South African Tourism on its Annual Performance Plan, with Minister & Deputy Minister

Meeting report

Minister of Tourism Ms Tokozile Xasa had extended her apologies for not being able to attend the meeting.The Committee appreciated the fact that even though a bit late Deputy Minister of Tourism Ms Elizabeth Thabethe had availed herself to attend the meeting.

Briefing by SA Tourism on its Strategic Plan 2017/22, Annual Performance Plan 2017/18 and its Budget
The delegation comprised of Mr Sisa Ntshona Chief Executive Officer, Ms Sthembiso Dlamini Chief Operations Officer, Mr Tom Bouwer Chief Financial Officer and Mr Enver Duminy SA Tourism Board Member.

Mr Ntshona undertook the briefing. In the interests of time only key points in the presentation was touched on. The issue for SA Tourism was how to get SA’s market share of tourism from the global environment. Foreign arrivals accounted for 10m of total tourism trips and increased by 12.8% compared to 2015. Africa was SA Tourism’s biggest source region followed by Europe and North America. Tourists were mainly visiting for leisure. SA Tourism had the Five in Five Strategy which aimed to bring in 5m tourists within the next five years ie 4m international tourist arrivals and 1m domestic holiday trips. It informed SA Tourism’s Annual Performance Plan and its strategies. South African Tourism had recently embarked on a review of its performance and its prevailing operating environment in a bid to enhance its growth strategy. Accountability and performance was important. SA Tourism considered an operating model that was more matrix driven. SA Tourism was therefore being restructured to have the right people in the right places. It was hoped that the restructuring process would be complete by the end of May 2017.

Domestic tourism was a major issue for SA Tourism. SA Tourism consequently beefed up its domestic tourism team. Domestic tourism was at the same executive level as international offices. The role that provinces played was important for domestic tourism. Domestic tourism accounted for 24.3m of the tourism trips, a decrease of -0.7% compared to the 24.5m trips taken in 2015. South Africa was ranked 38th globally in 2015 and was listed in the top 15 long-haul business events destinations, cementing SA’s status as the number one ranked business events destination in Africa and the Middle East. To this end SA Tourism was considering the hosting of national conferences in the lesser known smaller provinces. As a result SA Tourism’s measures had to be aligned with provinces.  On tourism grading the number of graded accommodation and rooms in SA was just over 5000 and 114 000 respectively, 85% being non-hotel establishments and 15% being large hotel chains and facilities for meetings, exhibitions and special events. On funding South African Tourism received approximately 90% of its annual budget from government grants and subsidies, and 10% from the private sector via the Tourism Marketing SA (TOMSA) Levy allocated through the Tourism Business Council of SA.

 In order for SA Tourism to meet its desired goal of the Five in Five Strategy it identified five thrusts ie optimising market investments, reassessing and realigning of its brand, developing effective stakeholder partnerships, utilising resources effectively and being an inspired organisation. The Committee was provided with insight into the purpose of each of SA Tourism’s Five Programmes ie Corporate Support, Business Enablement, Leisure Tourism Marketing, Business Events and Visitor Experience. Some annual performance targets were briefly spoken to. The plan was to maintain a vacancy rate of 7% for 2017/18 through to 2019/20. The number of international tourist arrivals currently sat at 10.5m the number was expected to reach 10.9m in 2017/18. The forecasted number of domestic trips for 2017/18 was 24.9m. Quarterly targets for 2017/18 were also provided for members’ perusal. The explanation was provided to the Committee that at present SA Tourism reported on its performance in terms of calendar years as per World Tourism Organisation requirements ie every 30 days. SA Tourism was aware that the Public Finance Management Act (PFMA) required reporting to be done in terms of financial years. SA Tourism was able in terms of the PFMA to report every 60 days but did not have the capacity to do it every 30 days. From 2018/19 onwards SA Tourism intended to report in terms of both calendar and financial years.
Mr Bouwer spoke to the financial information of SA Tourism. For 2017/18 the budget sat at approximately R1.3bn. 90% of SA Tourism’s budget came from the National Department of Tourism (NDT). 53% of the NDT’s budget was allocated towards SA Tourism. National Treasury had allocated an additional R494m to the NDT. Of this the NDT transferred R264m to SA Tourism.

At the time of finalising its Strategic Plan, SA Tourism had embarked on a risk assessment to identify risks that might have a negative impact on the achievement of its strategic objectives. The top three risks identified were firstly an inability to deliver on all the elements within the tourism value chain, secondly negative meta perceptions and barriers of the South African Brand and thirdly currency loss and increased costs of doing business abroad. SA Tourism would continue to monitor emerging risks to ensure delivery on its mandate.

Discussion
Mr J Vos (DA) said that a rethink was needed on tourism’s contribution to government. Tourism should have its own cluster in government. He asked whether it was not time to consider granting tax incentives for businesses that had been graded for many years. Perhaps public hearings should be held to decide on the matter whether grading should be compulsory or voluntary. Monitoring and compliance of grading was important. He felt that the Tourism Grading Council of SA (TGCSA) should be used as a transformation tool. In 2016 a total of R422m had been spent on 13 country offices. He agreed that SA missions should be used to promote SA abroad. SA Tourism was asked what its collaboration with the Department of International Relations and Cooperation (DIRCO) was. He was pleased that SA Tourism was also going to focus on local conferences. It would address the problem of geographic spread. He noted that the hosting of international conferences was a cash cow. International conferences brought in economic value. SA Tourism was also asked what programmes it had in place to present pre and post conference activities for delegates who attended conferences. On the matter of air access he pointed out that the airlift strategy in Cape Town was working well. An airlift strategy could work just as well in places like Durban and Kimberly etc. He was disappointed that the Committee was not going to attend the Tourism Indaba. What was SA Tourism’s thinking on the Tourism Indaba? Whether a strategic partner model should be considered or whether SA Tourism should do it in-house. SA Tourism was asked whether Tourism Marketing SA (TOMSA) Levy funds should be ring-fenced. He raised concerns about the affordability of domestic tourism. Many places priced themselves out of the tourism space. International prices were used across the board. Domestic tourism was unaffordable for ordinary South Africans. He suggested that a dialogue was needed over the issue.

Ms Dlamini, on whether to make grading voluntary, said that there was a policy discussion that the NDT was leading. The Committee had in the past asked for a full discussion over grading to take place. She said that at the end of 2016 grading had been discussed at Ministerial and Members of Executive Committee (MinMEC) meetings. The TGCSA’s mandate had been extended beyond accommodation. SA Tourism’s Board had requested SA Tourism to come up with a transformation framework. The first aspect of the framework looked at employment equity. There was a strong equity plan in place. SA Tourism should be seen as a launch pad for skills. It was part of SA Tourism’s human resources strategy. The second aspect of the framework was enterprise and supplier development. It had to be ensured that procurement processes needed to change. How were service providers chosen? The third aspect of the framework was market access. SA Tourism had access to ten international platforms. There was also the Tourism Indaba and Meetings Africa. The point was to better utilise platforms. On SA Tourism’s country offices and its relationship with SA missions she said that there were ten offices. SA Tourism serviced 40 markets. It followed a hub approach. The hub approach was broken down into five regions that SA Tourism serviced. These were SA, Africa Air and Land, Europe, Americas and Asia and the Middle East. On its relationship with missions SA Tourism did train ambassadors/ deployees on destination marketing. SA Tourism wished to use the mission platform for business development. The Tourism Indaba and Meetings Africa were also good platforms. On the use of TOMSA Levy funds, the funds were ring-fenced for marketing SA as a destination. There was a collaboration fund that both SA Tourism and TOMSA managed. Both SA Tourism and TOMSA identified pressure points like conversion. She agreed that much had been said about domestic tourism. It was one of SA Tourism’s pressure points. For a long time the focus had been on the international space. Research on domestic tourism had been done and three barriers had been identified ie affordability, awareness (lack of information) and culture (a culture of travel had to be built). The idea was additionally when persons travelled for business to have conversion to leisure. SA Tourism would like to share its Domestic Tourism Strategy with the Committee. SA Tourism had two campaigns for domestic tourism. The first was “I do tourism you do tourism”. Affordable packages were centred on events. The idea was to get 1m people within the next five years. On business events delegate boosting and conversion was taking place. The National Conventions Bureau was also looking at domestic events.

Mr Duminy agreed that air access would drive growth in both international and domestic markets. Airlines needed to be engaged to provide more flights. Seasonality patterns also needed to be taken into consideration.

Mr Ntshona, on the matter of a service provider to handle the Tourism Indaba, explained that SA Tourism had shortlisted a service provider. However it was found that the service provider did not meet SA Tourism’s approach. The issue was about getting the Tourism Indaba sustainable. There was a need to promote sector collaboration. SA Tourism would be exploring different methodologies and would report back to the Committee on it.

Mr S Bekwa (ANC) too felt that more needed to be done on domestic tourism.

Mr G Krumbock (DA) stated that SA Tourism had in its briefing alluded to the fact that it was working towards working out what its proper levels of spending should be. The Committee had in the past asked whether studies had been done to work out optimal spending for marketing. What progress had been made in this regard? Hard data was needed on what optima spend should be.

Ms Dlamini, on the optimal spending for marketing, stated that SA Tourism in 2016 did full stakeholder engagement on the matter. The Oxford Study had been done. SA Tourism had 40 markets and had even gone so far as to ask National Treasury for additional funds. One area that received additional funding was business events to bolster the National Convention Bureau’s bidding. She noted that the data from the study was available and could be presented to the Committee. SA Tourism could present the entire Marketing Investment Framework to the Committee.

Mr Krumbock was pleased to hear about the Marketing Investment Framework. He asked that Committee Support Staff schedule a meeting as soon as possible with SA Tourism for members to be briefed on the Marketing Investment Framework.

Mr N Koornhof (ANC) commented that domestic tourism should be seen as an opportunity. It was however unaffordable. It was cheaper to stay in a rural area in the United Kingdom than what it was staying in local rural areas. He agreed that public hearings could help. People tended to spend more but they travelled less. One of the most expensive flights was from Cape Town to Hoedspruit. Airlines like Airlink and SA Express did not cater for the domestic market. These airlines only milked the international market. SA Tourism was asked whether it met with the wine industry in SA. There seemed to be no control over South African wines. SA Tourism was the place that dealt with the South African brand. Wines formed part of the South African brand. All that was being marketed was SA’s scenery and wildlife like the Big 5. He noted that the Fourth Industrial Revolution was imminent. It would impact upon tourism. He was concerned that there were no efforts in place to protect the openness of the Karoo. Openness was a commodity that was in demand. The Chinese sought out open spaces to enjoy the stars and nature.

Mr Duminy noted that wine tourism was one of the key drivers in the Western Cape. It had to be remembered that tourism permeated all other industries. Collaboration with other departments was needed. SA Tourism also needed assistance and guidance from the NDT.

Ms S Xego (ANC) commented that SAT was the only child (entity) of the NDT. She was pleased that there was collaboration with provincial authorities. Also that SA Tourism accounted for the drop in domestic tourism. She was also pleased that efforts were being made to address domestic tourism issues. If SA Tourism managed to keep up its good audit outcome the Committee would continue to try to get additional funds for them.

Mr Duminy, on SA Tourism being the only entity of the NDT, said that it was understood that there was a responsibility attached to it. 

The Chairperson was pleased that the National Tourism Sector Strategy (NTSS) was being gazetted. What was SA Tourism’s take on the recent Local Government Conference? It was also a positive development that the National Conventions Bureau was looking at hosting conferences in some of the less popular provinces. This would address the problem of geographic spread. She suggested that SA Tourism consider looking at fan clubs and other types of clubs. Cheaper air fares could be negotiated for them. It was correct that the Committee could not attend the Indaba due to other commitments on the parliamentary programme. She asked whether SA Tourism had looked at the socio-economic impact of the budget in terms of its work. Did SA Tourism consider direct and indirect jobs? She noted that the outcome of the econometric study that was being done could be useful to lobby for increases in SA Tourism’s budget. When was the study going to be completed? What was the progress on it? She was too concerned about domestic tourism and why it was not taking off. Domestic tourism was huge in countries like France, Kenya and Morocco. She pointed out that the NDT needed to push for greater intergovernmental relations as other departments like Transport had an impact on its work. Roads had to be in good condition to ensure that there was access to tourist sites. Signage on roads leading to tourist sites was also lacking. For example the Nelson Mandela capture site in KwaZulu-Natal lacked signage on roads leading to it. 

Mr Ntshona, referring to the Local Government Conference, said that SA Tourism was starting to align and collaborate. SA Tourism’s strategies needed to end up in the Integrated Development Plans (IDPs) of municipalities. Local government was important to the delivery of SA Tourism’s efforts. He pointed out that at the upcoming Tourism Indaba SA Tourism would be announcing its Tourism Indaba host city for the next five years. He said that fan clubs was worth exploring but the issue was about how best to collaborate. On awareness he pointed out that the Western Cape had a calendar of events. It would have helped if there was a national calendar of events. Domestic tourism was a focus point for SA Tourism. 

Mr Duminy agreed that road signage was critical not only for direction purposes but also to get to tourist sites. He said that the NDT had to assist SA Tourism to upgrade tourist places. He noted that on the Tourism Indaba there were many socio-economic impact studies out there. Information on how many jobs were created needed to be known. The issue of affordability was considered important. One needed to look at what industry costs were. A new conversation was needed on affordability.

Deputy Minister Thabethe noted that marketing was done monthly by SA Tourism. It was important to know what SA Tourism was doing. There had always been a good working relationship between the NDT and SA Tourism. However she felt that the NDT could perform better oversight over SA Tourism. She agreed that the outcome of the econometric study would shed light on what the optimal amount for marketing would be. If other countries could get domestic tourism right so too could SA. The affordability of domestic tourism was a concern. The issue should be about offering packages that were affordable. She said that in France and China one often saw school groups all over the place. Perhaps international best practise should be looked at on how best to handle domestic tourism. It was critical that other departments be brought on board as often times there was overlap. As earlier pointed out the Department of Transport was responsible for roads that led to tourist sites. An integrated approach was needed to deal with issues. She understood the concerns that members had over the lack of signage and said that signage could perhaps be fast tracked in certain areas. A clustered approach of departments was needed to deal with issues. All three spheres of government should also work together. She agreed that wines in SA should be aggressively marketed abroad. She noted that revitalising towns was part of the Nine Point Plan. Tourists wished to experience rural and township life as locals did. 
           
Mr Duminy agreed that it had to be ensured that tourists went beyond the glossy places and were given the township experience that they wanted. Tourists wished to hang out where locals did. There had to be an understanding of what the traveller wanted. It had to be understood what the markets were that tourists wished to go into. 

The Chairperson asked whether home-stays were going to be graded. She also pointed out that at the Tourism Indaba there were hidden gems.

Mr Ntshona on hidden gems said that the issue was about what the journey of these gems was. The sector was very much driven by packages. New entrants to the sector also needed to be included in packages. 

Ms L Yengeni (ANC) asked how many programmes SA Tourism had. She also asked within those programmes how many targets had been achieved and what the under-spending in those programmes was. SA Tourism was asked what its presence in townships like Langa and Gugulethu in Cape Town were. She pointed out that it seemed as if SA Tourism’s performance was mainly in the international arena. Was this as it should be?

Mr Ntshona said that the programmes of SA Tourism informed its annual performance. SA Tourism would take the Committee through its Annual Report. All in all there were fourteen targets. Some had been met whilst others not. Some of the targets not met were on grading and domestic tourism. The realisation was that things needed to change. One of the things SA Tourism changed was its operating model. The organisation started to cohesively work together. On spending SA Tourism was on target but on performance issues needed to be addressed. The first point of departure was how SA Tourism set its targets. The second thing was that a coherent strategy was needed. There was for example the 5m tourists in 5 years strategy. SA Tourism had only in the last two years started focussing on domestic tourism ie the Sho’T Left Campaign. SA Tourism had unfortunately missed out on conversion. In growing numbers one also had to grow experiences. There were different types of tourism ie wine tourism, sports tourism and township tourism etc. Things needed to be brought to the fore. The issue was how to make a bed and breakfast establishment in Khayelitsha viable. The Tourism Grading Council of SA (TGCSA) needed to be used as a platform. More work was needed to market townships. When international tourists arrived everything needed to be showcased.
  
Ms Yengeni responded that if targets had not been met in programmes how come there was no under-spending or over-spending.

Mr Ntshona explained that the investment part of targets was fine it was on performance that SA Tourism was falling short. Where there was value in terms of investments there was also performance. SA Tourism was focussing on improving its performance. 

The meeting was adjourned.