SA Tourism briefed the Committee on its Quarter 2 2016/17 Performance Report
On organisational performance for Quarter 2, SA Tourism had achieved five of its fourteen key performance indicators i.e. number of tourist arrivals achieved, number of domestic holiday trips, total tourism revenue achieved, number of graded rooms, and achieved an unqualified audit. SA Tourism had not achieved two of its fourteen key performance indicators i.e. percentage of brand positivity achieved and number of graded accommodation establishments. Although the target on the number of graded establishments had not been achieved, the target for the number of graded rooms had been achieved.
On performance for Quarter 2, on number of international tourist arrivals achieved the target was 2 053 746 and achievement was 2 248 082.
On SA Tourism’s marketing investment framework, the Committee had asked SA Tourism to do an econometric model. SA Tourism had therefore resuscitated its Enhanced Strategy for Growth and had set a medium-term goal to increase its tourism baseload by five million trips/visits in the next five years. Members were provided with a breakdown of tourist arrivals from various markets globally. Figures on tourism revenue from various markets globally were also provided. The provincial spread in SA had improved from an international perspective with arrivals increasing in five of the nine provinces in Quarter 2 of 2016. Gauteng Province was the most visited province in Quarter 2, with the Western Cape Province coming in at number two.
SA’s brand positivity target had been set at 40%, however at June 2016 actual brand positivity sat at 38%. Part of the decline was due to currency losses, and SA Tourism had to find ways around the currency losses suffered. Domestic tourism accounted for 5.4m of the total number of trips for Quarter 2, a decrease of 6% compared to the 5.8m trips taken in Quarter 2 of 2015. Total revenue generated from the domestic tourism market increased relative to 2015 totalling 4bn in Quarter 2 of 2016. Affordability was cited as the main deterrent as to why people did not take domestic trips.
The Committee was also provided with insight into the work of the National Conventions Bureau on business events. Members were given a comprehensive breakdown of grading figures across the various categories of graded establishments. Grading was a discussion point at Ministerial Members of Executive Committees at present. The total number of graded establishments as at 30 September 2016 was 5 287. In previous quarters a great deal of establishments had cancelled their grading memberships. Much work had been done on grading, which saw many establishments coming back into the fold. SA Tourism’s total number of employees was 181. There were 28 vacancies, most being in marketing. SA Tourism had taken a decision not to fill vacant posts unless they were critical posts until such time that its organisational restructuring was complete. SA Tourism’s restructuring would be complete by 31 March 2016. SA Tourism had also aligned its employment equity in line with national legislation. There was however an under representation of African males in SA Tourism.
Total revenue for Quarter 2 was just over R456.7m with expenditure sitting at just over R352.4m.
Members asked the reasons why brand positivity figures for SA in certain countries like Japan were so low, could it be due to the negative publicity that SA was receiving of late? If Africa accounted for 78% of all arrivals into SA, then Members needed to be provided with more information on the African market. Members asked the reasons why tourists had cancelled trips to SA. SA Tourism was asked what its efforts on the hosting of business events in the lesser known provinces and towns were. Most events were usually hosted in Cape Town, Johannesburg or Durban. On the marketing of SA, SA Tourism was asked whether there was synergy with provinces and local government. Concern was raised about vacancies within SA Tourism, especially in its marketing department. SA Tourism was asked what its policy on remuneration of its board members was. What was the remuneration scale of board members? Concern was also raised that SA Tourism was not reaching its targets on grading. Was the cost of grading too great for establishments, and whether affordability of grading was an issue that needed to be looked at. Members suggested that perhaps government could subsidise the grading costs of establishments in rural and township areas. On employment equity, SA Tourism was asked whether there was a strategy in place for placement of previously disadvantaged persons within SA Tourism. Was there a moratorium on the placement of whites and other categories of persons within the organisation? SA Tourism was asked whether it had a succession plan strategy. Members asked whether SA Tourism should not consider making job creation one of its performance indicators.
Members requested information on the commission that Minister of Tourism Mr Derek Hanekom had established to deal with statistics and other issues. SA Tourism was also asked when it could provide the Committee with an income and expenditure report on the Tourism Indaba. Members asked what mechanism SA Tourism had in place to ensure that establishments remained graded. SA Tourism was asked what radical interventions it had to address challenges related to domestic tourism. Was affordability an issue that hampered growth of domestic tourism? International best practices on domestic tourism of countries like China should be looked at. The Chairperson suggested that SA Tourism in its strategic plan and Annual Performance Plan break down its targets into quarters. SA Tourism was asked whether it was contributing towards the meeting of the National Tourism Sector Strategy targets. Members asked what type of capacity building SA Tourism was planning to do at local government level. Members impressed upon SA Tourism to provide answers and information to clarity seeking and unanswered questions of Members to the Committee at a future engagement. SA Tourism gave the Committee assurances that it would do so.
Introductory remarks by SA Tourism Chief Executive Officer (CEO) Mr Sisa Ntshona
SA Tourism appreciated the fact that it operated in a tight fiscal environment. SA Tourism had implemented cost containment measures where it could. The intention was to spend more on investment. Travelling costs had been curtailed with even the CEO travelling economy class on flights. Greater investment would be made on making the case for tourism. The South African public did not fully understand what tourism was all about. SA Tourism intended in 2017 to create a case for tourism. Every South African had to be a tourism ambassador. A great deal of effort was being made to get intergovernmental coordination right. Duplication of efforts should not take place. This necessitated interaction with BrandSA and ProudlySA. Meetings had taken place with BrandSA and a memorandum of understanding would soon be in place. SA Tourism was also forging a relationship with the Department of International Relations and Cooperation (DIRCO) since it had a presence all over the world. SA Tourism also wished to link up with provincial and local authorities. Capacity building of municipalities would be a focus of SA Tourism; especially in rural areas. Another area of focus would be on insights and analytics as it was crucial for SA Tourism to know what trends were. Domestic tourism, and how to get South Africans travelling, would be a key focus point. For most countries, domestic tourism surpassed international tourism however with SA it was the opposite. Business tourism was another area that would be looked at. SA Tourism also tried to deal with issues on a regular basis such as the long queues at OR Tambo International Airport. SA Tourism had to assist and was thinking of ways of improving the tourist experience, essentially looking at ways of making the queuing experience more pleasurable at the airport. Persons in queues were given water and promotional material. SA Tourism thought about things broadly. Niche tourism i.e. sport and cultural tourism etc. would also be looked at. The Committee was informed that SA Tourism as a structure was going through restructuring. Insights and analytics would determine how far SA Tourism went into markets. From a National Treasury perspective tourism was a priority sector as the mining and manufacturing sectors were going down.
SA Tourism on its Quarter 2 2016/17 Performance Report
The rest of the delegation from SA Tourism comprised of Ms Sthembiso Dlamini, Chief Operations Officer, and Ms Nombulelo Guliwe, Finance Manager. Ms Dlamini undertook the briefing.
On organisational performance for Quarter 2 SA Tourism achieved five of its fourteen key performance indicators i.e. number of tourist arrivals achieved, number of domestic holiday trips, total tourism revenue achieved, number of graded rooms and achieving an unqualified audit. SA Tourism had not achieved two of its fourteen key performance indicators i.e. percentage of brand positivity achieved and number of graded accommodation establishments. Although the target on the number of graded establishments had not been achieved, the target for the number of graded rooms had been achieved. The remainder of the key performance indicators were not due for reporting.
Detailed figures were provided on performance for Quarter 2. For example, on number of international tourist arrivals achieved the target for Quarter 2 was 2 053 746 and achievement was 2 248 082. On SA Tourism’s marketing investment framework, the Committee had asked SA Tourism to do an econometric model. SA Tourism had therefore resuscitated its Enhanced Strategy for Growth and had set a medium-term goal to increase its tourism baseload by five million trips/visits in the next five years. All entities operating on SA’s tourism ecosystem needed to have a unified focus on the destination’s tourism positioning with synergised efforts and simplified processes. Members were provided with a breakdown of tourist arrivals from various markets globally. Figures on tourism revenue from various markets globally were also provided. On geographic spread, the provincial spread in SA had improved from an international perspective with arrivals increasing in five of the nine provinces in Quarter 2 of 2016. Gauteng Province was the most visited province in Quarter 2 with the Western Cape Province coming in at number two. SA’s brand positivity target had been set at 40%, however at June 2016 actual brand positivity sat at 38%. Part of the decline was due to currency losses, and SA Tourism had to find ways around the currency losses suffered. On domestic tourism performance, domestic tourism accounted for 5.4m of the total number of trips for Quarter 2, a decrease of 6% compared to the 5.8m trips taken in Quarter 2 of 2015. Total revenue generated from the domestic tourism market increased relative to 2015 totalling 4bn in Quarter 2 of 2016. Affordability was cited as the main deterrent as to why people did not take domestic trips.
The Committee was also provided with insight into the work of the National Conventions Bureau on business events. Members were given a comprehensive breakdown of grading figures across the various categories of graded establishments. Grading was a discussion point at Ministerial Members of Executive Committees (MinMEC) at present. The total number of graded establishments as at 30 September 2016 was 5 287. In previous quarters, a great deal of establishments had cancelled their grading memberships. Much work had been done on grading, which saw many establishments coming back into the fold. SA Tourism’s total number of employees was 181. There were 28 vacancies, with most being in marketing. SA Tourism had taken a decision not to fill vacant posts unless they were critical posts until such time that its organisational restructuring was complete. SA Tourism’s restructuring would be complete by 31 March 2016. SA Tourism had also aligned its employment equity in line with national legislation. There was, however, an under representation of African males in SA Tourism.
The briefing concluded with a financial performance overview for Quarter 2. Total revenue for Quarter 2 was just over R456.7m with expenditure sitting at just over R352.4m.
Mr G Krumbock (DA), on slide 10 on brand positivity, commented that SA Tourism had conceded that they had challenges on it. The Committee needed to be informed of what the reasons for deviations were. He asked why brand positivity was so low in the countries listed. Japan had a brand positivity of SA which only sat at 5%. He felt that there must be reasons why brand positivity was so low. Was it the negative publicity that SA was experiencing? There had been service delivery protests and the “fees must fall” campaigns. He also asked for clarity on figures which, amongst others, spoke to the number of tourist arrivals, the number of domestic holiday trips etc. He felt that there was a discrepancy in the figures when comparing slides 7and 8 to slide 17. He asked whether SA Tourism expected international arrivals to grow faster than domestic trips. He also asked for clarity on slides 19 and 23. He asked whether the headings of the slide were correct. On slide 32 he asked whether the average spend per domestic trip in 2015 was really R770. He felt the figure to be far too low. Travelling costs alone in SA was huge. On slide 26, geographic spread, he also felt that there was a contradiction in statements. The first point on the slide stated that arrivals had increased in five of the nine provinces in Quarter 2 in SA. However, the last point made on the slide spoke about most of the provinces seeing a decline in arrivals from 2015 levels with the exception of the Gauteng, Western Cape, Eastern Cape and Limpopo Provinces. On slide 25 he noted that arrivals from Africa made up 78%of all international arrivals. He asked SA Tourism to provide the Committee with more information on the African market. Greater understanding of the African market was needed.
Mr Ntshona responded that SA’s brand positivity had only gone down globally. It had to be remembered that SA Tourism did not operate in a vacuum. Events affected brand positivity. On what SA Tourism was doing about it, for instance there were engagements with BrandSA who was tasked with managing the perception of SA in the world. Not too long ago SA Tourism and BrandSA had discussed SA’s withdrawal from the International Criminal Court (ICC). SA Tourism had to ensure that messaging efforts with BrandSA had to be in tandem. Unfortunately, the world still perceived the continent of Africa to be one country. If something happened in the rest of Africa it affected SA. Hence SA Tourism had started engagement with its African counterparts on efforts to perhaps market Africa first before marketing individual countries. On why brand positivity for SA in Japan was so low, Japan did not even feature on SA Tourism’s market investment framework.
On statistics, everyone had their own numbers i.e. SA Tourism, the National Department of Tourism, the City of Cape Town, etc. Even the World Tourism Organisation (WTO) had its own statistics. There was a need to be smart about statistics. It depended on whose statistics was relevant. Minister of Tourism Mr Derek Hanekom had set up a committee to come up with statistics that everyone could use so that there could be uniformity. SA Tourism would report back to the Committee on what the committee was able to come up with.
Ms P Adams (ANC) referred to slide 12 which spoke about 30 new hotels entering the star grading system. Was it individual hotels or group hotels? She asked what the reasons for cancellation of trips were. It had to go beyond the visa regulations issue. On slide 10, which spoke about brand positivity of SA, she noticed that figures were only provided on two African countries i.e. Nigeria and Ghana. She asked what SA Tourism’s marketing strategy on SA’s neighbouring countries was. She had spoken to Deputy Minister of Tourism, Ms Tokozile Xasa, who had informed her that the picture on the visa issue was not too bleak as SA was seen as a fairly safe destination. She asked what the reason for the drop in brand positivity was. She asked about the efforts of SA Tourism in provinces like the Northern Cape, North West and Eastern Cape Provinces etc. What was being done in the aforementioned provinces to promote the hosting of business events? SA Tourism was asked whether there was synergy with provinces on marketing efforts as it could lead to savings. She asked why SA Tourism had 21 vacancies in its marketing department. When would the vacancies be filled? The Committee needed insight into the candidates that SA Tourism would like to fill the posts with. On employment equity, she asked why SA Tourism had foreign employees and what was the nature of their work. In which departments did they work? She asked what SA Tourism’s policy on the remuneration of board members was. She also asked what the policy on the code of conduct of attendance of board members to meetings was. What was the remuneration scale of board members?
Mr Ntshona, on the work of the National Conventions Bureau, responded that the focus would no longer only be on the big cities like Cape Town, Durban and Johannesburg. The focus would be on the entire SA. On issues of capacity building at provincial and local government level, SA Tourism’s strategy was not to prescribe to them what needed to be done. They themselves knew their own environments? Each city or province had to identify their own competitive advantage, hence this was where collaborative efforts came in. He pointed out that the South African Local Government Association (SALGA) had quarterly conferences at which SA Tourism had requested air time. There were many challenges related to local economic development and it was SA Tourism’s intention to assist. There was a need for the broader case for tourism to be made. He conceded that marketing was a weakness and that SA Tourism had to organise it better. Issues would be addressed with the restructuring of SA Tourism. On vacancies, SA Tourism had taken a decision not to fill vacancies until its restructuring was complete in order to know what its human resources needs were. Only critical posts would be filled in the interim. By April 2017 posts in the new structure would be filled. The operational model of SA Tourism would change. It would move from an activities based approach to a performance based approach.
Mr T Rawula (EFF) observed that SA Tourism had said that tourist arrivals figures had been bad for 2015, however since then there had been a vast improvement in figures by 15.4%. On domestic tourism Quarter 1 targets had not been met but Quarter 2 targets had. SA Tourism’s achievement of targets for Quarter 2 did not compensate for it’s under achievement of Quarter 1 targets. The briefing spoke about brand awareness declining. When he read SA Tourism’s strategic plan it said something else. There seemed to be a contradiction. He said, tongue in cheek, that perhaps the leadership deficiency that SA was experiencing could be one of the reasons affecting its brand positivity. On graded establishments, the strategic plan said there were 10 000 accommodation establishments. Only 50% of establishments in SA were graded. 85% of the 50% that was graded was non-hotels. SA Tourism was not reaching targets on grading. Was the cost of grading too great? The other issue was that grading was voluntary. He suggested that perhaps government should subsidise grading of establishments in rural areas and townships. On employment equity, he asked whether there was a strategy to place persons who were previously disadvantaged. Was there a moratorium on the placement of whites and of other categories of people? Did SA Tourism have a succession plan strategy? Were young employment equity persons employed by SA Tourism? The Committee needed to be provided with demographics of age. He asked whether SA Tourism should consider making job creation one of its performance indicators. Tourism after all had huge potential as a job creator.
Mr Ntshona, on why figures were different to those in SA Tourism’s strategic plan, explained that issues were different at present to what they were at the time when figures had to be captured in the strategic plan. There was an inter-ministerial committee which included representatives from ProudlySA, BrandSA, SA Tourism and the Government Communication Information Service (GCIS) on how best to market SA. He conceded that there were coordination challenges between SA Tourism and BrandSA but that they were being addressed. On why figures showed tremendous growth, he explained that tourism growth globally sat at 4% per annum. Tourism in SA was also recovering. SA was however still lagging behind the world. The growth in tourism was recovery taking place. On making job creation one of SA Tourism’s key performance indicators he pointed out that no-one created jobs. Jobs were an outcome of an enabling environment; he conceded that SA Tourism could drive the enabling environment. Paris had more tourists than local inhabitants. In Paris, there were a huge amount of pharmacies catering for the needs of tourists. By definition SA had to bring more tourists into the country. This would mean more restaurants, shops and even pharmacies being needed. This would create jobs. Tourism by its very nature was a labour intensive sector. The problem was that South Africans did not travel. They were unaware of hidden gems in certain provinces. A simple example was if a housewife from Sandton decided to visit the Mpumalanga Province then jobs would be created. SA Tourism needed to coordinate how SA showed up at trade shows abroad so that there could be a coordinated effort.
SA Tourism had foreign employees in its international offices. Country managers in those offices were South Africans. Persons employed under them were locals from the country as they had to understand the local language, laws and cultures etc. Human resources had never been a priority for SA Tourism. Succession and career planning issues had been consequential. The entire delegation present in the meeting had been appointed from outside SA Tourism. With its new organisational structure human resources had been elevated. Capacity building would take place at all levels. Human Resources would report directly to the CEO. The intention was to have young South Africans working for SA Tourism. There had to be deliberate efforts. Middle management at SA Tourism had to be built up. Country managers also had to earn their stripes. On Small Medium and Micro Enterprises (SMME) development greater substance was needed. Small business incubators needed to be created at local government level. Township tourism should also come to the fore.
Ms Dlamini added that the average age of SA Tourism employees was 42. SA Tourism’s workforce was still young. The Committee would be provided with information on the expenditure on the Tourism Indaba.
Mr S Bekwa (ANC) asked the Committee to be provided with information on the commission that the Minister of Tourism Mr Derek Hanekom had established to look into issues like statistics etc. He also asked when the Committee was going to get an expenditure report of the Tourism Indaba. There were 44% cancellations on being graded. He asked what mechanism SA Tourism had to convince establishments to remain graded. On the decline in domestic tourism figures SA Tourism was asked what radical interventions it had to address the issue. Could locals perhaps not afford to travel?
Mr Ntshona said that the Tourism Indaba was an iconic brand of SA Tourism. It was SA’s attempt to show off to the rest of the world. The Tourism Indaba had however been neglected for years. It had never been refreshed. There was a task team in place to deal with the issue of the Tourism Indaba. The contract on the hosting of the Tourism Indaba in Durban was coming to an end in 2018. There would be a public bidding process to get a replacement host.
Ms S Xego (ANC) was pleased about the Minister of Tourism’s task team to look into issues of statistics etc. It would shed light on how to address issues of domestic tourism. There should be a fair distribution on the hosting of business events across provinces. On domestic tourism, locals should be taught to travel. There should be awareness campaigns. Perhaps lessons could be learnt from China on how to promote domestic tourism. China had a vibrant domestic tourism sector. She was pleased that more establishments were returning to the grading fold. She noted that there were more grading cancellations when SA Tourism had used a three-year cycle. The change to a twelve-month calendar seemed to have worked. SA Tourism was asked how it ensured that there was stakeholder satisfaction.
Mr Ntshona said that the term National Conventions Bureau was to be changed to Business Events. Small towns like Port Elizabeth would also be able to host small events. The Tourism Grading Council of SA (TGCSA) terminology was also to be changed to Quality Assurance. The issue was about the quality of the tourism offering. Minimum standards had to be met. There had to be coordination with provinces and local government.
Ms Dlamini pointed out that City Lodge had renewed its membership to get graded. There were small and medium term independent hotels that had come back into the fold. Various options were being considered on the cost of grading.
The Chairperson suggested that SA Tourism in its strategic plan and annual performance plan should break down its targets into quarters. She asked whether SA Tourism was contributing towards the meeting of the National Tourism Sector Strategy’s (NTSS) targets. She also asked when SA Tourism would finalise the new investment portfolio framework.
Ms Dlamini noted that the marking investment framework cut off was 31 March 2016. SA Tourism would engage with the Committee on it.
Ms Adams asked SA Tourism to provide the Committee with a report which spoke to a detailed analysis of the income and expenditure of the Tourism Indaba. If SA Tourism wished to do capacity building at municipalities, especially in relation to local economic development, she asked whether the Department of Cooperative Governance and Traditional Affairs (COGTA) was on board. What type of capacity building was planned? If the problem in domestic tourism was hugely about affordability, did SA Tourism have cheaper packages on offer?
Mr Ntshona, on the affordability of being graded, said that money should not be a barrier to entry. SMMEs had to get access to markets. The tourism space was an interconnected system. The TGCSA at present was not compelling enough. Establishments needed to be shown that there were benefits to being graded. For example, there could be buying schemes for bed and breakfasts who came together to buy items like bed sheets and other items in bulk. Buying in bulk would decrease the cost per item. This would be a compelling reason to get graded. The issue was about making the value proposition more compelling. It must be commercially viable for places to get graded. Often people looked for accommodation when the Macufe Festival was held, yet there were small bed and breakfasts in the area which had accommodation available. Perhaps using cell-phone applications to pinpoint accommodation places was an option.
The Chairperson pointed out that there was R100m ring-fenced for domestic tourism. Many provinces had hidden gems which had to be showcased. StatsSA had said that alignment of the methodology on the collection of statistics was taking place.
Ms Xego asked when the Committee would be getting a report on the outcomes of the ministerial task team.
Mr Ntshona, on the task team, said collaboration was taking place with, amongst others, StatsSA and SA Tourism. The first preliminary report would be available by the end of 2016. The first report should be available in Quarter 1 of 2017.
Mr Krumbock expressed disappointment that his clarity seeking questions had not been responded to.
Mr Ntshona said that information on the African space was not at hand but would be provided to the Committee. On brand positivity and why figures for Japan were low, some things were beyond the control of SA Tourism. He reiterated that there was an inter-ministerial committee led by Minister in the Presidency Mr Jeff Radebe, driving the issue of brand positivity in SA.
Mr Krumbock responded that things could be quantified and could be measured. He wished to know what the driving factors were that SA’s brand positivity figure for Japan was only 5%. If it could not be answered at present, the information should be provided to the Committee.
Mr Ntshona undertook to provide the Committee with the information.
Mr Krumbock still felt that his clarity seeking questions had not been answered. He asked how quarterly figures could be greater than annual figures. SA Tourism should be aware of what they were presenting.
Mr Ntshona noted the point made by Mr Krumbock, SA Tourism’s presentations in the future would be sharper and the information requested would be provided to the Committee.
Ms Dlamini, referring to slide 26, said that provincial spread had improved but it did not mean that arrivals had gone up. In most of the provinces the numbers of arrivals had declined.
Mr Krumbock, to illustrate his point, read out the first bullet point on slide 26 which stated, “The provincial spread in South Africa has improved from an international perspective with the arrivals increasing in 5 of the 9 provinces in the Q2 of 2016.” The first bullet was in contradiction to the fourth bullet on slide 26 which stated, “Most of the provinces saw arrivals decline from 2015 levels with the exception of Gauteng, Western Cape, Eastern Cape and Limpopo”.
Mr Ntshona stated that SA Tourism would look at the statements on slide 26 and get back to the Committee.
The meeting was adjourned.
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