Tourism Grading Council of South Africa on its grading system

Meeting report

Grading system  Tourism Grading Council of South Africa (TGCSA) briefing
The Tourism Grading Council of SA (TGCSA) briefed the Committee on its grading system. The delegation comprised of Ms Thembi Kunene, Chief Quality Assurance Officer, Mr Graham Wood, Chairman of the Awards Committee and Mr Thekiso Rakolojane, Marketing and Communications Manager.

Ms Kunene provided a brief background on the TGCSA. In 2007 the TGCSA was a section 21 company and she had been its Chief Executive Officer. In 2009, the TGCSA became a business unit of SA Tourism and she was appointed as Chief Quality Assurance Officer. The TGCSA was now covered by the Tourism Act No 3 of 2014. The focus currently of the TGCSA was on the grading of accommodation but in the future it intended to move on to grading restaurants and tourist attractions also.

The strategic objectives of the TGCSA were to quality grade establishments accurately, and to recognise well-performing establishments. Its strategic goals were to continually enhance the credibility and skills of its grading assessors, to continually enhance the credibility of the grading process and the grading criteria, ensuring that there was a tangible basket of benefits for graded establishments, and finally to continue to enhance the credibility of the Lilizela Tourism Awards.

Ms Kunene provided a step by step explanation of the grading process. The process started with an online application. Thereafter payment of the grading fee had to be made by the establishment. Once payment had been made, an assessor would visit the establishment to do an assessment. The next step was pre-screening by the Provincial Master Assessor. Thereafter a monthly property approvals Exco meeting was held, where properties that had been submitted would be evaluated. The final step would be the awarding of a certificate and a plaque, which stated the star grading. There was an appeals process in the event that an application had been unsuccessful.

Mr Wood stated that the Awards Committee was made up mostly of private sector people.

Ms Kunene elaborated upon the criteria and scoring methods used in the grading process. For example when evaluating the exterior of premises, the TGCSA considered the appearance of the area, the grounds of the establishment, the gardens, its parking area as well as the safety and security provided. She emphasised that universal access for disabled persons was a compulsory requirement.

The TGCSA had introduced a three-year membership system in October 2012.Establishments therefore undertook a three-year commitment to quality.

The TGCSA had 13 full time employees and 52 assessors. The Awards Committee had eleven members, primarily drawn from the private sector. Ms Kunene, as Chief Quality Assurance Officer was the twelfth member of the Awards Committee.

Ms Kunene highlighted challenges that the TGCSA continually had to contend with. It was difficult to maintain and enhance the grading system as a voluntary system. There was a need to continuously enhance the credibility and skills of assessors, and enhance the credibility of the grading process and grading criteria. She also noted that it was not an easy task to recognise great performers through the Lilizela Awards, and a further challenge was also the ability to enhance and effectively communicate the relevant basket of benefits to establishments.

The TGCSA was also revising its strategy, and was waiting for approval of this from the SA Tourism Board. The new strategy would be presented to the National Department of Tourism (NDT) for final approval. The intention was to implement the new strategy by 1 April 2015.

The TGCSA also undertook partnerships with online review platforms like TripAdvisor, as this enabled the TGCSA to get consumer insights. TripAdvisor was the largest review platform and had the most South African products. 80.5% of graded establishments currently received a high consumer rating of 4 and above on TripAdvisor, with the highest rating being 5. 

The Committee was provided with figures on TGCSA’s performance history. Ms Kunene believed that the TGCSA could maintain a 7% growth year on year.

She added that the Western Cape was the only province that held a quarterly meeting of all associations in the province. It was a model that other provinces needed to follow.

Mr Wood said that over the last five to six years it had become apparent that SA needed a quality grading system. The Tourism Act called for the expansion of quality tourism products, which should go beyond accommodation. To date the TGCSA had extended its grading to lodges. It would continue to review its offerings. The new strategy of the TGCSA called for assessors to become full time employees of the TGCSA. At present 60% of the market was currently graded. Finally, Mr Wood asked the Committee to encourage government departments to use only graded establishments when making accommodation bookings.
 
Discussion
Ms L Makhubele-Mashele (ANC) referred to the TGCSA’s Lilizela Awards, which celebrated excellence, and noted that there had been some criticism of the Awards, because it was felt that these did not take previously disadvantaged persons into account. She asked what the criteria for the Lilizela Awards were.

Ms Kunene said she was aware of the criticisms towards the Lilizela Awards. She said that it was an open competition with no entry fee. Last year, 2013, was the first year of the Awards. In 2014 more entries had been received and the numbers were expected to increase year on year. The winners of the Awards in 2013 had been white, which possibly led to the perception was that previously disadvantaged persons were not given awards. She emphasised that the Awards could only mirror what was in the industry. If an establishment was deserving of the Award, that was all that mattered. She agreed, however, that greater work needed to be done on transforming the tourism industry.  

Ms Makhubele-Mashele asked for information on the amount charged for the grading fee she and the criteria used to determine the amount. She suggested that a tourism levy could perhaps be used towards subsidising the grading fee. In this way all establishments could be graded. The main issue was perhaps that people did not see the value of being graded.

She explained that establishments used to be graded according to the number of rooms which the establishment had. The TGCSA no longer used that method, but used a new formula. It now took into account the number of rooms that the establishment had, the star grading of the establishment and the establishment’s average charge per night. The new formula made the fee charged more equitable.

Mr Wood stated that the tourism levy was voluntary and the customer had the option of not paying it. If the levy were to become mandatory, there would have to be regulation and policing. The tourism industry preferred to be less regulated.

Mr S Bekwa (ANC) asked how grading assessors were appointed. He also asked what the funding structure of the TGCSA was.

Ms Kunene said that the current batch of assessors had been appointed one year ago. Advertisements had been placed in newspapers, which were circulated in the provinces. Curriculum vitaes were received and the requirements were that applicants needed to have a tertiary education and three years working experience. The applicants needed to be confident and had to have an understanding of the industry.
The challenge at the moment was that the assessors were self employed, and sometimes they found it difficult to close the deal. The TGCSA future scenario saw assessors being employed full time by the TGCSA.

Ms E Masehela (ANC) pointed out that in some provinces there was only one assessor, and other provinces had none. She felt that the Lilizela Awards should take into consideration different categories of establishments.

Ms Kunene conceded that there were no assessors in the Free State Province and only one in the Northern Cape Province. The number of assessors depended on the uptake of applications. Despite the fact that assessors were only based in certain areas, they were not only limited to working in those areas, and could travel to other provinces to grade establishments. It would be preferable for assessors to be employed full time.

Mr Wood pointed out that there was not a shortage of assessors. In total, there were 52 assessors, although not all had the same volume of work.

Ms S Xego-Sovita (ANC) noted that the briefing had been silent on the financial status of the TGCSA. The TGCSA as a public entity should disclose its information. She asked how personnel and service providers were recruited.

Ms Kunene responded that the total budget of the TGCSA was R40m. The income brought in from grading fees was only R12m. The rest of the overheads were covered by the National Department of Tourism. 

Ms Xego-Sovita asked what, besides the basket of benefits that the TGCSA was offering to establishments, was being used to convince establishments to get graded.    

Ms Kunene explained that the basket of benefits covered three areas. The first was that the TGCSA generated leads. Secondly, establishments were given access to discounts on the purchase of certain items such as sugar, pepper and salt. The third benefit was to assist establishments with business growth. There was a pool of qualified staff who could provide legal and business advice.
 
Mr A Whitfield (DA) noted and agreed with the remark that the Committee should encourage government departments to use graded establishments. He added that various products should be added to the TGCSA’s grading list. He wondered if the TGCSA and the NDT had considered the grading of heritage sites, pointing out that some heritage sites were not on par with international standards, and wanted further to know if this point was being addressed.

Mr Wood, on the issue of heritage sites, said that the TGCSA had discussed with the Minister of Tourism whether the TGCSA should grade restaurants too. It was a huge task but grading had to be extended to other tourism products too. It was also recommended by the TGCSA that places of interest and heritage sites needed to be graded. The same process as with the grading of accommodation would be followed.
He noted that a cabinet decision had been take in 2002 that government should use graded establishments. Government departments however failed to implement.

Mr Whitfield asked how the review of the TGCSA’s strategy was being reviewed and the possible addition of new products to be graded would affect the grading process. He noted that there was a three-year commitment, and asked if the establishments were required to make an upfront payment covering those three years.

Ms Kunene said that payment was not made upfront for three years. Grading was done every twelve months and payment was also done annually. The establishment however signed up to be graded for a three year period. Establishments could either be upgraded or downgraded.

Mr Wood said that initially, the application process for grading had been done annually. It was a very cumbersome process. It was later changed to a three year membership process as it alleviated a great deal of admin. The establishment would sign up for three years but would pay annually.

Ms Kunene pointed out that it was preferable to have full time employed assessors but there was a cost attached to it. Assessors needed to be skilled and trained.

Mr Whitfield asked if all TGCSA’s graded establishments were on TripAdvisor. He noted that more than 80% of establishments that were graded received a consumer rating of 4 or more, and asked for a breakdown of the figures per province.

Mr Wood said that in 2013, 25 000 comments had been made on TripAdvisor. Not all establishments were automatically registered with TripAdvisor. He agreed to furnish the Committee with a breakdown of figures on TripAdvisor per province

Mr G Krumbock (ANC) asked to what extent the TGCSA had the capacity to ensure that the level of grading given to an establishment was maintained. He did not believe that all one star establishments should all aspire to become five star establishments. One star establishments were also needed to cater for those who could only afford these kinds of places. The grading system was really about informing the consumers what they could expect for their money. He asked how the TGCSA was intending to incentivise establishments to get graded. He noted that at Howick, in the KwaZulu-Natal Province, there were many tourism sites starting to fail. He asked if there was a sound argument to be made that grading should be paid for by establishments, and wondered if it would not be preferable for the grading to be offered free of charge to the establishments, with the National Department of Tourism or government picking up the costs for grading, seeing that in the end result, the purpose of grading was to achieve a national objective.

Mr Wood said that the TGCSA had discussed the issue that grading should perhaps be offered for free. He personally felt that grading was moving towards being a free service to establishments, and would finally probably be funded by the National Department of Tourism, SA Tourism and government. Part of the new strategy of the TGCSA was to have a subsidised grading system for small emerging entrepreneurs. 60% of the establishments that the TGCSA graded were small establishments. Down the line, the TGCSA supported a system that was offered as an incentive to be a tourism product of South Africa.  

Mr B Joseph (EFF) asked how new establishments and establishments that were not graded could be assisted. Many of these businesses operated in townships.

Mr Wood stated that it was beneficial for establishments to be registered on TripAdvisor, as it would allow the establishments to respond on comments made about them. 

The Chairperson asked whether the TGCSA graded Formula1 and Road Lodge hotels as well.

Ms Kunene confirmed that Road Lodges and Formula 1 hotels were graded. It was always more preferable to stay at a two star hotel with excellent service than a three star hotel with bad service.

The Chairperson suggested that the model used in the Western Cape Province, where associations met in one room to discuss issues, should be communicated to other provinces by the TGCSA. 

Ms Kunene confirmed that this suggestion for other provinces to follow the example of associations in the Western Cape meeting, to discuss issues, would be taken further.

Ms Masehela felt that the problem with the Awards process was that entrants were all placed in the same basket. If entrants were not categorised then it became a problem. She suggested that establishments be grouped according to their star grading.

Ms Kunene responded that the Lilizela Awards had nine different categories. An establishment was entered into a category appropriate to its grading

Draft Report on the Southern Africa Tourism Services Association (SATSA) Conference
Mr Sibusiso Khuzwayo, Committee Content Advisor, provided a brief breakdown of what had ensued at the SATSA Conference in Stellenbosch, from 7 to 9 August, and which was attended by the Committee staff, although only one Member, Mr J Vos, had been able to attend.
 
The Minister of Tourism had, at the Conference, highlighted certain challenges to tourism, such as backlogs in road infrastructure, the need for an airlift strategy for SA, the implications of visa regulations and issues relating to crime and safety. Some discussion had taken place regarding SA’s tourism markets abroad. Questions were raised as to why the United Kingdom market had stagnated. It was suggested that perhaps the capacity of SA Tourism needed to increase. The issue of rhino poaching was also discussed.

Broad Based Black Economic Empowerment (BBBEE) Codes were furthermore discussed. The Department of Trade and Industry had issued generic codes, but Tourism had sector codes. By 15 April 2015 departments were required to have their own sector codes. The National Department of Tourism would present its reviewed codes to the Committee. In relation to the BBBEE Codes, the entire value chain would have to be considered. Each sector had its own issues to deal with.
 
Recommendations in the Draft Report spoke to what the NDT was doing about Small Medium and Micro Enterprises (SMME) development, also noted that transformation in the industry needed to take place and that the NDT needed to brief the Committee on the latest developments regarding the Department of Home Affairs visa regulations.

Mr Whitfield noted that the visa regulations issue was urgent, and that the Committee needed to fix a date for the NDT briefing.

Mr Krumbock suggested that the recommendations should also reflect that perhaps the tourism figures from the UK were decreasing because there was not enough funding to market South Africa properly in the UK. It should also be stated that a cost-benefit analysis should be done, looking into possibly doubling the budget for the marketing of South Africa abroad.

Tabling of Memorandum of Understanding (MOU) between RSA and Saudi Arabia sec 23(3)
Mr Krumbock said that he had no issues with the MOU and that it had no financial implications to SA.
He suggested that the MOU be tabled to the House.

Mr Whitfield pointed out that there were many MOUs that were dormant. Many of them held no benefit to SA. The bottom line was that tourist arrivals to South Africa had to increase.

Ms Makhubele-Mashele felt that where a country showed interest in South Africa, it made sense for SA Tourism to market South Africa in that country.

Mr Khuzwayo suggested that perhaps the Committee could be briefed by the NDT on MOUs and bilateral agreements, to provide more information for the Committee.

The Committee agreed to the tabling and to the briefing, as suggested

Committee Minutes
The Committee Minutes from the meeting of 22 August 2014 were adopted, subject to some minor grammatical amendments.

The meeting was adjourned.