SA Tourism on its 2013/14 Annual Report; Committee Reports

Meeting report

Briefing by SA Tourism (SAT)

SA Tourism briefed the Committee on its 2013/14 Annual Report. The delegation comprised of Mr Kananelo Makhetha SA Tourism Board Member, Mr Thulani Nzima Chief Financial Officer, Mr Thomas Bouwer Chief Financial Officer, Ms Amanda Kotze-Nhlapo Executive Manager of the SA National Conventions Bureau and Ms Freda Moloi, Company Secretary. Mr Nzima undertook the briefing.

Mr Makhetha said SA Tourism was operating in a challenging and developing environment. One of the challenges was the recent Ebola outbreak in Africa. International tourists did not realise that the Ebola outbreak was in areas that were closer to Europe than to SA. Another perceived challenge was the newly introduced visa regulations, and h was glad that the Department of Home Affairs had decided to postpone the implementation of the visa regulations for now.

Mr Nzima continued with the actual briefing. Members had been provided with a detailed report some time before the meeting. On the corporate governance side SAT had received its 13th unqualified audit report in 2013/14. On 2013/14 audited performance information a strategic objective was to increase foreign visitor arrivals coming to SA. The performance indicator used was the number of foreign visitor arrivals. The planned target for 2013/14 was set at 13 021 979, the actual achievement was 14 860 216, a positive deviation of 14.12%. On the strategic objective of increasing domestic tourism in SA, with the performance indicator being number of domestic travellers a target for 2013/14 was set at 15 million. The actual figure for 2013/14 was 12 million, a negative deviation of -20%. The drop in domestic tourism figures was concerning given that actual figures for 2012/13 had been 12.5 million. Some external factors that impacted of SAT’s work were exchange currency weaknesses and unemployment dampening domestic tourism. Figures on global tourism performance were also provided to the Committee. SAT received R866.9 million from the National Department of Tourism (NDT) and a further R131.3 million from Tourism Marketing SA (TOMSA) for 2013/14. Key global and Africa initiatives were touched on. On the domestic side a key initiative was the integrated new “Sho’t Left” campaign that was launched in August 2013 to encourage South Africans to take short breaks. The South African National Conventions Bureau (SANCB) focused its efforts on attracting events in economic sectors that had been identified by government as accelerating macro-economic benefits for the country. The Tourism Grading Council of SA (TGCSA) undertook the grading of establishments be it on a voluntary basis. A challenge was the perceived lack of credibility of the grading process and of grading criteria. Consequently SAT through the TGCSA developed a strategy to review the business model of the TGCSA with a view to increasing the base of graded establishments as well as renewals. The current staff complement of SAT was 206 and it was not expected to change in the 2014/15 financial year.

Although domestic targets were not achieved, the new domestic campaign launched in August 2013 started to show increased performance in spend and number of trips in Quarter 4 of 2013/14.  

Discussion

Mr W Faber (DA, Northern Cape) pointed out that he was seeing the phenomenon of South African tourists going abroad in huge numbers. A record number of people left SA from OR Tambo International Airport this past financial year. If South Africans could afford to travel abroad why was there a decrease in domestic tourism. Why was there under spending in domestic tourism in the amount of R75 million. SA was doing better than Dubai which was ranked fifth ahead of New York which was ranked sixth. If figures for tourism for Qatar and other emirate states were added to that of Dubai they would far outrank SA. There were only two countries in the world that did not have rising inflation: Poland and Japan. These countries experienced deflation, which meant that things were getting cheaper. There were flights daily from Poland to Durban. He was in close communication with the Polish authorities and noted that there was not much information in Poland on tourism in SA. Poland and Japan were growing markets.

Mr Nzima responded that the issue of South Africans leaving SA to visit other countries were not SAT’s core focus. SAT marketed SA abroad. SAT could track the travelling patterns of South Africans via its satellite tourist account, and check on how many tourists came into SA and how many left. People were encouraged to travel domestically hence the Sho’T Left Campaign had been launched. Short trips were being encouraged. People did not have to go overseas. Domestic tourism was important to keep tourism afloat when the international tourism market took a downturn.  He was not sure what the R75 million unspent funds were that was referred to. According to SAT’s Annual Report 2013/14 all allocated funds had been spent.

On the comparison of Dubai versus SA, from a National Convention Bureau’s perspective in 2012 SA had hosted 97 meetings, in 2013 the figure had increased to 108 meetings. SA was ranked number one in Africa and the Middle East on meetings destinations. Stellenbosch in the Western Cape was ranked number 10 in Africa as a meetings destination. On SAT’s choice of markets, it went through a cycle every three years to access market portfolios. The decision on which markets to focus on was important. Poland and even Russia could be possible markets for SA. In 2013 Russians were the biggest spenders in Europe. However Russians did not travel to SA much. SAT in its choice of markets did a scientific analysis and considered the right volumes of people and the revenue to be generated.  It was a technical process and a balance of markets was needed.

Mr S Mthimunye (ANC, Mpumalanga) said it seemed that tourism was safe in the hands of SAT’s Chief Executive Officer Mr Thulani Nzima. What informed the decision of SAT to open up offices in a particular country? Mr Makhetha had earlier stated that there were two issues that contributed towards a decline in tourism. The first was the outbreak of Ebola in Africa and the second was the newly introduced visa regulations from the Department of Home Affairs. He asked how the visa regulations had affected tourism.

Mr Nzima responded that SA was Ebola free but one nevertheless saw miscalculations and cancellations by foreigners. On visa regulations, the biometric requirement was difficult to implement. It was a problem. Both the United Kingdom and the USA had a biometric requirement. The Department of Home Affairs (DHA) had also postponed the requirement of an abridged birth certificate until 2015. The issue of transit visas was also being addressed. SAT was working with the DHA. The regulations per se may not be wrong; the problem lay with readiness on the ground.

Ms E van Lingen (DA, Eastern Cape) asked whether the Tourism Grading Council of SA (TGCSA) took the current economic climate into consideration when grading was done. TripAdvisor did not provide its services free of charge; it wanted something in return. Had SAT considered partnering with Lonely Planet? Why was rural tourism infrastructure failing? Given the current economic climate why was SAT focused on the middleclass when they would be greatly affected by the economic climate.

Why were more international tourists staying in guesthouses than in hotels? Was it because it was cheaper? She asked whether backup electricity generators were one of the criteria used in grading an establishment. This was especially important given the power outages. Where were the 206 SAT staff posted, locally or overseas?

Mr Nzima pointed out that part of the reason why grading was not so successful was because the issue was about value for money. Further factors were the level of investments that were required as well as the state of the economy. People liked to use TripAdvisor because it was considered effective and it was the biggest platform. TripAdvisor assessed clear categories and one received authentic advice. Rural tourism was a perennial challenge for SAT. SAT did not develop tourism products but only marketed tourism products. SAT marketed SA and did not market specific provinces. SAT tried to identify products in rural areas. SAT did not only focus on rich people. On domestic tourism the focus was on youth and on those more mature persons who were young at heart. The idea was to achieve balanced growth. A point of interest was that during the recession rich people hoarded money. There was the phenomenon of guilt tourism. People did not travel because their neighbours could not afford it. Guilt was the basis for not travelling. The phenomenon had started in France.  Of the 206 staff that SAT had 46 were stationed abroad. The new trend was alternative accommodation other than hotels.

Mr B Nthebe (ANC, North West) noted that SAT said it had a transformational agenda. He noted that in the North West Province communities living around tourism sites such as game parks did not receive benefits there from. In anticipation of the 2010 FIFA World Cup many small businesses had mushroomed but after the event they were on the verge of collapse. There was a lack of uptake of all the capacity that had been catered for. What had SAT done to assist these small businesses? SA still had the spatial patterns of the past. The majority of workers in SA were still migrant workers who went home during the festive season. What was SAT doing to change the tourism sector? Penetration into the Southern African Development Community countries was needed. Why was SAT opening offices in Nigeria but not in Mozambique?

Mr Nzima stated that SAT had a plan to assist small businesses. SAT worked with the Tourism Enterprise Partnership (TEP) to support Small Medium and Micro Enterprises (SMMEs). There were various initiatives.  In 2010 huge mushrooming of businesses were seen, and over 7000 establishments were graded. At the time of the World Cup there was huge overcapacity and overpricing was rife. The 2010 World Cup took place during the economic recession. After the World Cup hotels traded down their grading and in so doing SMMEs were pushed out of the market.  On the procurement of services SAT tried to use people from rural areas. On domestic tourism the issue was about affordable tourism. Some hurdles encountered were the sustainability of low cost airlines and the upkeep of road infrastructure. SAT did a scientific analysis of its portfolios. A great deal of marketing efforts was taking place in Nigeria and hence an office was opened. It was expensive to open up offices everywhere and SAT embarked on a hub strategy.

The Chairperson reminded SAT that the Committee was specifically interested in matters that related to provinces. The Committee appreciated the fact that SAT had obtained and unqualified audit report and was encouraged to keep up its good work or even to improve there upon.

He referred to SAT’s integrated marketing approach and asked what hurdles it encountered in dealing with government departments. He was under the impression that during the early years of SA’s democracy much of the visiting that had taken place was to family and friends. Was this still the case? He noted that the Minister of Tourism, Mr Derek Hanekom, had informed the Committee that tourism hubs were being considered. The hub at OR International Airport was already operational and that two further hubs at King Shaka International Airport and Cape Town International Airport were being considered. He had visited both the OR Tambo and King Shaka hubs and noted that the King Shaka portal was doing much better than OR Tambo, the OR Tambo hub was disappointing. At OR Tambo there was no information available on the Kruger National Park. It was shocking given the tourism value of the Park. There was some tourism material on some of the provinces. He was under the impression that there were many students from other parts of Africa studying in SA and he asked whether tourism sites should not be made accessible to them. Tourism opportunities should be opened up to them.  

Mr Nzima explained that a distinction was made between integrated marketing and stakeholder engagement. With integrated marketing there were the traditional marketing methods as well as the modern digital ways of marketing. When SAT encountered hurdles it transformed into a lobbyist role. For example in Hazeyview, Mpumalanga, SAT had engaged with the SA Police Services (SAPS) on matters relating to crime in the area

Visiting friends and relatives was an ongoing challenge; the situation had not changed significantly. SAT was looking at other reasons why people should travel ie culture, religion and heritage. SA had many festivals that offered different things. Efforts were also being made to convert business travellers to leisure travellers. SAT encouraged people when visiting their families to take their relatives out to restaurants etc. It created sustainability. Tourism hubs were visitor welcome areas. There were three types of hubs. The first were privately owned hubs, the second were those hubs owned by provincial tourism authorities, and the third category was national hubs like those found at airports. All the hubs were not in SAT’s control. The National Department of Tourism (NDT) could make inroads on what Members had concerns about in relation to hubs.

He was aware that the focus of the Committee was on the provinces and in future province specific information would be provided to the Committee by SAT.

In 2013 the Limpopo Province was ranked tops on domestic tourism. Tourists were looking for authentic tourism experiences.

Mr Faber said that the United States of America’s Embassy had put out a statement warning its travellers not to visit the Kruger National Park at that point in time when crime was rife in the area.

Mr Nzima explained that what Mr Faber was referring to was travel warnings. The Chinese government had recently put out a travel warning to its citizens not to visit SA because of the Ebola outbreak. SA had responded promptly to the false perception and the travel ban to SA was lifted.

Ms van Lingen said that the NDT had elaborated upon how they dealt with complaints. How did this affect SAT? Why were South Africans travelling abroad? Who did they visit? What should they be offered to keep them in SA?

The Chairperson asked Ms van Lingen if she would be willing to accept a written response to her questions as the Committee had simply run out of time.

Ms van Lingen said that a written response from SAT would be acceptable.

Committee Minutes

Committee Minutes dated the 19 November 2014 were adopted without amendments.

Draft Committee Oversight Report to Limpopo and Northern Cape Provinces

The Draft Report was adopted as amended.

The meeting was adjourned.