SA Tourism on its 2016 Strategic and Annual Performance Plans, with Minister

Meeting report

The Minister of Tourism, Mr Derek Hanekom, graced the meeting with his presence.

SA Tourism on its Final Five Year Strategic Plan and Annual Performance Plan 2016-2021

The SA Tourism delegation comprised of Dr Tanya Abrahamse, Acting SA Tourism Board Chairperson; Mr Thebe Ikalafeng, Deputy SA Tourism Board Chairperson; Ms Stembiso Dlamini, Acting Chief Executive Officer and Chief Operations Officer; Mr Tom Bouwer, Chief Financial Officer; Ms Amanda Kotze-Nhlapo, Chief Convention Bureau Officer; Ms Evelyn Mahlaba, Regional Director: Africa; and Mr Darryl Erasmus, Chief Quality Assurance Officer: Tourism Grading Council of SA.

Ms Abrahamse proceeded with opening remarks. She stated that Minister Hanekom had instituted a panel review of SA Tourism in 2015. A new board had also been appointed for SA Tourism; even the global world had changed with new conflicts, economics and strides in information technology. These changes were reflected in the Strategic Plan and Annual Performance Plan of SA Tourism that were before the Committee. SA Tourism wished to have a Tourism Growth Strategy implemented in 2016. This meant that SA Tourism needed to relook at the markets that it should focus on. SA Tourism would also have to evaluate its organisational culture. Due to budgetary constraints SA Tourism embarked on a programme of working with others. She pointed out that a preferred candidate for the post of Chief Executive Officer of SA Tourism would be presented to Minister Hanekom before June 2016. 

Ms Dlamini continued with the actual briefing.
The Committee was provided with insight into the values and organisational culture cornerstones of SA Tourism as well as its legislative framework and governance. SA Tourism was busy with an organisational review that would end at the end of the financial year. Members were provided with statistics on the performance of global tourism for 2015. Statistics on domestic tourism was also provided. There were 16.1m domestic trips taken in the first nine months of 2015, which represented an 18.7% decrease compared to the 19.8m trips taken during the same period in 2014. On business events SA was the number one meetings destination in Africa and number thirty-two globally according to the International Congress and Convention Association (ICCA) ranking. The three main host cities in SA were Cape Town (47%), Johannesburg (19%) and Durban (15%). Cape Town was ranked number one in Africa as well. The Tourism Grading Council of SA (TGCSA) was the mandated enabler and accreditor of tourism quality assurance. According to Statistics SA, SA’s accommodation industry had more than 10 000 players. Approximately 50% of these establishments were graded consisting of about 85% non-hotel establishments and 15% large hotel chains and facilities for meetings, exhibitions and special events. SA Tourism operated in about thirteen international markets and had suffered approximately R350m in currency losses over the past five years due to the depreciation of the Rand against major currencies. This had reduced SA Tourism’s marketing budget in real terms. Over and above the grant allocation from government SA Tourism received about 9.4% of its budget from Tourism Marketing SA (TOMSA) levies through the Tourism Business Council of SA (TBCSA) as a contribution from the private sector.

SA Tourism drafted its Strategic Plan and Annual Performance Plan in line with National Treasury’s framework. SA Tourism’s Strategic Outcome Orientated Goal was to market SA for increased contribution of the tourism sector to inclusive and sustainable economic growth. The goal was essentially to increase tourism revenue’s contribution to the economy from a projected R91.2bn in 2015 to R124.4bn by 2020. In order to reach the aforementioned Strategic Outcome Orientated Goal, SA Tourism set strategic objectives and had to put strategies in place. The various strategies with their respective key performance indicators were outlined to members. One such strategy was to invest in selected markets for leisure tourism to deliver volume of travellers and value in tourism revenue. The key performance indicators to be looked at for the strategy was the number of international tourist arrivals, total revenue, percentage of brand positivity and number of domestic holiday trips. On international tourism marketing SA Tourism opted to adopt a hub approach and to shift from bricks and mortar offices to virtual offices. On regional Africa marketing, SA Tourism wished to derive maximum value in support of the Africa Growth Strategy and adopted an Africa Hub Strategy for the air markets and robust marketing for the land markets.

The Committee was further provided with a breakdown of Annual Performance Targets 2016/17 and estimates in terms of SA Tourism’s Annual Performance Plan.  With the key performance indicator being percentage brand positivity achieved, the estimated performance for 2015/16 was 38%, the medium term targets set for 2016/17, 2017/18 and 2018/19 was 40% respectively.

Mr Bouwer presented the revenue and expenditure estimates of SA Tourism. A breakdown of figures was presented to the Committee. There was a 5.8% increase in the budget of SA Tourism. It was highlighted that unfortunately currency exposure could not be managed. SA Tourism had spent its marketing budget as was expected.  At the time of finalising its Strategic Plan, SA Tourism had embarked on a risk assessment to identify risks that could have a negative impact on the achievement of its strategic objectives. This process was concluded by the end of March 2016. The risks identified were currency loss and increased costs of doing business abroad, possible decline in tourism industry performance and lack of assurance over tourism statistical data.

Mr Ikalafeng concluded that SA Tourism had to work towards overcoming its challenges. He believed that SA was very much a value for money destination.

Discussion

The Chairperson noted that SA depended on SA Tourism to see to it that SA was branded properly. Tourism was a very important sector to SA.

Mr J Vos (DA) stated that he had posed a parliamentary question on country offices and had received a comprehensive response. A total of R400m was used for the operations of country offices. It was an issue that he felt needed further discussion. Media reports had alleged that there was a strategy in place to use country offices better. Some country offices were to be closed and a hub strategy was to be implemented. Missions were in addition to be used to market SA abroad. He suggested that there be better alignment between the National Department of Tourism (NDT) and the Department of International Relations and Cooperation (DIRCO). The question should be asked why SA had missions in certain countries. There had to be a reason that there was some benefit for SA to have diplomatic relations with certain countries. SA had to better utilise its assets abroad to do destination marketing. SA’s ambassadors had to be trained to market SA. If there were protocols that had to be adhered to then the two Ministers from the NDT and the DIRCO could deal with them. He pointed out that the City of Cape Town had in cooperation with the Western Cape Investment and Trade Promotion Agency (WESGRO) introduced an airlift strategy. The idea was to bring in more direct flights into Cape Town from SA’s markets abroad. Greater alignment was needed between what SA Tourism and provinces were doing. Cape Town was also hosting a World Travel Market (WTM) Africa 201, which was worth $333m. From the presentation it looked as though the National Conventions Bureau (NCB) was targeting 138 business events for 2016/17. Cape Town, Johannesburg and Durban seemed to host most of the events. He would like to have heard about other provinces and places like Mpumalanga Province and Grahamstown that had hosted events. This linked in directly with bringing about geographic spread. 

Minister Hanekom appreciated the input made on SA Tourism’s country offices. Much had been said about the use of virtual offices and the implementation of a hub strategy. It remained to be seen whether virtual offices would be sufficient. A hub strategy would make a difference.  DIRCO staff was trained but the problem was that they did not receive support. Countries like Mozambique had tourism attaches stationed at their embassies. Airlift strategies were important. A direct fright from SA to Mumbai, India, was needed. Business events not only dealt with geographic spread but also seasonality.

Ms Kotze-Nhlapo, on the target of 138, said the National Convention Bureau’s (NCB) rating was linked to the International Congress and Convention Association (ICCA). On average per year there were 120 business events. The NCB was committed to an African Events Strategy. The idea was to rotate where meetings were to be held in Africa. In 2016 events were being hosted in Mpumalanga Province and in Grahamstown. The average size of business events in SA was 700-800 delegates. Unfortunately not all places had the capacity to host such huge events. The intention was to have pre and post event tours. More or less 100% of people did pre and post tours. Delegates usually came from SA’s core markets. It was good to have a sector trade show like the WTM Africa 2016. These types of trade shows were money-spinners. The NCB supported these events.

Mr Bouwer, on the cost of doing business in country offices, stated that overhead costs tend to increase due to currency exposure. One needed to get a bigger bang for your buck. Perhaps the hub strategy was a solution. The country office in Italy had closed on the 31 March 2016. Overhead costs at the office in Italy had sat at 82%.   

Ms Dlamini said SA Tourism was aware of the airlift strategy that the Western Cape Province had. Kwa-Zulu Natal Province was also working on an airlift strategy. SA Tourism had informed the provinces about SA’s four key markets. On SA Tourism’s relationship with SA missions, the Board of SA Tourism had said that SA Tourism had to be formally part of the academy where ambassadors and diplomats were trained. SA Tourism was working with the DIRCO on a module for the academy.

Ms Mahlaba added that SA Tourism trained people on tourism issues. Staff of the DIRCO was always in attendance at tourism indabas. The DIRCO officials were also introduced to local products.

Ms E Masehela (ANC) asked what the current situation on the processing of visas was. She asked whether grading was to become compulsory.

Mr Erasmus explained that the Tourism Act outlined grading to be voluntary. A policy review was needed in order to make it compulsory. There was a committee in place to undertake a review of whether grading should be voluntary or compulsory.

Minister Hanekom conceded that the visa issue had affected growth in markets like China. The negatives to tourist figures into SA like the visa regulations and Ebola had now dissipated. Things in favour of growth were that there was no Ebola scare any longer and it was cheaper for foreigners to come to SA given the exchange rate. On visas he noted that Brazilians did not need visas to come to SA. A new development was that Russians also no longer needed visas to come to SA. In China the requirement of making in person applications for visas to SA was also being lifted. Applications would now be made through accredited companies. The same situation with China applied to India. There were problems in capacity on the processing of visas in India. India had huge growth potential but the Department of Home Affairs (DHA) had huge capacity problems in India. Cabinet had made a decision that business people could obtain a 10-year visa. There was also a multiple entry visa for Indians that was valid for three years. The DHA was planning to exempt travellers from the Brazil, Russia, India, China and SA (BRICS) Bloc of countries who had valid visas to the USA, the UK or held a Schengen visa. Such persons would get visas on arrival. He however emphasised that it was not yet a decided matter. One important outstanding matter was that of the immigration regulations over the requirement of an unabridged birth certificate for children who travelled. The issue was still under discussion.

Ms L Makhubele-Mashele (ANC) referred to SA Tourism’s Annual Performance Plan and said the revenue brought in by business events had not been quantified. A comparison was needed in terms of funds invested versus income generated from the invested funds. If the income generated was substantial then more investment should be made into business events. She felt that targets around holiday trips were problematic. She wished to see projected targeting on domestic tourism travel. It looked as if SA Tourism was under-targeting domestic holiday trips. South Africans should be encouraged to travel.

Ms Kotze-Nhlapo said that there were economic impact figures. There was a revenue indicator. There was more or less R2.3bn in revenue for the next 3-4 years.

The Chairperson said it was quite obvious that SA Tourism was under new management and had a new face. Minister Hanekom did well with his review of SA Tourism. Were virtual SA Tourism offices in Africa or were they in countries where SA had a presence? She asked whether SA Tourism staff in foreign offices were paid by the NDT or by SA Tourism themselves. She pointed out that airlift strategies fell under the responsibility of the Department of Transport. Most coastal provinces had bilaterals with airlines. SA Tourism needed to do greater work on airlift strategies. How far had SA Tourism negotiated with the DHA to accredit tourist agencies who wished to do business in SA? She also asked how far the process was on the appointment of a service provider to handle the Tourism Indaba. It would take a load off SA Tourism in the hosting of the event. What was the Tourism Marketing SA (TOMSA) Levy Fund used for?

Minister Hanekom, on the appointment of a service provider to assist with the hosting of Indabas, said there was a tender process but he did not have any detail about it. .

Ms Kotze-Nhlapo confirmed that there had been a tender process and that the process was now in its final stages of choosing a partner. She hoped that an announcement would be made soon.

Minister Hanekom responded that it would be useful to have a partner to assist with the hosting of Indabas. On how to grow tourism in SA there were three things to consider. The first was to do marketing, which SA Tourism did. The second was to continuously improve products i.e. destination improvements. The third issue was to remove obstacles to tourism growth i.e. visas could make it easier for people to come to SA without compromising security.

Ms Abrahamse said she had sat on the panel review of SA Tourism. There was a huge gap in nature tourism. South African National Parks (SANParks) provided the highest number of beds. SA Tourism had entered into a long conversation with SANParks. There was a need to open up opportunities for domestic tourism. Locals could use the Wild Card that SANParks offered to get discounts or other discounts could also be considered. She stressed that arts, culture and heritage had been neglected. There was a need to develop a strategy to map out arts, culture and heritage events. 

Mr Bouwer said that SA Tourism paid SAT staff in foreign countries.

Ms Dlamini noted that SA Tourism had signed a Memorandum of Understanding (MOU) with the TOMSA. There was a short term and long term aspect to the MOU. The intention was to drive arrivals from countries like China, the UK and Germany. On public relations and branding there was funding from a 15% collaborative campaign. All initiatives funded from the TOMSA Levy were done collaboratively with the Tourism Business Council of SA (TBCSA). 

The Chairperson asked where the home of the Tourism Grading Council of SA (TGCSA) was. Where should the TGCSA ideally be located? She asked for information on where else events could be hosted besides Cape Town, Durban and Johannesburg. On the mandate of the TGCSA it would seem that in the Tourism Act grading was limited to places of accommodation.

Minister Hanekom, on the issue of a home for the TGCSA, noted that the review panel had made a suggestion that the TGCSA should be located with either the NDT or the South African Bureau of Standards (SABS). At present the TGCSA was housed with SA Tourism.  Shifting the TGCSA anywhere else would be difficult. The presence of the TGCSA at SA Tourism was not detracting SA Tourism from doing its work. The Tourism Act needed some serious review. A great deal of anomalies and alignments on the TGCSA needed to be addressed.

Mr Erasmus explained as matters stood the mandate of the TGCSA was only according to what was stated in the Tourism Act. In the event that a policy review was done then the mandate of the TGCSA could be extended.

Mr Vos noted that the NDT, SA Tourism and provinces had their own campaigns going. He was aware of the Sho’t Left and the My First Time Campaigns. He asked what the Hidden Gems and Discover Your Town Campaigns were all about? Greater collaboration was needed between local and provincial stakeholders. There was a need to link campaigns with the affordability of domestic travel. He pointed out that the briefing had been silent on cruise tourism. Cruise tourism should form part of planning efforts. Cape Town would have a dedicated terminal for cruise ships just as Durban had. Port Elizabeth was also planning to build a cruise ship terminal. Globally cruise tourism had increased by 10%. It was a money-spinner. Cruise tourism was however seasonal. The development that was taking place at the V&A Waterfront in Cape Town was coming up with a mix to include cruise tourism.

Ms Mahlaba explained that on the My First Time Campaign, SA Tourism was finalising the domestic consumer insights. SA Tourism wished to partner with different entities to encourage people to travel. Domestic events were happening. SA Tourism had for instance partnered with a biking event that usually took place in the Limpopo Province.

Mr Ikalafeng suggested that SA Tourism in the future showcase some of the work it had done on campaigns. He invited the Committee to visit SA Tourism’s offices in Johannesburg. Perhaps SA Tourism could allocate a SA specialist to the Committee.

Minister Hanekom noted that there was good news for tourism. Tourism could expect a good year ahead. He noted that 2015 statistics from Statistics SA had shown a growth of 15% in all major markets, which included regions like the South African Development Community (SADC), Europe and Asia. China especially showed incredible growth. On targeting and forecasting forecasted growth for the sector was pegged at 2%, which he felt was hopelessly wrong. He believed that growth would be much higher. He cautioned that in tourism things could change very quickly. He asked the Committee to be aware that forecasting was not an exact science. The exchange rate however bad it was for SA was a good thing for tourism in SA. It was more affordable for foreigners to visit SA. He emphasised that domestic tourism was important for tourism growth. It was a huge injustice that poor South Africans could not enjoy their own tourist sites. The tourism industry had to come to the party. It was part of the affordability argument. Tourist resorts could form part of the solution. He conceded that there were problems on Social Responsibility Implementation (SRI) Projects. Community projects in rural areas were sometimes difficult and he was aware that the failure rate was high. Efforts were being shifted towards destination enhancement. Cultural villages could also be an option as cultural diversity was part of SA’s uniqueness. Cultural villages were not marketed enough. He noted that Mr Vos always brought up the issue of municipal resorts and he agreed that it could be the solution to having affordable accommodation. There needed to be collaboration with provinces. Provinces and municipalities needed to increase their budgets for tourism. In the Western Cape tourism was a priority. This was not necessarily the case in other provinces. The NDT traditionally did not consider cruise tourism a priority. He was aware that cruise tourism was a growing industry. The tourism industry felt that the cruise ships were owned by others and not themselves. He felt that it was short term thinking not to consider cruise tourism a priority. There were a great deal of visitors that disembarked from cruise ships and one should not merely be dismissive.

The Chairperson suggested that perhaps SA Tourism could consider looking at cruise tourism. 

The meeting was adjourned.