South African Tourism on its 2016/17 Annual Report

Meeting report

Opening remarks by SA Tourism Board
Ms Tanya Abrahamse, Chairperson, SA Tourism Board, noted that globally 2016 was a difficult year. The challenges faced and the actions taken to mitigate them would be elaborated upon in the briefing. SA was doing well on tourism. SA Tourism had its Five in Five Strategy in place. Tourism was a great contributor to the country’s Gross Domestic Product (GDP). However domestic tourism was not fairing too well. South Africans needed to travel. The briefing would speak to the “We Do Tourism” Campaign which also targeted improving domestic tourism. SA Tourism was engaging with provinces on issues of the National Tourism Sector Strategy (NTSS), the Tourism Grading Council of SA (TGCSA), conferences and on business tourism. SA Tourism had entered into Memorandums of Understanding (MOUs) with provinces. Everyone needed to be on the same page. Branding for SA could not be different for different provinces. There needed to be a “Team SA”.

Briefing by SA Tourism on its Annual Report 2016/17
Mr Sisa Ntshona Chief Executive Officer (CEO), SA Tourism, said the entity had received its 16th unqualified audit report in 2016/17.

On the performance of SA Tourism for 2016/17 it only managed to achieve six of its fourteen key performance indicators. On the number of international tourist arrivals achieved the planned target was 9 077 995. In terms of financial year reporting period actual performance sat at 9 945 373. The target had been surpassed by 9.6%. On the number of domestic holiday trips achieved the planned target for 2016/17 was 3 059 764. Actual performance for the financial year was 2 950 000. There was underperformance by 3.6%. On the number of business events hosted in SA the planned target was to have 138, actual performance was only 125. There was thus underperformance by 9.4%. On the number of graded establishments the planned target was 5 650 the actual achievement was 5 354, an underperformance of 17%. A new key performance indicator for SA Tourism was staff satisfaction score. The planned target was 3.7 the actual performance achieved was 2.9. There was 21.6% underachievement.

Mr Tom Bouwer, Chief Financial Officer (CFO), SA Tourism, said the entity had two main sources of income for SA Tourism were R1.024bn from the NDT and R137.6m from the Tourism Business Council of SA. 74% of SA Tourism’s total expenses were attributed to marketing efforts which came to R914.4m. Employee costs only made up 15% of total expenses. 

Mr Ntshona noted that there was a revival of the Tourism Indaba as recalibration was needed. SA Tourism had also gone through internal restructuring which had been a long and detailed process. SA Tourism needed to remain relevant. The “We Do Tourism” Campaign was underway which aimed to sensitise SA. Everyone in SA had a role to play in tourism. Various government departments also had crucial roles to play. He pointed out that Angolans no longer needed visas to come to SA. Kenya reacted by taking away the visa requirement for all African countries. Safety and security was a huge issue since every incident in SA made news worldwide. It affected SA’s source markets. Transformation in the tourism sector was of utmost importance. SA’s secret weapon was its people. There were huge opportunities for township and rural tourism. SA Tourism worked hand in hand with the National Department of Tourism (NDT). Grading was an issue which was being looked at. Grading was voluntary. The issue was about not making grading a barrier to entry. Market access should be ensured. SA Tourism looked at the entire ecosystem. He pointed out that SA Tourism was the following day kicking off a new domestic tourism campaign. 

Discussion
The Chairperson acknowledged the good work that SA Tourism was doing as reflected by its clean audit report, the efforts of its Board and its staff. He was grateful that consultations with provinces was taking place and pointed out that he had participated in the “ I Do Tourism” Campaign held in Johannesburg. He urged members to do the same. Work on chefs training was appreciated as South African chefs were being snapped up by big hotel groups. SA Tourism was asked to shed light on the Value Added Tax (VAT) liability issue in the United Kingdom. He was a bit sceptical on Uber taxis. He said that Mr W Faber (DA, Northern Cape) disagreed with him over the matter and so did many young people. It was a fact that tourism was a major contributor towards the Gross Domestic Product (GDP) of SA. More jobs needed to be created. Safety of tourists was also an important issue.

Mr Thebe Ikalafeng, Deputy Chairperson, SA Tourism Board, on safety, said that at SA Tourism’s last board meeting where Minister of Tourism Ms Tokozile Xasa was present it was agreed that an inter-ministerial approach was needed. The Minister undertook to get all ministers of government on board. Work was being done to mitigate the negative perception of safety in SA.

Ms Dlamini said that Project Ignite kicked off the restructuring of SA Tourism. There was a key thrust to have partnerships. The Department of International Relations and Cooperation (DIRCO) was an obvious partner. The National Department of Tourism (NDT) did not do international marketing. SA Tourism had come up with the Marketing Investment Framework which identified 42 markets that SA Tourism needed to invest in. South Africa’s 126 missions were used as a springboard. Missions were trained on tourism and were hosted at the Tourism Indaba. Ambassadors were also trained.

Mr Bouwer, on the VAT issue, explained that SA Tourism did not sell anything in the United Kingdom. The United Kingdom said that SA Tourism should pay VAT on contributions. The matter had been referred to court and SA Tourism was awaiting the outcome of the decision taken by the Crown Court over the matter. 

Mr Faber asked what SA Tourism was doing about credit card fraud. He asked whether SA Tourism made comparisons between tourists that were scammed in SA. Why were only six targets out of fourteen achieved? SA Tourism was asked what it was doing to remedy things.

Mr Faber further asked about SA Tourism’s current situation with the UK public relations firm Bell-Pottinger. SA Tourism had hired Bell Pottinger for a period of three years at a cost of R9.6m to market SA in the UK. He asked why was tourism figures were not high in the Northern Cape Province. The Province had so much to offer in the way of tourist activities. Was it an issue of flights to the Northern Cape Province that was an issue? He further asked whether the Province itself was not doing enough on tourism.

Ms Sthembiso Dlamini Chief Operations Officer (COO), SA Tourism, on credit card crime and cyber fraud, said that SA Tourism had not had reports of it. China was however a vulnerable market. The issue was about convincing Chinese tourists to use travel cards instead of cash. SA Tourism was partnering with the Industrial and Commercial Bank of China (ICBC) as well as with Standard Bank in SA to create a travel card. She pointed out that the Northern Cape Provincial Tourism Agency was very active.  Two key markets that SA Tourism was pushing in the Northern Cape Province were the Dutch and the Americans. SA Tourism’s strategy was to bring international media to SA and to immerse them into what SA had on offer.  The National Conventions Bureau (NCB) also worked closely with the Northern Cape Provincial Tourism Agency. Meetings, Incentives, Conventions and Events (MICE) covered the business side of things in tourism. The NCB as a business unit worked with the Province on hosting of business events. On the product side of things the Tourism Grading Council of SA (TGCSA) also worked with the Agency. On domestic tourism SA Tourism identified events in the Province. 

Mr Ntshona stated that credit card fraud was a global phenomenon. He pointed out that SA was ranked as the top third country on the banking governance side of things. SA used to teach the UK how to do things. The Bell-Pottinger issue needed to be understood in its context and time. Bell-Pottinger was the firm which qualified to get the public relations contract. It was a five-year contract. By the time the matter hit the media the contract was coming to an end. Bell-Pottinger had re-applied but had been unsuccessful. He assured the Committee that SA Tourism had gotten value for money from Bell Pottinger. SA Tourism was well protected. In the contract with Bell-Pottinger an exit clause was included. If the contracted public relations company had a reputation change which was not favourable then SA Tourism had the option of cancelling. He said that the Northern Cape Province had been showcased. Every time people came to SA they should have a new experience. Provinces had to be knowledgeable about who their top markets were. For instance in the Northern Cape Province the Germans, the Dutch and the Chinese frequented it the most. The idea was to use events to hook people. SA Tourism would work with the Northern Cape Province on Air Aces. The challenge in the Northern Cape Province was about how to increase capacity and also to increase attractions.

Ms Abrahamse stated that the Northern Cape Province epitomised the beauty of SA. It had huge open spaces and had biodiversity. It was very unique. She said that different players played in the Northern Cape Province. National Parks was the biggest bed owner in SA but unfortunately SA Tourism never had a good relationship with it. It was time to have a good relationship with them. 

Mr L Magwebu (DA, Eastern Cape) asked that SA Tourism share with the Committee its Memorandums of Understanding (MOUs) that it had entered into with provinces. Members needed to know what was contained in the MOUs. He noted Ms Abrahamse’s remark that domestic tourism figures had declined. Mr Ntshona had said that SA’s secret weapon was its people. He wished to add to it. SA’s history was also its draw card. He asked where SA Tourism was on Destination Marketing Companies (DMCs). He noted that there was a lot to see in East London. He felt that Buffalo City was not doing enough. Each province had its own history. The Eastern Cape and Northern Cape Provinces were struggling with tourism but the Western Cape Province was doing well. He had in the past visited Perth and had seen that persons with stalls were subsidised by the city for the duration of a two day festival. Why could it not be done in SA?

Ms Dlamini agreed to provide the Committee with MOUs that SA Tourism had with provinces. Domestic tourism was critical area for SA Tourism There were big economies overseas which had thriving domestic tourism markets. The Sho’t Left 2.0 was a new Campaign to encourage domestic tourism. The issue was about access, access to money, time and information. The intention was to drive conversion. Affordability was of great importance. The issue was about packaging affordable deals. The problem was that SA Tourism did not have black DMCs to do business with. 

Mr Ntshona pointed out that some provinces were far ahead on tourism than others. Each province had its own unique offerings.  The MOUs with provinces would be shared with the Committee. Each province’s MOU was different. All the MOU’s with provinces added up to the national plan for tourism. He noted that black DMCs were an issue. SA had to be showcased as a whole. Tourists wished to go to rural areas but the only problem was that there was no connectivity. Small, Medium and Micro Enterprises (SMMEs) complained that they received no business. A DMC had the power of consolidation. At least ten black DMCs were needed. Things at present were nowhere near that target. The industry saw it as an encroachment of its space. 

Ms Abrahamse, on DMCs, pointed out that the world moved fast. People did not use travel agencies that much anymore. The internet made things more convenient and faster. People made bookings online. Even the role of DMCs was changing. Groups that travelled still used DMCs. The DMC space was getting smaller.  

Mr Y Vawda (EFF, Mpumalanga) was concerned about the drought in the Western Cape. SA Tourism was asked what it was doing to assist the Western Cape. It was already expected that many tourists would not be flocking to the Western Cape over the festive season because of the drought. On domestic tourism, he pointed out that there were millions of people travelling by minibus taxis on a daily basis. These were people that needed to be captured. The taxi industry had to be taken on board. Taxi drivers had to be treated with respect and in this way respect would be reciprocated. A paradigm shift was needed in thinking. If one took care of the pennies then the pounds would take care of themselves. He pointed out that Uber used information technology to support its business. If one could not beat them then one had to join them.  He said that taxis in SA could also use technology like Uber did. Everyone had a smartphone and its technology should be used. Uber was here to stay. Opportunities needed to be embraced.

Ms Abrahamse said that she had been involved with SA Tourism for the past twenty years. How could the private sector be innovative? The role of SA Tourism would be that of enabler. When one landed in Japan one was given access to a Japan application. It opened up the entire country. The Japanese application was the brainchild of an entrepreneur. In London there was the Country Hopper application which was for free. There was something similar in New York as well. SA needed to get on board fast. South African entrepreneurs needed to be encouraged. Government was far too slow to get things going.

Ms Dlamini on efforts in Mpumalanga explained that the MOU set out how assistance was given. The Mpumalanga Province needed assistance with marketing. SA Tourism’s Chief Marketing Officer worked with the marketing office of the Province. The idea was to move away from the idea of tourism month. People should travel year round. Efforts were made to give persons discounts when they travelled to provinces.

Mr Ntshona conceded that SA Tourism was not on top of things as it should be when it came to technology. The problem was that government processes did not allow one to move fast. Uber was using a sharing platform. SA Tourism was working closely with the NDT. SA Tourism made input on what it expected from Airbnb. Airbnb and Uber were global platforms. With Airbnb the small player became more visible. Homestays had also been captured on Airbnb. On the matter of the Western Cape drought he said that Sanlam had done awareness of the drought. There were specific two-minute songs recorded by artists to encourage people to only take two-minute showers. The length of the song was what the duration of the shower should be. The issue was about informing and educating. He gave the example of California which was a desert state but had thriving tourism. 

Mr Mhlanga congratulated SA Tourism on achieving an unqualified audit report. The Office of the Auditor General of SA (AGSA) had raised certain issues. What was SA Tourism intending to do about its irregular expenditure? It was a fact that tourism contributed greatly towards the GDP of the country. Tourism was a labour intensive sector. It was about how foreign investment could benefit SA. SA Tourism was asked how provinces benefitted from the recruitment of people. He asked how Small Medium and Micro Enterprises (SMMEs) benefitted from the Enterprise Programme Fund. He asked for detail on the Tourism Marketing of SA (TOMSA) Levy Fund. He was concerned about women empowerment and about the efforts of the Broad Based Black Economic Empowerment (BBBEE) Charter Council. How were cooperatives being assisted? If only six of the 14 targets had been achieved what was being done about the remaining eight.

Ms Abrahamse said that the tourism sector needed to reflect the demographics. Inclusive growth and social cohesion was important to tourism. There was a tendency to forget that SA’s history was a big draw card for tourists from overseas. SA Tourism with all role players which included the Tourism Business Council of SA (TBCSA) and the Tourism Enterprise Partnership (TEP) needed to be cogniscent about it. SA Tourism appreciated the input. Minister Tokozile Xasa scrutinised what SA Tourism was doing on transformation. 

Mr Bouwer on irregular expenditure said that SA Tourism had tendered for a public relations agency in certain parts of Europe. SA Tourism followed a hub approach which clustered three countries together in this instance. Tenders had gone out but no suitable public relations firm could be found. SA Tourism had decided to extend its existing contract with its current public relations firm. As part of the tendering process SA Tourism had to obtain three quotations. So tenders went out and a new company was appointed. Payment of 68 000 euros for six months had been made to the public relations company. This amount was considered to be the irregular expenditure. 

Mr Ntshona said that government needed to lead by example and use graded establishments. Entities listed on the Central Supply Database should be graded. He explained that the TOMSA Levy was voluntary. It was an industry initiative. The TOMSA Levy contribution was 10% of SA Tourism’s budget. The funds were used for safety and security initiatives. On how tourism was contributing more to GDP he pointed out that tourism was a huge Foreign Direct Investment (FDI) earner. It assisted with the balance of trade. He noted that tourism was a people intensive industry. Tourism mitigated the Fourth Industrial Revolution. He stated that the day before he had attended the Women in Tourism Conference in Port Elizabeth. Minister Tokozile Xasa was very passionate about women in tourism. The intention was to see a 30% increase in women in tourism in five years. SA Tourism monitored the BBBEE Charter Council. On not meeting eight of its fourteen targets he said that even the Portfolio Committee on Tourism had remarked that even though SA Tourism was doing well its figures on meeting its targets said the opposite. The question that begged to be asked was whether SA Tourism had the correct Key Performance Indicators (KPIs) to reflect its performance. SA Tourism was doing things right but the KPIs did not speak to it. SA Tourism intended to finalise new KPIs by January 2018.  

Ms Abrahamse said that the SA Tourism Board had now been in place for two and a half years. She pointed out that many of the performance measures were not in control of SA Tourism. In 2017/18 adjustments would be made. Another consideration was the manner in which performance measures were set out. SA Tourism was trying to get things right. She explained that the TOMSA Levy was SA Tourism’s relationship with the private sector. It reflected the faith and trust that the private sector had in SA Tourism. The TOMSA Levy had grown enormously. It was an important source of funds. In the past year private sector had wished for TOMSA Levy funds to be used to fund certain projects. Small projects were undertaken by SA Tourism using TOMSA Levy funds. The TOMSA Levy however still needed to grow.

The Chairperson stated that Mr Mhlanga was a new member of the Committee and asked that NDT staff provide him with additional information.  

Mr B Nthebe (ANC, North West) was pleased that SA Tourism was encouraging government to use graded establishments. The Committee had recently gone on oversight to the Free State Province at Koffiefontein and some members had complained about the accommodations. SMMEs needed to be supported and had to be embraced. Why was the Tourism Indaba always held in Durban? Why could it not be held in the Mpumalanga Province or the Eastern Cape Province? The main issue with domestic tourism was affordability. People simply could not afford to travel. When huge races like the Comrades Marathon took place it attracted a great deal of foreigners. Locals who might also have liked to participate could not afford the whole expense around the event.

Mr Ntshona on domestic tourism explained that unfortunately SA Tourism did not own products. Establishments were the owners of the product and could not be told what to charge. On the Garden Route and in the Western Cape prices were too high. Establishments looked at maximising profits. It was all about dollars and euros. Many establishments preferred to do maintenance during the off season than to lower prices. Entrepreneurs were needed to target the local market. During Apartheid times the Aventurra Resorts were targeted towards the local market.   

Mr Ikalafeng said that all provinces had been given the opportunity to tender for the Tourism Indaba. Only three provinces had tendered ie Western Cape, Gauteng and Kwa-Zulu Natal. The rest of the provinces said that they lacked bed capacity for the event. The 5-year contact for Durban had just been renewed.

Mr Faber could not understand why Namibia had a booming tourist trade and the Northern Cape Province was not. Tourists flew into Cape Town and took connecting flights to Namibia. They did not come to the Northern Cape Province. The offerings between Namibia and the Northern Cape Province were similar. Places like Kimberley and Upington was dying. What was Namibia doing right that the Northern Cape Province was not? He asked whether the problem lay with Provincial Departments.

Mr Ntshona on Namibia responded that DMCs followed the money. DMCs were not driven by patriotism. The problem was also about ignorance and the lack of knowledge about SA. Part of education efforts should be to expose DMCs to SA. There was the Regional Tourism Organisation of Southern Africa (RETOSA) which collaborated as a Southern African Development Community (SADC) bloc of countries. He added that in 2018 it was the centennial celebration of Mr Nelson Mandela’s birthday and that there was a programme to be launched called, “Whats your 100?” Across the nine provinces 100 sites would have to be identified. Provinces had to identify sites. 

Mr Mhlanga asked that the Committee be provided with the MOU that SA Tourism had with TOMSA.

The Chairperson asked that all MOUs be provided to the Committee. He remarked that SA had won the Miss Universe Pageant.

Committee Minutes
Minutes dated 8 and 15 November 2017 was adopted unamended.

The meeting was adjourned.