South African Tourism on its 2014/15 Annual Report

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Meeting Summary

South African (SA) Tourism briefed the Committee on its Annual Report 2014/15. The briefing provided insight into the global environment as it affected tourism. Some of the challenges related to the difficult trading conditions globally, there was also global insecurity causing nervousness amongst travellers and delays in visa issuance impacted upon some markets such as China, India and Africa. The new immigration regulations and health scares additionally adversely affected SA Tourism’s performance. Within SA there was sluggish economic growth which impacted upon Gross Domestic Product growth. late arrival of statistics from Stats SA and changes in their methodology impacted upon SA Tourism. The continued challenge of currency exposure lead to a regular review of SA Tourism’s operating model overseas due to rising costs. Domestic tourism performance remained a challenge for SA Tourism. Members were provided with insight into the vision, mission and legislative mandate of SA Tourism.

On financial performance for 2014/15 SA Tourism recognised total revenue of R991.6m during the 2014/15 financial year. The amount comprised of R880m in government grants received from the NDT and R111.6m received from Tourism Marketing SA (TOMSA).This was an R14m increase from the previous financial year. On operating expenses 77% of SA Tourism’s expenses were attributable to marketing and 16% of total operating expenses related to employee costs. In conclusion, whilst SA Tourism did not meet all set targets it was embarking on strategies to improve on areas where targets had not been achieved. A comprehensive Stakeholder Management Plan had been developed to improve collaboration and strengthen relationships with strategic stakeholders, trade, media and government. SA Tourism and the SA Tourism Board were already hard at work implementing recommendations of the Ministerial Review Panel on SA Tourism.  

The Committee appreciated SA Tourism’s prioritisation of domestic tourism and also commended SA Tourism for obtaining an unqualified audit report. The Committee additionally offered its assistance in the event that SA Tourism experienced difficulties with the Department of International Relations and Cooperation and the Department of Trade and Industry as the Committee had a good working relationship with both these Departments. Members pointed out that the visa regulations still had an impact over past festive season as its relaxation had not yet been implemented. Given the contribution that tourism made towards the Gross Domestic Product of SA and to job creation SA Tourism was asked what the way forward was. Did SA Tourism have estimates of targets? What were projections for the next financial year? Concern was raised that overseas figures to SA had decreased. The suggestion was made that perhaps the Ministers of Home Affairs and on Tourism should be invited to the Committee to speak on the matter. Members also felt that there should be different tariffs for South African locals and for foreign tourists. Locals could simply not afford to visit tourist sites in SA. Issues of affordability and access needed to be addressed. The Chairperson informed the Committee that a ministerial committee was working on the issue of the visa regulations and progress was being made. Members asked about tourism investments that had been made in Apartheid homelands that had become white elephants. Were these places not an opportunity to create jobs for people in those areas? Members raised concern that there was a lack of transformation in the tourism sector. Members also asked whether SA Tourism Board members were serving on a voluntary basis or were there plans to remunerate them. SA Tourism was asked for timeframes within which it would fill vacant posts. Were targets on geographic spread being met? The plight of disabled persons was also raised by members. Disabled persons also had the right to enjoy tourism products.

The Draft First Term Committee Programme was adopted unamended.

Meeting report

Briefing by South African (SA) Tourism
SA Tourism briefed the Committee on its Annual Report for 2014/15. The delegation from SA Tourism comprised of amongst others Ms Stembiso Dlamini, Acting Chief Executive Officer /Chief Operating Officer, Mr Tom Bouwer Chief Financial Officer, Ms Belu Mabandla General Manager: Operations and Ms Ntokoza Langa Office Manager: CEO’s Office. Members of the SA Tourism Board also in attendance were Ms Judy Nokwedi and Mr Yacoob Abba Omar. The National Department of Tourism (NDT) was represented by Mr Armstrong Manganye Deputy Director SA Tourism Oversight duly supported by Ms Petra van Niekerk Parliamentary Liaison Officer: Office of the Director General.

Ms Dlamini undertook the briefing. She kicked off the briefing with insight into the global environment as it affected tourism. Some of the challenges related to the difficult trading conditions globally, there was also global insecurity causing nervousness amongst travellers and delays in visa issuance impacted upon some markets such as China, India and Africa. The new immigration regulations and health scares additionally adversely affected SA Tourism’s performance. Within SA there was sluggish economic growth which impacted upon Gross Domestic Product growth. Late arrival of statistics from Stats SA and changes in their methodology impacted upon SA Tourism. The continued challenge of currency exposure lead to a regular review of SA Tourism’s operating model overseas due to rising costs. Domestic tourism performance remained a challenge for SA Tourism. Members were provided with insight into the vision, mission and legislative mandate of SA Tourism. The Committee was also provided with organograms of the governance and organisational structures of SA Tourism. SA Tourism was pleased to announce that it had received its 14th unqualified audit report in 2014/15.

The Auditor General of SA certified that SA Tourism’s financial statements were free from material misstatements and no findings were raised regarding procurement and contract. The Committee was provided with figures on global and regional tourism performance in 2014. Whilst foreign air arrivals to SA grew by 3.7% in 2014 the target set had not been achieved. Africa-air and Europe were the only regions that exceeded their target. Tourist arrivals to SA in 2014 grew by 6.6% over 2013 to reach 9 549 236. The Committee was provided with a comprehensive breakdown of performance information of SA Tourism. SA Tourism had to take action to overcome areas of underperformance. On improving the number of foreign visitor arrivals SA Tourism was currently formulating its Integrated Marketing Growth Strategy and would continue to implement its Hub Strategy for better market penetration and increase in arrivals. To improve on revenue from 2015/16 onwards, SA Tourism would be reporting on the number of tourists instead of foreign visitor arrivals as the return on investment was calculated based on tourists. In order to encourage an increase in the number of domestic travellers and the number of “holiday” trips an additional amount had been allocated to domestic tourism over the Medium Term Expenditure Framework period for 2015/16. New strategies and tactics would be implemented in order to create awareness, to cultivate a culture of travel and to increase the frequency of travel. Improvement on the number of graded establishments could be achieved by SA Tourism accelerating the implementation of the Tourism Grading Council of SA (TGCSA) Strategy that was approved in August 2014. It was also envisaged that the full implementation of the Basket of Benefits would improve the value proposition which would stimulate uptake by existing and new establishments to get graded.

Members were provided with detail on the TGCSA and the South African National Convention Bureau (SANCB), touching on key initiatives of each. The SA Tourism Board was appointed by the Minister and consisted on nine non-executive directors and included a representative from the NDT. In the period under review the non-executive directors serving on the SA Tourism Board were not remunerated for their service. On human resource management the SA Tourism Board had approved a structure of 202 positions versus the current headcount of 171. SA Tourism worked towards maintaining a vacancy rate of below 7%. SA Tourism was well within its Employment Equity targets based on the employees at Head Office and country managers abroad. International offices were not bound by the Employment Equity targets and operated under their respective labour laws. On financial performance for 2014/15 SA Tourism recognised total revenue of R991.6m during the 2014/15 financial year. The amount comprised of R880m in government grants received from the NDT and R111.6m received from Tourism Marketing SA (TOMSA).This was an R14m increase from the previous financial year. On operating expenses 77% of SA Tourism’s expenses were attributable to marketing and 16% of total operating expenses related to employee costs. In conclusion, whilst SA Tourism did not meet all set targets it was embarking on strategies to improve on areas where targets had not been achieved. A comprehensive Stakeholder Management Plan had been developed to improve collaboration and strengthen relationships with strategic stakeholders, trade, media and government. SA Tourism and the SA Tourism Board were already hard at work implementing recommendations of the Ministerial Review Panel on SA Tourism.  

Discussion
The Chairperson appreciated SA Tourism’s prioritisation of domestic tourism. He noted that the Committee encouraged the National Department of Tourism to do the same. He informed SA Tourism that the Committee was responsible for oversight over the Department of International Relations and Cooperation (DIRCO). If SA Tourism experienced any obstacles on the side of DIRCO he urged it to approach the Committee for assistance. The Committee also had a good relationship with the Department of Trade and Industry (DTI) and its entities. The idea was to have a cohesive approach. The Committee’s oversight responsibility was not only about how well SA Tourism was functioning but also on how to improve certain areas. He on behalf of the Committee commended SA Tourism for its unqualified audit report.  

Mr W Faber (DA, Northern Cape) stressed that the visa regulations had hit tourism hard. Over the past festive season there had been ten to twenty families that had been denied boarding at Heathrow Airport. The relaxing of visa regulations had not as yet been implemented. Tourism accounted for approximately 9% of SA’s Gross Domestic Product. Tourism created 1 job for every 12 arrivals. He asked what the way forward was. He understood that at present SA Tourism could not provide exact figures but asked if it could provide estimates of targets. He was convinced that overseas figures to SA must have decreased. He suggested that the Minister of Home Affairs and the Minister of Tourism be invited to the Committee to speak on the matter. What were the projections for the next financial year? He felt that there needed to be different tourism tariffs for local South Africans and for foreign tourists. Local South Africans could simply not afford to visit tourist attractions like Robben Island. Countries like Poland had different prices for locals and for foreign tourists. It was something that needed to be seriously considered. He spoke to the bloodhound project that was to take place in the Northern Cape and asked what role SA Tourism was playing in marketing it overseas.

The Chairperson responded that there was a ministerial committee working on the issue of the visa regulations and progress was being made. The Minister of Tourism, Mr Derek Hanekom, had communicated to the Committee about the progress that was being made.

Ms Dlamini, on estimated projections, said that SA Tourism did analyse things. There were different methodologies that were used to set targets. There was a 10.9m projected tourist arrival target. The affordability of tourism prices was getting attention. SA Tourism on its own could not speak to the affordability issue. Stakeholder engagement sessions were needed to address the issue of affordability. The issue was also about how to expand domestic tourism taking into account affordability. On the bloodhound project, she explained that the Northern Cape Tourism Agency was working with SA Tourism’s United Kingdom office. Other country offices were also ready to come on board. A meeting was scheduled to be held in February 2016 to discuss issues of quality and grading in the Northern Cape. 

Mr S Mthimunye (ANC; Mpumalanga) stated that during the apartheid days homeland governments had made tourism investments which had become white elephants. He referred specifically to KwaNdebele. He was aware that perhaps these tourism investments now fell under provincial tourism authorities. He asked what SA Tourism’s take on the matter was. Could these places not be job creators? He also felt that there was a lack of transformation in the tourism sector. He asked what the Amsterdam property was that SA Tourism was referring to.

Ms Dlamini responded that the National Department of Tourism (NDT) had a unit in place to deal with destination development. The NDT worked in collaboration with provincial and local government on it. The NDT was leading the initiative. She said that SA Tourism worked with the Tourism Business Council of SA on transformation. Transformation was placed with the tourism industry itself. A partnership was needed between government and the tourism industry. SA Tourism sensitised its country managers about transformation. Transformation was incorporated into SA Tourism’s supply chain management processes as well. Procurement had to take into account Broad Based Black Economic Empowerment (BBBEE). SA Tourism incorporated transformation into its operations. 

Mr Bouwer explained that the Amsterdam property of SA Tourism was categorised under property and equipment. On the accounting side of things SA Tourism had to recognise it as an investment property. The property was a rental property for SA Tourism. 

Ms M Dikgale (ANC, Limpopo), on the late arrival of statistics from Stats SA, asked whether SA Tourism provided Stats SA with timeframes when statistics were needed. On the matter of SA Tourism’s Board members not being remunerated, was it voluntary service by Board Members or were there plans to remunerate them?

Mr Bouwer explained that the previous SA Tourism Board had served voluntarily. The Minister of Tourism had stated that current Board Members would be remunerated.

Ms Dlamini said that the problem with statistics was complex. Previously SA Tourism had received statistics from the State Information Technology Agency (SITA). The Department of Home Affairs (DHA) provided data to Stats SA. SA Tourism received data every two months. By March 2017 SA Tourism would have something new in place on how to collect tourism data.

Ms Judi Nokwedi, Chief Operating Officer: Tourvest Integrated Tourism Group and SA Tourism Board Member, explained that in no way was the remuneration of Board Members industry driven. Board Members had full time day jobs. The Board was changed drastically by Minister Hanekom. The idea was to promote SA as a tourist destination. Board Members drew from their sector experience and expertise. She stressed that the Board would look at transformation in the sector. Tourism Sector Codes had been gazetted. Transformation was a SA Inc. priority.

Ms Z Ncitha (ANC, Eastern Cape) said that there were too many positions which were not filled in SA Tourism where persons were in acting capacities. What timeframes were there to fill vacant positions? People needed to be appointed in order to ensure sustainability of reports. She also asked whether targets on geographic spread were being met. She appreciated SA Tourism’s efforts in working with provincial and local government.

Ms Nokwedi said that the appointment of a CEO for SA Tourism was a priority for its Board. Appointments at board level were a priority for the Minister of Tourism. She was in agreement that good leaders needed to be appointed. It was hoped to finalise the appointments in quarter one of 2016. She pointed out that countries that were doing well on tourism in general had a vibrant domestic tourism market. Affordability and access in many countries was about subsidisation.

Ms Mabandla, on geographic spread, stated that everyone promoted tourism but each in its own way. SA Tourism had different strategies to ensure geographic spread. She explained that when SA Tourism held indabas and meetings Africa events various people like buyers and traders were hosted. She wished to emphasise that SA Tourism ensured geographic spread by exposing media and trade to various provinces. Different provinces were covered. Provinces often held signature events.

The Chairperson was aware that the CEO of SA Tourism, Mr Thulani Nzima, had resigned. He had been informed that the SA Tourism Board was working on the matter.

Mr B Nthebe (ANC, North West) pointed out that part of transformation was affordability and access of tourism products to South Africans. There were South Africans who stayed close to places like the Kruger National Park and yet had never enjoyed its sights because they simply could not afford it. He felt that it was the duty of the SA Tourism Board to identify what needed to be done in order to move forward. There seemed to be an emphasis on global tourism at the expense of domestic tourism. He conceded that global tourism as important but so was domestic tourism.

Mr Faber said that Richard Branson of Virgin Atlantic fame was hosting a kite surfing competition in Cape Town. The competition entailed breaking the Guinness World of Records and involved 352 kite surfers. Even though he spent a great deal of time in Cape Town he had not even been aware of the competition. He felt that events like the competition needed to be advertised more.

Ms Dlamini said that SA Tourism tried to strengthen partnerships all-round. It included partnerships with the Department of Arts and Culture as well the sports fraternity. The partnerships helped SA Tourism to know what activities were out there to promote. The SA Tourism Board had tasked SA Tourism to promote activities.

The Chairperson pointed out that the staff complement of the NDT reflected a small number of disabled persons. Disabled persons required special facilities but also had the right to travel and enjoy tourism products. Many a times disabled persons experienced difficulties as they were not taken into consideration. The point of bringing up disabled persons was because the Committee wished to affirm their potential and abilities.

Ms Dlamini responded that the Tourism Grading Council of SA had revised its criteria to include universal access. Persons with disabilities could therefore access tourism products. She noted that SA Tourism was working on its employment equity plan. The employment equity plan of SA Tourism would take into account the employment of disabled persons.

The Chairperson said that the Committee encouraged DIRCO to support tourism growth in SA.  

Draft First Term Committee Programme (26 January 2016 – 24 March 2016)
The Committee adopted the Draft Programme unamended.

The meeting was adjourned.

 

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