recap of the first. There had been discussion on funding for new and up and coming business ventures, grants offered by the Department as well as the pledge of millions by the National Empowerment Fund (NEF) for new business ventures. She touched on the importance of institutional capacity building strategies for municipal tourism officials because they were handicapped by ignorance as they did not realise the potential of tourism and were not prioritising it. Partnerships with the South African Local Government Association (SALGA) should be established and training of municipality tourism staff should be prioritised. The idea of partnerships could not be overemphasised and municipalities should create conducive environments that would allow tourism to flourish - prioritising was again important, because then they would start looking after their roads, museums and libraries which were some of the demands of tourism. The National Department of Tourism (NDT) should assist municipalities and politicians at local level to understand the value of tourism in the local economic climate. The importance of strategies to curb pollution and the carbon footprint were noted and Parliament had to look into differentiated but equal development in restitution strategies to curb the carbon footprint as prescribed by the European Union (EU).

Commission 2: Growing Domestic Tourism
Matching Supply and Demand: Using a Match Model for Domestic Tourism
Prof Berendien Lubbe, Head of Tourism Management: University of Pretoria said this topic was very important because there were a lot of products and demand and how they matched up was the concern. She said that there should be a strong domestic tourism sector because it cushioned the tourism sector against global uncertainties, stabilised seasonal flow and mitigated the risk of carbon emissions. A strong domestic tourism industry was essential for sustainability of the tourism industry and strong tourism countries such as China, France and the United States of America (USA) had strong domestic tourism sectors.

Tourism was a demand driven industry and a travel culture should be developed amongst South Africans -  which was not the norm for most adult South Africans. In 2011, Tourism SA found that 8.2 million adult South Africans could afford to travel and it identified five markets among those to grow domestic tourism. The tourist profile was changing and market failure was often due to suppliers failing to meet market demands. One of the challenges in growing domestic tourism was that tourism investment was not always linked to demand. Tourism was coordination-intensive and the provision of tourism products and services involved a wide range of suppliers and in balancing the supply and demand as the whole supply chain was affected. Tourism was also information intensive because the supply chain collaborated through joint knowledge of sales promotions, marketing and production information.

The NDT had given a brief to it to determine the particular experience needs of the five key domestic market segments with specific reference to accommodation facilities, food and beverage services, attraction activities, event packages and tours, and special interest offerings as key product categories. The challenge was how to capture the complex nature of the tourism experience without simply providing a database of products, which was already being audited, but rather to present the product and how it serviced the needs of the market. Other challenges of the research included where specifically in South Africa the research was to be done and why, whether the complex results could be simplified for stakeholders, whether the study and the results could be replicated in other areas, sectors, routes and towns, and whether policymakers and stakeholders could use this developed model.

The research objective was to determine the product and experience needs of the different domestic market segments, which were provided. In the particular regions sought gaps were looked at to provide recommendations for product development. The endpoint of the research was to develop a model to position a region by matching the supply and demand of that particular region. The four regions selected for the study were the West Coast, Central Karoo, O R Tambo district and the Emhlangeni district in Bushbuckridge. Food and beverages were excluded because this proved too complex and the market segment provided by SA Tourism provided information on the demographic, age and income of a specific sector as well as some of the experiential needs of the specific market segment. The five market segments were: the Spontaneous Budget Explorer who were young people across all races seeking adventure, activities, socialising, nightlif as well as the New Horizon Family, the Highlife Enthusiast, the Seasoned Leisure Seekers, and the Well to do Mzanzi Family.

Prof Lubbe gave an overview of the research methodology and data analysis. The five market segments were rated according to each market node / area and the demand based on the needs were rated against current supply or offering. Each of the five market segment was rated against the six sectors (such as accommodation and activities) for each node and a Match Model was created, both per sector as well as overall. Recommendations were included in the study based on the gaps identified. For example, the New Horizon Family segment needed child-friendly entertainment so that they could broaden their children’s horizons and, based on the results, the West Coast entertainment and activities were found to be mostly adult based and the study made subsequent recommendations (see document).

Prospects for Niche Tourism Development in South Africa
Prof Mark Boekstein, Tourism Programme Coordinator: University of Western Cape, said niche tourism had its origin in niche marketing. The niche tourism market was made up of identifiable groups of individuals with similar interests, needs and wants and a specific product could then be tailored to meet the needs of that specific market. Niche tourism emerged to counter mass tourism, which had presented with a few problems such as a low trickle down rate (benefits did not disperse to surrounding areas), low rates of development, pollution, damage to vegetation and overcrowding). For planners, niche tourism seemed to offer a great opportunity for tourism that was more sustainable, less damaging and which attracted higher spending tourists. Niche tourism offered a more meaningful set of experiences for tourists, knowing that their needs were being met. Mass tourism would typically be more conventional such as beach areas and resorts and niche tourism would be catering to special interests such as cultural or environmental activities authentic to the community. The Department of Trade and Industry (DTI) had noted the benefits of niche tourism in a published paper a few years back and said there was growth potential for creating new markets, generation of quality jobs that required specialised skills and even though the niche tourism market was smaller, spending was generally bigger. The Western Cape moved toward niche tourism and in their last Tourism Development Plan identified 26 markets on which to focus, which included adventure and bird watching.

In asking what tourism product could be developed as a niche tourism attraction in South Africa, Prof Boekstein said that it should be a unique location-specific product that set South Africa apart from its competition and had with growth potential. He identified thermal springs as a niche product. SA had about 80 thermal spring with temperatures ranging from 39-64 centigrade and only 50 had been developed. The development of semi-medicinal spas had all but stopped and most of the thermal springs were developed as leisure resorts and the healing properties of the mineral water were were not being utilised. The healing traditions that were based on utilising the water could be lost if not utilised and incorporated into modern health as a medical and health niche tourism product. He referred to the Caledon Spa which people visited from all over the world that burned down in 1945 and had never fully been rebuilt with only one Victorian spa bath remaining with 49 centigrade water rich in iron and manganese. He showed similar underutilised thermal springs in Worcester and Brandvlei in the Western Cape, Riemvasmaak in the Northern Cape and Shushu on the Tugela River in KwaZulu-Natal (KZN). The leisure resorts needed to be incorporated into health and wellness opportunities because the infrastructure was already in place. To develop spring thermal water into a niche tourism market, one needed to:
- Research the healing properties of the different water springs and find ways to incorporate the healing properties into modern medical health and wellness niche tourism product
- At the same time continue to offer products that attracts the domestic markets, family leisure markets and the retired market
- Attract international health tourists with health and medical wellness facilities in combination with local tourist attractions and niche tourism products
- Encourage increased interaction between businesses and local communities and to use locally based herbal remedies like rooibos and fynbos indigenous to the area to encourage community to become involve and benefit from tourism

In conclusion, Prof Boekstein said we should not turn away from mass tourism but we need to develop niche tourism because it was more sustainable economically, environmentally and socio-culturally.

Tourism Route Development as a Catalyst for Community Involvement
Professor Thandi Nzama, Head of Recreation and Tourism Department: University of Zululand, said her presentation was based on research done in conjunction with NDT and was based on tourism routes in KZN where the local communities were not involved nor benefiting from the tourism in their own communities.

Tourist routes were initiated to disperse income, to bring lesser known attractions to the fore, to increase the appeal of a destination and to increase sustainability of community involvement. One of the main concerns that was hampering tourism growth and development was the limited involvement of local communities, especially the previously disadvantaged communities, mostly in the rural areas. Rural areas had plenty of natural and cultural resources and tourism route development had the potential to make use of the resources readily available. The best way to secure sustainability in the tourism sector was to cluster activities and attractions in less developed areas and by stimulating co-operation and partnerships between communities in local and neighbouring regions, which was a market driven approach to tourism development.

If tourism routes were well planned, there would be the potential of attracting a variety of users such as international overnight visitors, longer staying visitors as well as the potential of developing less explored areas, enticing visitors to spend time and money on a unique product. Products and activities could be organised to appeal to special interest tourists, and potentially stimulate entrepreneurial opportunities. Communities should be linked together to promote tourism development by collectively coming up with unique products and services that could be utilised as tourist attractions. Most community members were not involved or consulted in tourism route development and ideally tourism routes should be designed to involve local community members and their ideas, expertise, aspirations and expectations. Route tourism was important because it empowered disadvantaged communities.

The socio-economic impact of the King Shaka Route, the Zululand Heritage Route and the Zululand Birding Route were researched and it was found that the majority of the people living adjacent to these tourism routes were not consulted in the establishment of these routes and some were not even aware of the routes. Midlands Meander tourism route was criticised in 2002 for not providing benefits to the community and assisting black entrepreneurs and, since that time, the management of the route had actively pursued opportunities and benefits for the community. In South Africa there had been considerable activity surrounding the development of routes and some were very successful and advanced and support had been provided for planning and launching of routes and trails. The private sector and non-profit organisations were involved in launching routes but the focus had mainly been on the number, type and economic impact of routes and not necessarily on the extent of community involvement. The non-profit organisation, Open Africa, had developed 62 routes in six countries, and used tourism as an economic platform to create and sustain jobs in rural Africa.

The Midlands Meander was a successful tourism route in KZN with its core product offering being diverse arts and crafts and a scenic rural environment. The route was 100% privately funded with public sector involvement. The 250km Zululand Heritage Route was developed based on research done by Tourism KZN for tourists to learn more about the culture and heritage of the local community as well as wildlife, yet there was very little community involvement in the establishment of the route. The characteristics of a successful tourism route were: well planned with a theme, numerous routes that should allow for amalgamation, with opportunities for locally, publically, privately and internationally formed partnerships. The basis for successful route development was a strong political will, both on a local and national level for a conducive environment to thrive in.

Contrary to belief, communities and people were enthusiastic to get involved with tourism route development, but they lacked the capacity to initiate and sustain the route, they lacked the necessary infrastructure and they lacked the experience to create associations and partnerships. They are also not aware of the framework of support that was available as well as financial support that could be made available to them. These challenges made it hard for communities to participate in route tourism development and thus local communities, in 2013, were still not integrated into mainstream tourism.

Mr Chris McDuling, Tourist Guide: Cape Tourist Guide Association (CTGA), commented that there was a misconception about packaged deals and all inclusive tours, especially about the tourist guide, whether he was operating one kombi and that guide should be marketed internationally as a person that could offer unique tourism experiences.

Impact of Heritage Sites on Tourism Development
Ms Mmabatho Ramagoshi, Acting CEO for South African Heritage Resources Agency (SAHRA), said that the mandate of SAHRA was to provide for the identification, conservation, protection and promotion of our heritage resources for present and future generations, guided by its enabling Act.

Heritage spoke of places and objects that had cultural significance. SAHRA had the power to declare a place a national heritage site through certain processes. Most heritage sites were buildings and most had Dutch Colonial history, but SAHRA also started looking at other traditions like historical settlements where from people were forcefully removed, landscapes and natural features of significance and also graves and burial grounds. Sites would not be declared heritage sites without the involvement of the community, because these sites existed within the community, and the community needed to understand the value of a heritage site within their community. Tourist guide within the community best knew the history and heritage of that community.

In 2011 the Department developed a heritage tourism plan that would integrate culture and heritage into mainstream tourism. It would promote heritage tourism as an available niche market, but also promote diversification through tourism development. Heritage sites were open to visitors, but the sites also needed to be properly preserved by skilled individuals, which was costly. There had been concern around the deterioration of Robben Island and whether the site was properly preserved.

South Africa had eight World Heritage sites and although the focus was on the domestic market, there needed to be money to preserve these sites that would in turn create economic growth with international tourist visits. While money was being invested in these sites, the Department should also focus on the sites in the rural area like Mapungubwe in Limpopo which was difficult to access in March because of the floods.

The advantages of heritage sites included job creation and entrepreneurial opportunities, the diversification of the local economy around the site and created opportunities for partnerships. Heritage sites were a niche market which preserved local tradition and culture, preserved national and historical resources and built community pride in heritage. The approach to heritage tourism should incorporate conservation and community involvement and participation. Awareness of conserving the natural resources should be emphasised and job creation and economic development should be prioritised.

The biggest challenge around heritage sites was the lack of co-ordination, where people in a community would not be aware of the significance of a site and as a consequence there was a lack of economic development. There was a lack of correlation between departments so there was no conserving of sites. There needed to be significant increase in tourism around heritage sites. Through collaboration, tourism around heritage sites could be increased.

Investing in New Tourism Plant in South-Africa – The Future of the Hotel Industry
Ms Katinka Schumann, Divisional Executive: Services Sector: Industrial Development Cooperation (IDC), said the the estimated contribution of tourism to South Africa’s GDP was 9.8%. International arrivals to SA had grown from 3,9 million in 1994 to 9,2 million in 2012. Both were very good numbers. The tourism market had been growing faster than economic growth, both domestically and internationally. The IDC did not foresee further weakening of the Rand and there was a window of opportunity where foreigners saw South Africa as a value for money destination, and it also meant that South Africans should rather travel domestically rather than internationally. The favourable interest rate environment is also expected to prevail until 2015. Between 2007 and 2010 the number of overnight stays declined by 1 400 000 in total, with a decline of 1 100 000 in the hotel category. The expanded capacity (+1.6% p.a.) and reduced sales(-2.3% p.a.) resulted in occupancy rates remaining relatively low and overall income per room (room rates) staying relatively flat. Post-2010, income for the guest houses and lodges categories recorded substantial growth. For all categories, excluding guest houses, occupancy rates(45.8%)  have not recovered to pre- economic crisis levels  (45.8%).

The IDC funded companies that were viable, whether new or existing and wanted to lead industrial capacity development, and the focus now was to find a niche or need and then to build the supply. The IDC was aligned with the National Growth Development Plan and wanted to match its efforts to the NDT plan in the tourism sector. The IDC had been funding the industry for 20 years and had spent roughly R5 billion and created 14 000 direct jobs. The Small Enterprise Finance Agency (SEFA) was the new amalgamated agency that had become part of the IDC family, that provided funding in the range of R50 000 up to R1 million for smaller businesses.

Ms Schumann went over case studies that showed the different businesses that the IDC had funded. These businesses included a 100% black owned business, a venture by the deaf community, as well as a project in conjunction with NDT to create and build markets that would motivate South Africans to travel and to stimulate domestic tourism. She said that the IDC took on the riskier new projects and was patient.

The IDC used its research and information centre to forecast the macro environment and assess demand conditions affecting domestic tourism. GDP growth globally had been down the last three years with a slight increase forecast for 2014. Advanced economies had been fairly pedestrian with 1% growth. The emerging economies expected a 5% growth for next year. Africa and South Africa expected 2 to 3% growth for 2014.

The tourism sector is expected to perform well, with growth continuing to outpace that of the national economy (growth in foreign tourist arrivals of 4.6% p.a. from 2014 to 2023), thereby increasing the contribution of tourism to national GDP, largely due to the expected:         
- Growth in tourism from Asia (China and India) and South America (Brazil, Colombia and Chile);
- Growth in business tourism;
- Investment in tourism infrastructure;
- Intensive marketing of South Africa as a tourist destination.

The challenges were families in debt and high unemployment rates, but there were opportunities like BRICS that brought a lot of people to South Africa that would otherwise not have come here, the infrastructure projects, and low interest rates that was projected to stay low until 2014. The Rand was relatively strong, foreigners thought South Africa was a good value for money investment and South Africans can travel domestically. It took a long time to build a hotel or to get a project off the ground, and care must be taken not to miss opportunities for development.

Discussion
Mr T Ntsimane, General Manager: Development Bank of Southern Africa (DBSA) said the biggest problem in the industry was the attitude of "service people" and a change in attitude was needed. He also stated that as South Africans we must realise the importance of saving.

Mr C Jill, Director: Apartheid Museum referred to tourism route development and said there needed to be serious partnerships across departments. He talked about the Midlands Meander route that was based on membership and the members were served as well as the community. Tourists were able to do their shopping along the route and to work on the basis of research and the heritage aspect attracted foreign tourists. The local knowledge of people in the area was important as well as finding a champion to run with the idea. He had recently attended a museum conference in Brazil with 3 000 delegates which took place once every three years. He learned that the Department of Arts and Culture would not consider bringing this event to Africa because their budget was spoken for until 2019.

Mr Bongani Ndhlovu, Executive Director: Iziko, talked about funding to maintain heritage sites, and the possibility that these sites could be maintained by means of their own revenue generated by activities surrounding the site. He recommended that there should be a league for developing heritage sites.

Ms Rosemarie van Staden, Director: Tshwane Tourism Association, recommended that all this wonderful research that had been done should go back to the participating areas so that the people in the areas could be consulted and NGOs could provide information and the areas could be grown and micro economies could be driven.

Mr McDuling asked how much of the growth achieved since 2012 could be attributed to the global markets and he asked if there was a statistic or a measure that showed a shift from hotel owners to smaller businesses or community projects

Ms Schumann replied that she did not have an answer to the questions, but would look at this on return, but she did say that guesthouses had shown a bigger impact than before.

Ms Sharon Lewis, CEO Tourism: Northern Cape Tourism Authority, said that the tourism industry could not function without partnership with the Department of Transport, because public transport involvement was necessary to move people en masse. The issue of soft services and hard services like infrastructure and the role of the Department of Education was critical.

Mr Ntsimane asked that a linkage between domestic and international tourism be developed so that facilities could be utilised locally as well as be linked to niche promotion so that the environment could be protected.

Mr G Phillips, Managing Executive: Tourism and Marketing: South African National Parks, said there needed to be mechanisms to regulate pricing so that the market could enjoy the conservation in the country.

Plenary session reconvened and the highlights and recommendations of each Commission were reported:

Commission 1 - highlights and recommendations. Some of these were:
- The Commission agreed that the Yamoussokro Declaration (agreement between African countries on regulating flights in Africa) did not achieve its intent and the issues that arose should be dealt with.
- Poor connectivity on the continent and those gaps need to be filled to make travelling easier and cheaper
- Turnaround times for visas were a challenge for visitors
- Tourism products needed to be developed to tap into new markets.

Commission 2 – highlights and recommendations. Some of these were:
- Explore niche tourism market for more sustainable tourism development
- Recognise opportunities for tourism development
- Create partnerships with communities, Department of Transport, Department of Education
- Create a national heritage league so that funding for conservation of heritage sites can be generated by their own revenue.

Commission 3 – highlights and recommendations. Some of these were:
- Mobilising skills development programmes in tourism industry
- Growing businesses for more employment opportunities
- Look at the final draft for SMME development
- Ways to close the gap between emerging and large entities.

The Committee Researcher read out the combined recommendations.

The Chairperson asked if the recommendations could be accepted and if there were any amendments.

Mr R Shah (DA) said that the recommendations should be checked to ensure that all the feedback from the Commissions was incorporated.

The Chairperson asked if the rough draft of the recommendations sounded correct and if the recommendations could be accepted broadly.

Mr Shah said that the problems with domestic connectivity and the need for low cost airlines was not adequately captured in the draft recommendations.

The Chairperson asked if they could ask for written submissions within the week from those present.

The Committee Secretary said that this could be done. The report would go before the National Assembly and only then be accepted as resolutions. He noted that other departments may be implicated in this report, without having participated in this summit.

Mr Farrow (DA) said the report was a broad-based document and the Committee should be able to sit and unpack the report.

The Chairperson agreed and said that after the document was adopted it would be sent to tertiary institutions so the Committee could get an idea of the views of stakeholders. He thanked everyone for the invaluable input, for networking opportunities, and their partnership for a better future.

The meeting was adjourned.