SA Tourism on its Annual Performance Plan, with Deputy Minister

NCOP Trade and International Relations

28 June 2017
Chairperson: Mr E Makue (ANC, Gauteng)
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Meeting Summary

SA Tourism, with the Deputy in attendance, briefed the Committee on its 5 Year Strategic Plan and Annual Performance Plan.

SA Tourism reported that many countries had a strong domestic base however SA was the opposite, it had a strong international base. There was a need to balance international and domestic. SA Tourism tried its best to convince the tourism industry to focus on domestic tourism but profit margins were what mattered and the focus was still international. The intention was also to come up with Destination Marketing Companies (DMCs) that would put packages together that were affordable. This was part of transformation efforts. The potential of business events should also not be underestimated as the business tourist spent three times more than the leisure tourist. On grading the number of graded accommodation establishments sat at just over 5000. On funding, SA Tourism received 90% of its annual budget from government grants and subsidies and the remaining 10% from the private sector via the Tourism Marketing SA (TOMSA) Levy. On organisational efficiency and governance SA Tourism recently embarked on a review of its performance and its prevailing operating environment. It came up with the 5 in 5 Strategy. It wished to bring in 5m tourists within the next 5 years ie 4m from the international market and 1m from domestic. SA Tourism had also come up with a Marketing Investment Framework (MIF) which would guide where SA Tourism should invest its marketing budget for optimal return on investment. SA Tourism additionally had a Memorandum of Understanding (MOU) with the Department of International Relations and Cooperation (DIRCO). Before DIRCO officials were deployed they went through an induction programme which included a module on tourism. SA Tourism was starting to stretch its presence. SA Tourism was also partnering with provinces and in July 2017 intended to sign performance agreements with provinces. Alignment of efforts between SA Tourism and provinces was starting to take place especially on events like the Grahamstown Arts Festival and the Durban July.

The Committee was provided with specifics on SA Tourism’s budget. The total budget for 2017/18 was around R1.36bn.

Members appreciated the efforts by SA Tourism to work closer with provinces by virtue of performance agreements. It was felt that a closer working relationship between SA Tourism and provinces were long overdue. In the past engagements with provinces had been unstructured. Members pointed out that there were untapped tourism opportunities in their respective provinces. When music festivals or any other festivals took place in provinces they should be used as draw cards to attract tourists to provinces. Members raised concerns about striking South African Airways (SAA) workers leaving tourists stranded at airports. These types of incidences negatively impacted upon tourism in SA. SA Tourism was asked to draw closer to stakeholders like the SAA in order for there to be cooperation. Had Brexit affected tourist numbers from the United Kingdom to SA? Members also asked whether the 10% Tourism Marketing SA (TOMSA) Levy was shared with provincial boards and provincial authorities. SA Tourism was asked whether members of parliament could be trained in the same manner as ambassadors were on tourism. Members observed that it was perhaps a lost opportunity in that in July 2017 many of parliament’s committees would be undertaking international study tours and that they could have marketed SA abroad. It would nevertheless be useful if tourism material could be distributed to members of parliament. Members raised concerns about black SMMEs complaining that government and parliament did not do business with them even though they had accommodation and conference facilities available. Members were usually booked into huge hotels when Committee’s went on oversight. Was there anything that SA Tourism could do about the matter? SA Tourism was asked to check whether departments used black owned accommodation establishments.  Members also asked SA Tourism if it was looking into the issue of where a small establishment had managed to secure a tender to provide accommodation but lacked the capacity to fulfil its obligations fully. The establishment would then bring on board other establishments to meet the shortfall in accommodation. In so doing the establishment would receive a percentage of the profits made by the brought on board establishments. The Committee appreciated the efforts of SA Tourism in trying to market events like the Durban July and the Comrades Marathon on the international stage. SA Tourism was asked that in future presentations on its financials that a slide be provided on breakdowns of its budget as per economic classifications. Members further asked whether politics in SA affected tourism figures negatively. SA Tourism was asked how currency fluctuations factored into tourism. Members raised concerns about hotels in the Free State Province that had not been graded properly. How were hotels graded? Members had observed that during peak times in December it was always believed that accommodation in Cape Town was not available. This was not entirely true as there was accommodation available in townships like Khayelitsha and Nyanga. How could small township establishments be given exposure? Even during the 2010 FIFA Soccer World Cup small establishments had not made a killing as they had expected due to a lack of exposure. Small establishments were not to be found on databases on the internet where international tourists could see what they had to offer. Members were concerned that at tourist sites in rural areas outsiders were hired as tour guides instead of locals. SA Tourism was furthermore asked what progress had been made on the participation of disabled persons in the tourism sector. 

Meeting report

Deputy Minister of Tourism, Ms Elizabeth Thabethe, attended the meeting.

The Chairperson appreciated the fact that members had been given ample time to go through the briefing document as it had been sent to them way ahead of the meeting.

Opening remarks by Deputy Minister
Deputy Minister Thabethe noted that SA Tourism was the only entity of the National Department of Tourism (NDT). SA Tourism was mainly tasked with marketing SA both locally and internationally. Not only were officials from SA Tourism and the NDT present but so too was the Deputy Chairperson of the SA Tourism Board, Mr Thebe Ikalafeng. The NDT had restructured its portfolio and SA Tourism was the vehicle through which it reached out. 53% of the NDT’s funds went towards SA Tourism. The efforts of SA Tourism had to be linked with what the NDT did. 

Comments by Deputy Chairperson of the SA Tourism Board
Mr Ikalafeng said he was pleased that the Committee had ample time to go through the briefing documents. He wished to highlight some issues. One of these was that a ministerial review of SA Tourism had taken place and it led to SA Tourism having a relook at its strategy. Its new strategy aimed to bring in 5m tourists within 5 years. Two important strategic thrusts were firstly the Marketing Investment Framework which aimed at how to get the 5m tourists within 5 years and secondly the Organisational Design of SA Tourism which had to be tailored for it to meet its goals. He also said that the Tourism Indaba had been renamed as the Africa Travel Indaba. SA was after all the thoroughfare to the rest of Africa. Tourism was a key driver to the South African economy. Key to the 5 in 5 strategy was how to integrate efforts with provinces. Assistance from the Committee on how best SA Tourism could deliver on its mandate would be appreciated.

Briefing by SA Tourism on its Strategic Plan and Annual Performance Plan
The delegation from SA Tourism comprised of Mr Sisa Ntshona, Chief Executive Officer, Mr Tom Bouwer, Chief Financial Officer and Mr Themba Ndlovu, Budget Manager. The National Department of Tourism (NDT) was represented by Ms Morongoe Ramphele, Deputy Director General: Tourism Sector Support Services, Mr Armstrong Manganye, Deputy Director: Entity Support and Ms Petra van Niekerk Parliamentary Liaison Officer: Office of the Director General.

Mr Ntshona undertook the briefing. Given the earlier comments by the Chairperson about members having sufficient time to peruse the briefing document he undertook to speak off the cuff whilst touching on issues contained in the briefing document. According to United Nations World Tourism Organisation (UNWTO) figures there were 1.2bn international travellers worldwide. For 2016 China was the world’s top source market with double digit growth in spending. Turkey was also a big market and was situated right next to Syria. Due to the conflict 5m people stopped going to Turkey. SA needed to take advantage and capture those 5m travellers. There were things happening internationally that made certain places risky as far as safety and security was concerned. Qatar was recently closed off by its neighbouring countries. Tourism figures had also dropped in the United States, the United Kingdom and France. SA Tourism had to shift its marketing efforts based on what was happening worldwide at present. On the local front in SA foreign arrivals accounted for 10m of total tourism trips and increased by 12.8% compared to 2015. 2015 had been a bad year for tourism as there was the Ebola scare and uncertainty on visa regulations. Africa was SA’s biggest source region with 70% of international arrivals coming from it.

SA Tourism had to consider cost of acquisition ie how much it would cost to recruit tourists. The cheapest at R24 was from countries like Zimbabwe and Lesotho. The more expensive at R850 was from countries like Australia and China. Another issue to consider was how much the tourist spent in SA. It could range from R50 to R1500 per day. In 2016 domestic tourism accounted for 24.3m of tourism trips, a decrease of 0.7% compared to 24.5m trips taken in 2015.Many countries tend to have a strong domestic base however SA was the opposite, it had a strong international base. There was a need to balance international and domestic. With the recent fires in Knysna there were many international cancellations. Efforts were being made to fill the void with domestic travel. Mobility was unfortunately not ingrained into South Africans. SA Tourism tried its best to convince the tourism industry to focus on domestic tourism but profit margins were what mattered and the focus was still international. Even during off peak times industry players would prefer to do maintenance rather than target the domestic market. Part of inclusive growth the intention was for new players to introduce new affordable domestic tourism products. The intention was also to come up with Destination Marketing Companies (DMCs) that would put packages together that were affordable. This was part of transformation efforts. The potential of business events should not be underestimated. The business tourist spent three times more than the leisure tourist. Business events should not only be held in bigger cities like Cape Town and Durban but smaller towns should also be used to host smaller events. On business events SA was ranked number one in Africa and the Middle East.

On grading, the number of graded accommodation establishments sat at just over 5000. SA Tourism aimed to widen the scope of quality assurance. Grading was still considered a huge driver. Quality assurance across the board needed to be looked at. On funding, SA Tourism received 90% of its annual budget from government grants and subsidies and the remaining 10% from the private sector via the Tourism Marketing SA (TOMSA) Levy. On organisational efficiency and governance, SA Tourism recently embarked on a review of its performance and its prevailing operating environment. It came up with the 5 in 5 Strategy. It wished to bring in 5m tourists within the next 5 years ie 4m from the international market and 1m from domestic. The intention was to grow arrivals by 40% in the next five years. SA Tourism had also come up with a Marketing Investment Framework (MIF) which would guide where SA Tourism should invest its marketing budget for optimal return on investment.

SA Tourism additionally had a Memorandum of Understanding (MOU) with the Department of International Relations and Cooperation (DIRCO). DIRCO had 132 embassies all over the world. Before DIRCO officials were deployed they went through an induction programme which included a module on tourism. SA Tourism was starting to stretch its presence. SA Tourism was also partnering with provinces and in July 2017 intended to sign performance agreements with provinces. Alignment of efforts between SA Tourism and provinces was starting to take place especially on events like the Grahamstown Arts Festival and the Durban July. The provinces should host the event and SA Tourism would do the marketing. SA Tourism’s country offices would be used to push events like the Comrades Marathon onto the world stage.  Air access should be improved with more flights into SA. Cultural and rural tourism was also taking off. Tourists wished to eat and live like locals. Tourists wished to have the total South African package. Cricket SA was also hosting its T20 cricket tournament. Matches would also take place at second tier stadiums in areas like Kimberley. Packages on offer for tourists had to be specific and deliberate. It should include accommodation, food and transport. Seasonality was an issue that also had to be contended with. During December places like Cape Town was fully booked whereas Johannesburg was empty. The Gauteng Province should be marketed as the place to go to during December if you wished to have peace and quiet. Jobs in tourism should not be seasonal but should be permanent. Brand awareness and positivity was important when marketing SA. Were tourists aware of the South African brand? SA Tourism and Brand SA worked hand in hand. SA Tourism was now an outcome based organisation that wished to have the right people in the right places. SA had such diverse offerings. In the past efforts were mainly on creating awareness, at present it was more about implementation. SA Tourism, Brand SA and StatsSA had always had their own sets of statistics. Efforts were being made to have one set of statistics for all. Small Medium and Micro Enterprise (SMME) development was also important to SA Tourism. Women and youth had to be taken on board. The intention was to expand SA Tourism’s Hidden Gems Programme.

Mr Bouwer provided the Committee with specifics on SA Tourism’s budget. The total budget for 2017/18 was around R1.36bn. There was a 1% cut in the budget of SA Tourism totalling R57m over three years. 

Discussion
Mr L Magwebu (DA, Eastern Cape) noted that SA Tourism in its briefing had said that it wished to draw closer to provinces with the help of performance agreements on domestic tourism efforts. He felt that a closer working relationship was long overdue. Engagement with provinces had been very unstructured. He pointed out that in the Eastern Cape, where he was from, there were many untapped opportunities. For example in East London during the festive season there was a musical festival that scores of young people flocked to. These types of festivals should be tapped into. The issue was about how to maximise the effect of such festivals to attract people to the Province. SA Tourism was asked to unpack what Domestic Marketing Companies were. What function did they have? On global tourism he said that when the Committee had returned from its international tour to Malaysia they were confronted by a strike which had affected South African Airways (SAA) flights. SAA had been caught off guard and many tourists were stranded. SA Tourism on its interaction with stakeholders was asked to draw closer with the likes of SAA so that there could be cooperation.

Mr Ikalafeng noted that the key sentiment being expressed by members was about transformation needing to take place in the tourism industry. SA Tourism had to play its part in transforming the industry. SA Tourism had brought 90 SMMEs to the Tourism Indaba.

Mr Ntshona stated that at festivals like Makufe people often complained that they could not find accommodation, yet information showed that there was accommodation available. There seemed to be an asymmetry. He explained that Destination Management Companies (DMCs) created packages which covered accommodation, food and transport etc. They were like the travel agency company Thompsons. There was a need for more black owned DMCs. The issue was about how to package things. The issue was also about how to make specials on offer available to tourists. Mauritius was good at putting packages together. SA Tourism intended to grow the number of DMCs. Development needed to take place to promote hidden gems. When SA Tourism attended trade markets in Germany then it took trade along with it. Restaurants needed to be included in the itinerary of DMCs. He noted that the rest of SA needed to be aware of events in East London. In this way bed and breakfasts in these areas could become viable. 

Deputy Minister Thabethe noted that issues like the SAA strike was concerning. The issue was about implementation of labour legislation in work places. Strikes hugely impacted upon service delivery. Just before this meeting, she heard that SAA crew members were picketing. The crew members were represented by a trade union. When these types of things happened then other airlines made a killing. There had to be a way of dealing with institutions like SAA.

Mr M Rayi (ANC, Eastern Cape) asked whether Brexit had affected tourism numbers from the UK to SA. He also asked whether the 10% Tourism Marketing SA (TOMSA) Levy was shared with provincial boards and provincial authorities. SA Tourism was asked whether Members of Parliament could be trained in the same manner as ambassadors were. He pointed out that many of parliament’s committees would be undertaking international study tours in July 2017 and it would have been useful if they could have marketed SA in the respective countries that they were visiting. It would also be helpful if tourism material could be distributed to members. On black owned Small Medium and Micro Enterprises (SMMEs) he pointed out that when the Committee had visited the Eastern Cape there were small businesses who complained that Parliament and government did not do business with them even though they had chalets and conference facilities available. He noted that when members took Parliament to the people members had stayed at huge hotels. The Committee planned to go to the Free State Province in August 2017 and he pretty much expected members once again to be staying in huge hotels.  Was there anything that SA Tourism could do? He also asked SA Tourism if they could check on whether departments were using black owned establishments. He had observed that in East London when small businesses obtained tenders to provide accommodation and they did not have the capacity they partnered up with other small establishments. In so doing they received a percentage of the takings made by those establishments. Was SA Tourism looking into the matter? Or was it government’s responsibility. He was pleased that SA Tourism wished events in SA like the Durban July to have an international element. He suggested that things could even be taken one step further in that international competitors could be allowed to compete with their horses as well as participating in the fashion extravaganza that annually took place. SA Tourism was asked that in future presentations on its financials that a slide be provided on breakdowns of its budget as per economic classifications.

Mr Ntshona pointed out that innovation also had a role to play. How could devices like cell phones become enablers? SA Tourism was developing a cell phone application. He explained that for instance at the Makufe Festival SA Tourism’s cell phone application would bring up all the available accommodation in the area around the Festival. Information on establishments’ star grading and what they had on offer would be available. Heritage sites would be identified as well. SA Tourism was responsible for marketing. Provincial and municipal administrations would have to take responsibility for the content at events. The intention was to grow numbers. The visitor was important. SA Tourism had an initiative at the Tourism Indaba called “I do tourism”. Everybody had to do their part to sell tourism. The immigration officer and even the South African Police Services (SAPS) member had to smile to tourists. Tourists had to be made to feel welcome. Even on long haul flights instead of playing movies, content shown on television screens should be marketing SA as a destination. For small businesses the key issue was market access. Small businesses had nice places for tourists to stay at but nobody was aware of it. These types of establishments needed to be made more visible.  He was pleased that the training of MPs as potential marketers of SA was suggested. MPs often travelled overseas and met foreign dignitaries and hence it was important that members sold SA to them. All South Africans who travelled became potential marketers. He did point out that one of SA Tourism’s big issues was that there were detractors in Australia and the UK who spoke only of the negatives of SA. On the UK-Brexit issue he said that the UK was a major source market for SA. There were many pronouncements made on the Brexit issue and SA Tourism was following developments. SA Tourism did have an office in the UK. SA Tourism was re-evaluating whether it was the best place to have it. It was expensive and SA Tourism had to consider its resource allocations. Could SA Tourism find a cheaper place? There was also the option of SA Tourism sharing office space with the Department of International Relations and Cooperation (DIRCO). SA Tourism would rather prefer to pay rent to the DIRCO. He pointed out that SA was building an embassy in New York called SA House. SA Tourism would be sharing office space with the DIRCO at the premises. On whether the TOMSA Levy was shared with provinces he explained the principle underlying it. If there was a performance agreement with a province then the province must drive to reach a target. SA Tourism would ensure that there was an enabling environment. SA Tourism would drive demand. SA Tourism would essentially handle the marketing. The province was responsible for getting the event going. The province had to get the performers and ensure capacity was there to host the event.

Deputy Minister Thabethe responded that it was up to Parliament to encourage members to stay at smaller black owned establishments. The 30% procurement decision had to be applied in practice. She noted that the Nine Point Plan after all called for the revitalisation of the economy. 

Mr M Chabangu (EFF, Free State) asked whether politics in SA affected tourism figures negatively. How did currency exchanges factor into tourism? On a recent trip to Singapore members had realised how weak the rand was compared to the Singaporean currency. He asked what the procedure was to become a proper bed and breakfast. He felt that there were hotels in the Free State Province that was not graded properly.SA Tourism was asked how hotels were graded. He asked whether SA Tourism encouraged bed and breakfasts that provided accommodation for short periods like for example charging R150 for two hours and R250 for the entire night.    

Mr Ntshona, on grading, stated that SA Tourism wished to change perceptions. The idea was to move away from the judgemental perception to one where there was a process that was more empowering. Grading in the past was almost like judging the establishment. The establishment should rather be an empowerment place. There was a need to build the case for grading. The South African Local Government Association (SALGA) had to do its bit in setting up an enabling environment at local government level. When SA Tourism entered into agreements with provinces, provinces needed to ensure that local governments also came on board. Tourism signage was for instance issued and licensed by local government. He explained that it was not only politics which affected tourism figures in SA, it included everything else. Brand positivity had many things which impacted upon it. Brand SA therefore had a key role to play. SA was however a country that many foreigners wished to come to. The trend nowadays was that people travelled with a purpose. He conceded that unfortunately SA Tourism had no control over currency fluctuations. However he did not wish SA to be seen as a cheap destination. SA should rather be seen as a value for money destination. On airport hotels and people booking in for example for a 6-hour layover, he noted that efforts were made to ensure that there were minimum elements in place. There could also be by laws in place that had to be taken into consideration.

Mr J Mthethwa (ANC, KwaZulu-Natal) stated that the tourism industry was doing a good job. He agreed that during season time in December it would seem that places were fully booked in Cape Town. However when one went to townships like Khayelitsha and Nyanga there were places that had accommodation available. How could these types of establishments be brought on board to take their rightful place in the tourism industry? It was sad that during the build up to the 2010 FIFA World Cup small establishments were encouraged to get their places in order for the World Cup however when the tournament arrived they had received no bookings. The huge investments had been in vain. The problem was that small bed and breakfasts were not on databases on the internet where people from overseas could see what they had on offer. People lacked the knowhow on how to market themselves. He was concerned that in rural areas there were no local guides at say for example at heritage sites. Persons from outside the area were employed. Could SA Tourism do something about the matter?

Mr Ntshona agreed that smaller establishments needed greater exposure. How would the smaller bed and breakfast get exposure to a tourist coming from France? The bed and breakfast would welcome the business from France and the person from France would love the real feel experience of a bed and breakfast in a township. 

Deputy Minister Thabethe, on the lack of local tour guides in rural areas, stated that perhaps more local tour guides needed to be trained. However when she had visited iSimangaliso Park in KwaZulu-Natal, the Khula Village was run by young people who had been trained. More tour guides could be trained if greater funds were made available. Those tour guides who were trained were doing excellent jobs.

The Chairperson raised the issue of disabled persons participating in the tourism sector and asked what progress had been made on it.  He noted that when members had attended the Tourism Local Government Conference in 2016 members had observed that there was untapped potential at local government level. SA Tourism could partner with local government to assist people at local level.

Mr Ntshona stated that the tourism industry had to become more accessible for persons with disabilities as it meant more business for them. Consumers had become more conscious about issues like the environment etc and hence businesses needed to factor in these issues in their plans. Provision should also be made for the deaf and the blind. Greater awareness had to be created.  

Committee Minutes
Minutes dated 21 June 2017 was adopted unamended.

The meeting was adjourned.

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