SA Tourism briefed the Committee on its Quarter 4 Performance for 2016/17.
On the key performance indicator about the number of holiday trips achieved, the entity recorded 974 291 trips achieved versus a target of 1 152 521. The main deterrent for people not taking domestic holiday trips was affordability. On total revenue achieved in tourism, the target was R28bn, actual performance was R26bn. This decline was attributed to a decline in spend per arrival in 2016 compared to 2015. SA Tourism’s impact on brand positivity had declined in core markets like Australia and Germany and in investment markets like Canada and Ghana. On the number of business events hosted in SA the annual target was 138, but actual achievement was 117 conferences registered on the International Congress and Conventions Association (ICCA). The annual target for the number of business delegates hosted in SA was 77 567, actual figures were that 68 498 delegates attended the 117 ICCA registered events. On the number of graded establishments the 4th Quarter target was 1 558, actual figures achieved was 1 211. The 4th Quarter target for number of graded rooms was 33 851 with actual numbers sitting at 25 783. The underperformance was attributed to grading cancellations of existing and new clients. The annual target for SA Tourism’s staff satisfaction score was 3.7; actual performance was only a score of 2.9. The percentage of staff turnover target was set at 7%, actual performance sat at 6.6%. SA Tourism at present had a high vacancy rate. The number of vacancies sat at 60. SA Tourism had restructured the organisation and had placed the filling of vacancies on hold. However Project Ignite was put in place and efforts were being made to build capacity and to have the right persons in the right positions. SA Tourism’s total staff figure sat at 202. On financial performance SA Tourism’s 4th Quarter revenue roughly totalled R208m whilst expenditure was around R292m. Year to date marketing expenditure was around R929m.On governance, SA Tourism’s Board comprised of fourteen members with no vacancies.
The Committee observed that SA Tourism’s performance for the 4th Quarter was quite poor. Members were concerned that SA Tourism seemed to be struggling with domestic tourism. SA Tourism was asked to look into dual pricing as an option to make domestic tourism more affordable to local South Africans. Government parks and resorts should be made more affordable. Members proposed that municipal resorts should take on private partners as Mossel Bay Municipality had done. Discussions had to take place about fixing tourism infrastructure on the ground. Concern was also raised about high airport taxes. In total there were three taxes that the traveller had to pay. How could these taxes benefit tourism? Members also suggested that delegate boosting for delegates that attended conferences needed to be done. Packages should be made available with offerings for pre and post conferences. Members pointed out that if Wesgro in the Western Cape could do delegate boosting why could SA Tourism not do it nationally. SA Tourism was asked what the real reason was why establishments were not getting graded and why those who were graded were withdrawing from the grading system. The Committee also needed specifics on the number of conventions that were held and also where they were held. Members appreciated the efforts of SA Tourism but asked how it translated its efforts into delivery on the ground. Members had on a recent oversight visit to the Garden Route observed that municipalities were not taken on board when it came to tourism. This was especially concerning when domestic tourism and township tourism had to be boosted. Was enough being done to assist disadvantaged persons? What was being done to bring people into the tourism space? In the areas that members had visited members felt that there was huge potential for homestays. Given the underperformance of SA Tourism, members asked whether the targets set were realistic. Members raised concerns about the huge vacancy rate of SA Tourism. SA Tourism was asked whether it had engaged National Treasury on the impact that its regulations was having on SA Tourism’s ability to operate abroad. Members pointed out that there seemed to be mixed feelings around whether grading should be voluntary or compulsory. Members felt that grading should be used as a transformation tool, especially when it came to homestays. Members emphasised the importance of airlift strategies and appreciated SA Tourism’s partnership with Cape Town International Airport on its airlift strategy.
The delegation from SA Tourism comprised of Mr Sisa Ntshona, Chief Executive Officer (CEO), Ms Stembiso Dlamini, Chief Operations Officer (COO) and Mr Tom Bouwer, Chief Financial Officer (CFO). Mr Thebe Ikalafeng Deputy Chairperson of the SA Tourism Board was also in attendance.
Briefing by SA Tourism on its 4th Quarter Performance Report 2016/17
Mr Ntshona said that with the key performance indicator being the number of holiday trips achieved the 4th Quarter target had been 1 152 521, actual achievement was only 974 291. The main deterrent for people not taking domestic holiday trips was affordability. Domestic tourism was essentially broken down into visiting friends and relatives -70%, business tourism -20% and holiday trips -10%. SA Tourism’s Annual Performance Plans only took into consideration holiday trips. The issue was about converting visiting friends and relatives to holiday trips. South Africans needed to be encouraged to travel. Domestic tourism had to be affordable. There was a growing black middle class. Domestic tourism generated a total of R7.7bn in the 4th Quarter which was a 10% decrease for the same period in 2015. On total revenue achieved in tourism the 4th Quarter target was R28bn, actual performance was R26bn. This decline was attributed to a decline in spend per arrival in 2016 compared to 2015. On brand positivity no 4TH Quarter target had been set. The annual target was 40%, actual achievement sat at 38%.
SA Tourism’s impact on brand positivity had declined in core markets like Australia and Germany and in investment markets like Canada and Ghana. On the number of business events hosted in SA the annual target was 138, actual achievement was 117 conferences registered on the International Congress and Conventions Association (ICCA). The annual target for the number of business delegates hosted in SA was 77 567, actual figures were that 68 498 delegates attended the 117 ICCA registered events. The figure was expected to reach 74 000. When it came to hosting conferences, SA Tourism had a deliberate strategy for Africa. SA Tourism’s success rate on bids was 60%. On the number of graded establishments the 4th Quarter target was 1 558, actual figures achieved was 1 211. The 4th Quarter target for the number of graded rooms was 33 851 with actual numbers sitting at 25 783. The underperformance was attributed to grading cancellations of existing and new clients. Grading performance was affected by businesses closing down as well as the illegal use of star grading plaques. Another issue to consider from the perspective of the establishment was whether grading actually boosted revenue of the business. SA Tourism’s efforts to boost grading included placing a Provincial Master Assessor in each province aligning its efforts with provincial authorities as well as to have performance agreements with provincial authorities.
The annual target for SA Tourism’s staff satisfaction score was 3.7; actual performance was only a score of 2.9. The percentage of staff turnover target was 7%, actual performance sat at 6.6%. SA Tourism at present had a high vacancy rate. The number of vacancies sat at 60. SA Tourism had restructured the organisation and had placed the filling of vacancies on hold. However Project Ignite was put in place and efforts were being made to build capacity and to have the right persons in the right positions. The Committee was informed that SA Tourism had a low attrition rate with almost no resignations. There was perhaps one resignation in the last nine months. SA Tourism’s total staff figure sat at 202.
Mr Bouwer spoke to the financial performance of SA Tourism. 4th Quarter revenue roughly totalled R208m whilst expenditure was around R292m. Year to date marketing expenditure was around R929m. Ms Dlamini briefly touched on the governance of SA Tourism. The SA Tourism Board comprised of 14 members with no vacancies. Some information was presented on the attendance of Board members to meetings.
The Chairperson said in the future SA Tourism should reflect variances in their presentations. The entity’s 4th Quarter Performance was poor. SA Tourism seemed to be struggling with domestic tourism. With the “We Do Tourism” Campaign how was domestic tourism going to improve? SA Tourism had forgotten about ‘brand positivity‘ needing to be one of its targets. She asked what the real reasons were why establishments were not getting graded and why those that were graded were withdrawing from grading. On staff satisfaction at SA Tourism she asked whether staff that had left had given reasons why they had left. The Committee needed greater information regarding conventions ie the numbers of conventions and where they had taken place. She asked that SA Tourism provide the Committee with its documents at least by next Wednesday before the scheduled Friday meeting.
Mr Ikalafeng stated that SA Tourism would address its continued underperformance. The problem had always been about a mistiming issue. The 4th Quarter was already nine months ago. He hoped that the “We Do Tourism” Campaign would have an impact on domestic tourism. The structure of SA Tourism was being realigned with its five in five goal through Project Ignite. The timeous provision of documents would be addressed.
Mr Ntshona explained that SA Tourism on its 4th Quarter Performance was still stuck in the misalignment of calendar year versus financial year. The 4th Quarter Performance was still for the most part in terms of calendar year January to December. It would be corrected in the current year. Some of the issues had been ironed out.
Mr S Bekwa (ANC) appreciated the efforts of SA Tourism but asked how it translated its efforts to delivering to people on the ground. Could the Committee see SA Tourism’s footprint on the ground? On a recent oversight visit by the Committee to the Garden Route and in particular to George he had observed that on tourism it seemed as if municipalities had been left behind. This was especially so when it came to domestic tourism, township tourism etc. It seemed that only officials and business people were in that space. Was enough being done to assist the disadvantaged? What was being done to bring people into the tourism space? In the areas that the Committee had visited homestays had huge potential.
Mr Ntshona, on how SA Tourism reached people at grassroots level, explained that as part of its roadshows things were being peeled like an onion one layer at a time. Provincial level was tackled first. Layer by layer SA Tourism worked its way downwards. Municipalities were important role players. Proper road signage was needed. There were practical issues that had to be addressed. It was no use having wonderful marketing campaigns if there was nothing on the ground. Conversations were needed and capacity building was key. Local economic development municipal officials did not always understand what their roles should be. If a municipality had to prioritise between building Reconstruction and Development Plan (RDP) houses or tourism issues, the RDP houses would always win hands down. In George he had spoken to some black operators. The problem was that they were not part of the ecosystem in the area and did not benefit from the oyster festival and other activities. Their offerings were not packaged. The one operator took tourists to local traditional weddings. There was a need to make these small operators visible on SA Tourism’s platforms. Effort was being made to add more experiences for tourists. He stated that SA Tourism had discussions with trade not to be afraid of new players. People at grassroots level complained that they were not visible.SA Tourism was starting to make the necessary linkages.
Ms E Masehela (ANC) referred to slide 8 which spoke to the number of domestic holiday trips, she observed that performance was lacking. The 4th Quarter target was 1 152 521 however actual performance was only 974 291 trips. The issue was whether people were travelling a great deal. She asked whether targets set were realistic. SA Tourism seemed to be doing a great deal of work but it was not meeting its targets. Perhaps the issue of targets needed to be looked at. Perhaps SA Tourism had too many targets. Could targets dealing with similar issues be consolidated? This would reduce the number of targets. She also asked whether SA Tourism checked baselines. Was what had happened in the past being considered? On the number of delegates that attended conventions etc in SA she pointed out that SA Tourism received such figures from the ICCA. SA Tourism was informed that there were figures that the ICCA did not report on. SA Tourism was asked how it intended to obtain the figures that ICCA did not report on. She was concerned about the 30% vacancy rate of SA Tourism. She also asked SA Tourism whether it had engaged National Treasury about its regulations and the impact it had on SA Tourism operating abroad. SA Tourism was asked whether it had considered making grading compulsory.
Ms Dlamini appreciated the comments made about target setting. Perhaps merging key performance indicators could work. She pointed out that SA Tourism’s Annual Performance Plan for the current financial year had shown an improvement. When SA Tourism returned in the near future to present its Quarter 1 2017/18 performance report to the Committee, members would notice how the entity’s target setting had shifted. On vacancies, SA Tourism was revamping everything in the organisation. The new structure had been approved by its Board. SA Tourism was currently busy with its recruitment drive. A skills mix was needed. Part of the Annual Performance Plan’s target was to ensure that by the end of the financial year the new structures’ vacancies would be filled. During previous financial years SA Tourism had only considered ICCA events. SA Tourism had embarked on a process to rectify things.
Mr Bouwer stated that SA Tourism did engage with National Treasury on challenges that it faced in operating abroad. SA Tourism would comply with National Treasury guidelines/regulations. No shortcuts would be taken. National Treasury assisted SA Tourism to make its environment more workable. There was constant engagement.
Mr Ntshona pointed out that SA Tourism operated all over the world yet it had to abide by the Public Finance Management Act (PFMA). For each country that SA Tourism operated in it had to come up with handbooks. The issue was about the laws of the host country clashing with SA’s laws. The principle followed was that if the South African law was less stringent than the host country’s then the host country’s law would apply and if the South African law was stricter then the South African law would apply.
Mr J Vos (DA) was concerned about domestic tourism figures that had been on the decline over the past few years. Since 2013 up until the present there had been a 10m decline in day trips. Domestic tourism should be a focus area. Dual pricing was something that SA needed to consider. There were pros and cons. A great deal of research had been done on it. Domestic tourism should be affordable to South Africans. Government owned parks and resorts should be made affordable to South Africans. Parks having open days or specials during the month of September was not good enough. There could be discounted rates or free entry for South Africans. Municipal resorts should take on private partners as was done in Mossel Bay. Municipalities had to be assisted. The focus should be more on municipal resorts. SA Tourism should speak to the National Department of Tourism about fixing tourism infrastructure on the ground. Another issue which needed addressing was air taxes. In all there were three taxes that a traveller had to pay. How could the taxes be a benefit to tourism? There was also a need to do delegate boosting for delegates who attended conferences. There should be packages with offerings pre and post conferences. In the Western Cape, Wesgro was looking at delegate boosting. Why could it not be done nationally? Offering to delegates could be to visit wine farms etc. On grading, there seemed to be mixed feelings around voluntary versus compulsory grading. Grading should be used as a transformation tool, especially when it came to homestays. He further emphasised the importance of airlift strategies. He was glad that SA Tourism was partnering with Cape Town International Airport on its airlift strategy. What was SA Tourism’s plan on a national airlift strategy?
Ms Dlamini stated that SA Tourism had discussed delegate boosting. The National Conventions Bureau had a delegate boosting strategy in place. SA Tourism would speak to Wesgro. Associations did do delegate boosting. SA Tourism would work out how it could utilise its country offices to do delegate boosting. Where delegates were coming from had to be determined.
Mr Ntshona stated that it was necessary to get the basics right when it came to dual pricing. Different models had been looked at. The world was however focusing more on dynamic pricing which entailed different prices for peak and off peak times. It was easier to implement dynamic pricing at publicly owned parks. It would be a challenge to get the private sector on board as the profit margin was what mattered most. At off peak times the private sector would rather do maintenance to their establishments instead of lowering their prices. There was however an opportunity for new players to come in. Discussions around pricing needed to take place. SA Tourism was part of the airlift team in the Western Cape.
Mr Ntshona conceded that a great deal of the effort had been on international tourism and it was only right that there should be a focus on domestic tourism. Why not reintroduce the cheaper midnight flights that had been on offer in the past. He agreed that a real conversation was needed about airlift and on pricing. SA Tourism was engaging with the Kwa-Zulu Natal Province on airlift as well. On using grading as a transformative tool, there was a system called “Amadeus” in place. SA Tourism was trying to find an SA application that was dynamic to be used on electronic devices like cell phones. The application would, when one was in a particular location, show what tourist offerings and accommodation establishments there were in the area. One application was needed for the entire SA. The application at the same time could also be a source of data that SA Tourism could use as an analytical tool.
The Chairperson emphasised that tourists wished to have the full South African experience. They wished to see how South Africans lived, ate and slept.
Ms Dlamini, on how to give international tourists the experiences that they wished, said that it depended on how destinations were packaged. It could include township tours, visits to heritage sites etc. SA Tourism through its international work did undertake roadshows where they showcased some of SA’s experiences. SA Tourism tried to understand consumer insights. Tourists wished to immerse themselves in the South African culture. SA Tourism offered training via the “SA Specialist” initiative. It showcased the six pillars of SA Tourism’s brand and it was expressed in packages.
Mr Ntshona said that it was true that tourists wished to have the African experience. Based on his own assessment the problem was about not having packages. Packages should be put together. SA Tourism was working with the National Department of Tourism to encourage operators to put packages together. Youth had also complained that there were no packages catering for them. It was an opportunity to bring in youth owned businesses.
Mr Vos emphasised that municipalities needed to link local economic development to tourism. There needed to be a discussion with SA Tourism and the National Department of Tourism (NDT) on this. The NDT needed to assist municipalities to come on board. He pointed out that municipalities were developing their own applications for electronic devices. This could be problematic. A combined dialogue was needed. He suggested that the Committee set up a meeting with both SA Tourism and the NDT to discuss matters.
The Chairperson said that it would not be a problem if members wished to have one.
The meeting was adjourned.
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