South African Tourism key programmes; Committee programme

Meeting report

South African Tourism (SAT) key programmes: Briefing
Mr Zweli Mntambo, Chairperson of the Board, South African Tourism, noted that he had been newly appointed as Chairperson and wanted to express thanks to Mr Frank Kilbourne, the previous Chairperson, who had served as Chair of the South African Tourism (SAT) board for ten years.

Mr Mntambo said that the aim of the briefing was to inform members about the work of SAT did and how it worked, particularly focusing on how the SAT tried to achieve government’s objectives as set out in the National Tourism Sector Strategy (NTSS). It was SAT’s task to market South Africa in such a way to get international tourists visiting the country, and once they were here, they had to be convinced to stay as long as possible. The main aim was that tourists spend. It was up to the industry to ensure that tourists had a good stay. Local South Africans were also encouraged to travel throughout the country. He noted that SAT worked well with all its partners. It also worked closely with the Tourism Business Council of South Africa (TBCSA). SAT obtained its mandate from the Tourism Act. Finally, he was pleased to say that SAT had received clean audit reports from the Office of the Auditor-General for thirteen consecutive years. He concluded that the briefing document was very comprehensive, and that only key points from it would be highlighted during the presentation.

Mr Thulani Nzima, Chief Executive Officer, SAT, reiterated that the work of SAT was informed by the Tourism Act and the NTSS, and its work was tied into the Medium Term Expenditure Framework (MTEF). Tourism was one of the six pillars of growth for South Africa.

He noted that SAT had recently refined its current objectives and strategies, up to the current financial year, to bring it in line with government’s Performance Information Management Policy. He noted that the presentation document gave insight into SAT’s strategic outcomes-oriented goals, goal statements and objectives.

The business focus of SAT was leisure tourism, grading and quality assurance, and business events and meetings. He stressed the importance of the value chain from creating awareness of South Africa abroad up until the actual experiences of the tourist when in the country. Industry collaboration and structured engagement was considered vital.

He elaborated on SAT’s performance globally. Tourist arrivals to South Africa in 2013 grew by 4.7% over 2012 to reach a figure of 9.6 million. All the regions that SAT engaged in showed positive growth in tourist arrivals for the period. Foreign arrivals to South Africa for January to December 2013 grew by 10.5% over 2012, to reach 14.8 million. He also noted that South Africa could act as a hub for travel elsewhere. Foreign arrival figures were used to calculate tourist arrival figures. Europe remained the main source of tourist arrivals to South Africa whilst Asia remained buoyant with the highest growth. The Committee was given a breakdown of the top six markets to South Africa and what SAT’s plans for 2015/16 for them were (see attached presentation for full details). The top six markets were the UK, USA, Germany, China, India and France.

Mr Mntambo suggested that the Committee should consider scheduling meetings with the Tourism Business Council of South Africa and the Tourism Marketing of South Africa (TOMSA), as SAT had close working relationships with both organisations. TOMSA, by virtue of the levies that it collected, made allocations towards SAT.

Mr Tom Bouwer Chief Financial Officer, SAT, presented the budget and details of the financial statements. For the current year TOMSA’s allocation was R82 million. Thus far, SAT had received R58 million. He also pointed to some revisions of the figures (see attached presentation for full details).

Mr Nzima stated that SAT was officially opening up a new office in Brazil in September 2014. It also intended opening up offices in Kenya and Angola, but found this challenging as there were many bureaucratic processes.

Mr Wavela Mthombeni, Senior Researcher, SAT, continued the briefing with an outline of the SAT’s mandate. He stated that SAT selected countries in which it felt there was a need to market South Africa. Two of the factors taken into consideration were volumes and spend of possible tourists. The world was made up of 7 billion people, so SAT clearly needed to prioritise. He noted that different countries had different maturity levels of tourism. Tourists from Germany and France, for instance, were considered to be more on the mature side, compared to tourists from Southern African Development Community (SADC) countries, who tended to be young people. Once a country was selected by SAT, the next step was to slot it into one of SAT’s categories of markets. SAT had four categories of markets:  namely, core, tactical, investment and watch-list markets. SAT’s markets had increased but it simply did not have the budget to engage fully in all of those markets. Between 2014 and 2016, the revenue targets had been set to grow indicatively at 3%, whereas the budgets had been set to grow at 2.6%.He pointed out that at present there was a R70 million deficit.

Ms Jan Hutton, Chief Marketing Officer, SAT, spoke to the last slides on the briefing, on leisure tourism from a global, Africa and domestic tourism perspective. She noted that some of SAT’s global partners were National Geographic and Cable News Network (CNN). Other opportunities taken globally by SAT were the “Meet South Africa Campaign” that was rolled out across most of its core markets. A challenge to SAT’s global strategy was the highly competitive nature of the landscape, given that more than 150 countries were trying to attract tourists to boost their respective Gross Domestic Products.

Arrivals from most African markets grew positively in 2013 compared to 2012. She cited the growth figures as Nigeria -15%, Ghana -18.5%, Angola - 20% and Kenya -7%. Barriers to entry posed challenges to the African marketing, and these included the sheer scale of the continent, language variance, the cost of doing business and political and macro-economic pressures.

In relation to domestic tourism, SAT had made marketing investments in the past few years on campaigns such as Sho’t Left and Vaya Mzanzi, which had to a certain extent kept the industry going, but there had been a decline in domestic travel due to the economic climate. SAT had now decided to resurrect and reintroduce the Sho’t Left Campaign, and to remind South Africans that travel was affordable and offered the best life-enhancing value that money could buy. An additional R100 million had been set aside for 2015/16, to boost domestic tourism. Popular radio DJ programmes were also launched across provinces.

The Chairperson asked SAT to bring the briefing to a close at this point, given time constraints.

Discussion
Mr J Esterhuizen (IFP) agreed that brand awareness was important. He stressed that brands needed to be sustainable. 

Mr Mntambo agreed that brands needed to be protected. There were instances where things happened which negatively impacted upon South Africa, but they were unavoidable. One such example was the criminal trial of Mr Oscar Pistorius.

Mr Nzima added that a brand was a total package, and there were many factors that affected a brand. The good news was that it was realised that the brand was all in the value chain.

Mr Esterhuizen said that he fully understood the importance of the value chain and suggested that SAT needed to work with the Department of Arts and Culture over the Robben Island issue. Rhino poaching in South Africa was another issue that needed to be addressed.

Mr Esterhuizen was concerned about the effect that the new visa regulations were to have on long haul travellers like the Chinese. The processing times would be far too long. He noted that the Department of Home Affairs would have to improve its visa-processing times.

Mr Mntambo responded that the Minister of Tourism was engaging with the Minister of Home Affairs on how the regulations affected tourism. The visa regulations were put in place because the Department of Home Affairs was concerned about the security of South Africa.

Mr J Vos (DA) informed the Committee that he had held a meeting with the Minister of Home Affairs on the issue of the visa regulations. He had also met with the Minister of Tourism and had proposed the introduction of e-visas, which were being used in India, where the average leisure travel time was 30 days. The Indian leisure travel market to South Africa was very family-orientated. Africa was another market where greater focus should be given, for leisure and business. He suggested that this Committee, together with SAT, should leverage support for the e-visa. The e-visa would lower waiting times and improve security. He was worried that the newly introduced visa regulations could cause a 70% drop in the Chinese market to SA. He said that SAT and others must “look outside the box” in coming up with solutions. The e-visa was one such consideration.

Mr Mntambo reacted that with regards to the Department of Home Affairs visa regulations a compromise was trying to be reached.

Mr A Whitfield (DA) noted that the global budget deficit sat at R70 million. He asked whether this was mainly due to currency exposure and whether it would decline. He asked what steps was SAT taking to mitigate against currency exposure. If there were targets that SAT was to sacrifice, then he asked what these would be.

Mr Nzima stated that the figures that had been presented were SAT’s return on investment. The influences on the figures came either from currency volatility or budget issues, possibly a combination of both. Initiatives had been undertaken to mitigate currency volatility. SAT was working with National Treasury, and this issue had been elevated to Ministerial level. At times it was necessary to put certain marketing initiatives aside, given these factors.

Mr Whitfield noted that SAT’s domestic campaign had started in September 2010, and wanted to know how it reported on its performance, what the key indicators were that were measured, and whether it was possible for the Committee to get further information on the results of the domestic campaign?

Mr Whitfield commented that he felt that heritage assets in South Africa were not leveraged correctly. If it was correct that SAT was having quarterly meetings with local government and provinces then the issue should be brought up.

Mr Nzima said it was known that the safari experience in South Africa would not remain sustainable forever. Emphasis should be placed on culture and heritage based products. Provinces had to realise what heritage products they could sell, and SAT assisted provinces in identifying which products they could best sell. Provincial lekgotlas were attended by SAT.   

Mr Mntambo said that the point made on heritage assets was well taken. The Minister of Tourism had raised the issue with the National Department of Tourism and with SAT. The leveraging of assets required monitoring. Assistance from the Department of Arts and Culture should be sought.

Mr Vos suggested that, given SAT’s funding limitations and the fact that it wished to open up more offices abroad, it should perhaps consider using South Africa Missions abroad as its offices. There needed to be a closer relationship between SAT, the National Department of Tourism and the Department of International Relations and Cooperation (DIRCO). SAT staff could be placed at South Africa Missions’ offices, but he questioned the actual task of the SAT offices, and whether ambassadors and consul-generals at missions were not perhaps already doing similar work. Overall, he said that there was a “need to work smarter”. He noted that a total of R82 million was payable by TOMSA to SAT on an annual basis, and he wondered if some of the TOMSA levies that were generated in a certain area should be ploughed back into that area.

Mr Mntambo said that SAT did work with South Africa missions abroad. All ambassadors of South Africa came to SAT for training and orientation on the role which they could play in marketing South Africa. In places where SAT had offices, work was being done by SAT, but where it did not have offices in a particular country then the diplomats there did take responsibility to market the country. The complexity was that there were regulatory and tax issues that prevented missions and SAT operating from the same offices. In regard to the funding, he said that discussions were being held on the possible ringfencing of TOMSA levy funds, but the practicalities had yet to be ironed out. He noted that he had attended TOMSA’s Annual General Meeting a few weeks ago.

Mr Nzima added, in regard to the sharing of offices with missions, that there were Memorandums of Understanding in place. Ambassadors at missions were provided with collateral marketing material.

Mr Vos brought up the issue of engagement with low cost airlines to improve regional distribution. He was glad that the airline Safair had applied for a licence, and that it had been granted. The airline Comair had applied for an interdict to prevent Safair from flying the domestic route from Cape Town to Johannesburg, but Safair’s claim had prevailed and it would be operating soon.

Mr Nzima said that South African Airways (SAA) did provide SAT with insight into markets in which it was not strong. SAT did share offices with SAA in Nigeria, Japan, Australia and New York. He agreed that low cost airlines were an issue worth discussing. One possibility was that perhaps provinces could work with and support low cost airlines. Emirates Airlines had an agreement with KwaZulu-Natal Province to operate on domestic routes from that province.

Mr Vos pointed out that the SAT website was very similar to that of Cape Town Tourism, and suggested that duplication should be avoided, although he was in favour of one website linking to others that were relevant. He said that there should not be rivalry between tourism entities.

Mr Vos suggested that grading should be expanded, so that not only accommodation, but also the “tourist experience” should be graded.

Mr Nzima noted that the categories that were graded had been expanded. Currently, it was not only accommodation establishments that were graded but also conferences and other venues. SAT also partnered with TripAdvisor.

Mr Vos felt that strategic assets across the country needed to be championed. Different regions in South Africa had assets that could be leveraged to draw crowds. There were clear opportunities to increase business and sports tourism. Tourism was a local issue also, and thus municipalities should play a major role. He proposed that the National Department of Tourism and SAT should assist municipalities to deliver on their tourism mandates, by strengthening and capacitating these municipalities.

Mr Nzima said that on the issue of leveraging strategic assets, especially in provinces, there was already a marketing working group which brought provinces together.

Ms P Adams (ANC) suggested that the existing DJ programme which SAT had should be extended. South African artists and musicians should be used as “tourism ambassadors” in countries like China and India.

Mr Nzima responded that SAT was already using celebrities to market South Africa abroad, with some having proactively come forward offering to be brand ambassadors for SA. The list included John Robbie and Lee-Anne Manas.

Ms Adams referred to the assertion by SAT that it wished to create a culture of domestic tourism, and asked how it was going to convince South Africa families to travel and take short breaks. She added that the question of affordability for the local market had to be looked into.

Ms Adams complained that transformation in the tourism industry was not happening, and asked what SAT was doing to address this issue.

Mr Mntambo stated that transformation of the industry fell in the hands of the tourism industry itself, such as the hotels, lodges, transport operators and others. The Minister of Tourism had addressed the industry on the issue, and a Black Economic Empowerment (BEE) Charter Council was also driving this aspects. However, there was a limit to what SAT could do actively about transformation, as its task was mainly market South Africa.

Ms Adams asked if SAT had expanded public works programmes with its partners.

Ms Adams asked about the costs for SAT to open up an office in Africa, and wondered if there was sufficient collaboration with DIRCO. She also asked whether the Ebola outbreaks in West Africa would have an impact on South Africa, given its huge footprint in Nigeria and Ghana.

Mr Nzima responded that the cost of opening up an office in Africa could be quite high and was charged in US dollars. SAT was trying to follow a different model in opening up its offices in Brazil and Angola. The issue of Ebola was difficult to speak to. The opening up of the Kenyan Office had taken long due to security requirements having to be met.

Ms Adams suggested that China was an open market for South Africa. China had 80 million travellers per year, and even if South Africa only targeted getting 1% of the 80 million, that amounted to 800 000 Chinese travellers. She agreed with her colleagues that everyone in South Africa had to work smarter.

Mr Mntambo agreed that there was no doubt that China was an important emerging market for South Africa, and a great deal of energy, time and money was being spent on it. China was on SAT’s agenda. There were already interactions between SAT and South African Airways regarding load factors and flight patterns to China.

Mr Nzima added that China had already been positioned as a hub for surrounding destinations like Korea, Macau and other countries.

Ms L Makhubele-Mashele (ANC) noted that the briefing document was comprehensive and that it was difficult for Members to absorb everything today. She agreed that for meaningful engagement to happen, there was a need to work smarter.

She referred to the distinction made between tourism arrivals and tourism visitors, and said that criticisms had been noted about the accuracy of statistics. She thus wanted to know what tools SAT used in order to ensure that its statistics were credible.

Mr Nzima said that over time, SAT would have a better explanation for the Committee. He agreed that the debate over the integrity of figures had been going on for a while. StatsSA was the custodian of statistics in South Africa, and there was now a working group made up of the National Department of Tourism, StatsSA, The Department of Home Affairs and others.

Ms Makhubele-Mashele asked how SAT had made the Tourism Indaba its own, pointing out that some cities held their own “mini-indabas” at the same time as SAT’s efforts. This led to the question of what threats and risks there were to South Africa should there be duplication of activities. This Committee needed to get an understanding of various tourism agencies and the Tourism Indaba.

Ms Makhubele-Mashele also asked what efforts SAT engaged in to advance rural tourism, whether it provided assistance or mentoring to rural areas, or whether this was left up to other departments.  

Mr Mntambo said that cultural villages and tourism had to be primarily driven by local authorities and local businesses, for this had to be marketed as a product. He noted that there would always be threats to the Tourism Indaba’s existence, but the Tourism Indaba had been revamped for 2014. He did not believe that there was much of a challenge from elsewhere. The SAT and its Tourism Indaba was in a good space. Continuous work was being done with the cities as well. 

Ms S Xego-Sovita (ANC) referred to slide 12 of the presentation, which spoke about the importance of the value chain and SAT’s structured engagements with the Minister. She suggested that SAT should encourage tourism stakeholders to also engage with the Minister. She expressed her dissatisfaction also at the lack of transformation in the tourism sector.

Mr Nzima said that work on the value chain was about constructive engagement and it was important to recognise limitations.

Ms Xego-Sovita said that she had heard of many countries where SAT did not have physical offices, asked how many countries this represented, why it had no presence there and how it worked there. She also asked what other countries were opening up offices in South Africa.

The question did not appear to have been answered.
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Other business
The Chairperson said that the Committee had received an invitation to attend a conference in Stellenbosch from 7 to 9 August 2014, but this coincided with the Parliamentary constituency and recess period. ANC Members had activities to attend to and would not be able to attend, but she stated that Mr Vos, who resided in Cape Town, had indicated that he would attend, and any other Members who were able and willing to do so should attend if they could. She suggested that the Committee Secretary and Committee Content Adviser attend.

Draft Second Term Committee Programme
The Chairperson noted that the Draft Committee Programme had been revised, due to Parliament’s programme having been changed.

Members adopted the revised draft Programme, with no additional changes.

Committee Minutes
Minutes of the Committee meeting held on 11 July 2014 were adopted without amendments.

The meeting was adjourned.