South African Tourism (SAT) told the Committee that although there had been an improvement in the overall economy, as well as in consumer confidence at the beginning of 2018, this had not translated into increased spending, as unemployment still remained high. Despite the international tourist arrivals target not being met in this quarter, there had been a 3.6% growth in tourist arrivals compared to the same quarter in the previous year. The recovery of the Africa land in this quarter (4%) had not been sufficient to offset the losses recorded from the region earlier in the year. The regulatory barrier of visas in key source markets such as China, India, Nigeria and New Zealand had negatively impacted on tourist arrivals from the relevant regions. Brand awareness and brand positivity had been negatively impacted by a number of incidents of crime against tourists in 2017.
The entity had spent R1.405 billion of its R1.468 budget, representing a 96% expenditure level. The main area of expense was in leisure tourism marketing, which accounted for R969 million, and was slightly below budget. Human capital business objectives were directed at achieving five million more visits in five years, and involved the goal of creating a high performance culture that enabled the delivery of strategic business priorities in a sustainable manner.
Members expressed concerns about the safety and security of international tourists, in particular, and suggested the negative perceptions should be measured and related to their impact on the economy in general, and job creation. It was suggested that South Africa should follow the example of some overseas countries, which employed “tourist police.” The Chairperson countered that monitors at popular tourist spots would be visible deterrents to criminal elements.
Members were also concerned about the technicalities of volume versus value, in terms of international tourist targets. They asked whether SAT had considered investing more money on marketing in those regions from which fewer, but higher spending, tourists tended to come. The issue of visas for international tourists from major markets such as China was also raised, and Members wanted to know what was being done about it and whether SAT had considered the use of e-visas. SAT was questioned as to whether they understood the domestic market that they dealing with, and whether they had done research on what drives their spending and consumer patterns. Members also observed that domestic business tourists tended to spend more money than leisure tourists, and therefore wanted to know what efforts had been put into converting business tourists into leisure tourists.
On marketing, they argued that SAT’s advertising campaigns were not speaking to actual destination marketing, and suggested a change in its marketing strategy. They also recognised the grading of establishments as a major tool in attracting visitors to the country, and recommended that alternative strategies be developed to incentivise establishments to grade. The non-attendance of board members at SAT board meetings was highlighted, and the Committee asked the new chairperson of the Board to take steps to ensure that this was addressed.
SA Tourism (SAT): Situational Analysis
Mr SisA Ntshona, Chief Executive Officer (CEO), SAT, said there had been an improvement overall in the economy between January and March 2018. Consumer confidence had also seen an upswing in the first three months of the year, as reported by the FNB/BER consumer confidence index. However, the translation of this improved confidence to increased spending was yet to be seen, as unemployment still remained high.
Key Focus Areas for SA Tourism in 2017/18:
Leisure Tourism Marketing
- Drive volume and value through strategic partnerships.
- Maximise resources and global footprint by leveraging on DIRCO’s infrastructure to promote tourism.
- Promote and incentivise hosting of conferences and incentives in the secondary cities.
- Address the geographic spread through the pre- and post Meetings Africa and INDABA tours conducted, to immerse international, regional and domestic buyers and media into smaller towns and alternative products.
- Improvement of reputation through regular trade engagements and consumer campaigns.
- Focus and emphasis on the eradication of the illegal use of stars to drive trade and consumer confidence.
Fourth quarter performance
Programme 1: Corporate Support
The strategic objective was to achieve operational efficiencies in all activities, including human, marketing and other resources available to South African Tourism. 154 out of the 155 (99%) permanent employees had been directly or alternatively placed in the new organisational structure as an outcome of organisational development (OD). The employee placement process had begun and was likely to be completed by the end of May 2018. The organisation had employed 29 new staff members following the outcome of OD.
Programme 2: Business Enablement
The strategic objective was to enhance stakeholder and partnership collaboration to better deliver on SAT’s mandate, and to position it to be recognised as a tourism and business events industry leader in market intelligence, insights and analytics. Trade engagements had continued to receive priority in this quarter. The CEO had embarked on a #Waterwise global road show that had replaced the previous webinars, in partnership with Travel Update. The CEO had also participated in the Joint Association Members Meeting Sessions (JAMMS), where numerous initiatives on how tourism stakeholders could manage the water crisis had been discussed.
Programme 3: Leisure Tourism Marketing
The strategic objective was to contribute to inclusive economic growth by increasing the number of international and domestic tourists, and to contribute to an enhanced, recognised, appealing, resilient and competitive tourism and business events brand for South Africa across the target markets and segments. Despite the international tourist arrivals target not being met in this quarter, there was a 3.6% growth in tourist arrivals compared to the same quarter in the previous year. The recovery of the Africa land in this quarter (4%), was not sufficient to offset the losses recorded from the region earlier in the year. The regulatory barrier of visas in key source markets of China, India, Nigeria and New Zealand had negatively impacted tourist arrivals from the relevant regions. Brand awareness and brand positivity were negatively impacted by a number of incidents of crime against tourists in 2017. South Africa scored significantly below average on safety and security among the target audience in 2017. These markets did not rate South Africa highly as a welcoming destination, and this was another factor contributing to the poor brand performance.
Programme 4: Business Events
The strategic objective was to contribute to inclusive economic growth by increasing the number of international and domestic tourists, and to contribute to an enhanced, recognised, appealing, resilient and competitive tourism and business events brand for South Africa across the target markets and segments. Four of the six key performance indicators had been achieved.
Programme 5: Tourist Experience
The strategic objective was to contribute to an improved tourist experience, in line with the brand promise. The target for grading accommodation establishments had not been achieved, as nationally there had been a strain on membership-based organisations. A marketing campaign to educate consumers on the benefit and value of grading had been launched in this quarter. Similarly, a recruitment campaign for establishments had also been launched. While targets had not been met, a recovery trend was being detected. A net increase in graded establishments had been achieved in February, March and April 2018.
Financial performance overview
Mr Thomas Bouwer, Chief Financial Officer, SAT, reported that the entity had spent R1.405 billion of its R1.468 budget, representing a 96% expenditure level. The main area of expense was in leisure tourism marketing, which accounted for R969 million and was slightly below budget. The 4% variance had been due to provisions that were due to be processed after board approval.
Human Capital and Governance Overview
SAT had a workforce of 165 permanent employees, against an approved headcount of 202. It had recorded a vacancy rate of 13% due to the organisational redesign process (Project Ignite). Internships and contract employees were used to ensure business continuity. Recruitment for vacancies had commenced in June 2017.
Regarding employment equity, the employee complement was made up of 61 males (36 black, three coloured, two Indian, nine white and 11 non-South Africans; and 114 females (61 black, nine coloured, eight Indian, 11 white and 25 non-South African. There were five temporary male employees, all black, and eight females, of whom six were black, one Indian and one non-South African. There was also one black female intern.
Organisational Review Project Update:
The outcomes of the Ministerial Review of SAT’s organisational structure and human resource (HR) development had been:
- Build and enhance the executive committee (EXCO) and leadership team’s capabilities to carry out their roles and duties, as per their key performance areas (KPAs).
- Conduct a review of the role, performance and capabilities of the HR function.
- Review and redesign the organisational structure, taking into account the funding and resource constraints,including currency risks and losses.
Human capital business objectives were directed at achieving five million more visits in five years, and involved the goal of creating a high performance culture that enabled the delivery of strategic business priorities in a sustainable manner. Performance management training and the roll out of plans were ready for implementation in the first quarter of 2018/19.
Another business objective was to develop and implement a market investment strategy that allowed SAT to focus on prioritised markets and segments. This would involve building human capital competitiveness as a core driver of SAT’s performance, through integrated talent management and learning and development. The talent management framework had been signed off, and would be implemented in the third quarter of 2018/19.
The SAT board had held two meetings during the quarter, the marketing committee had held one meeting, and the National Convention Bureau marketing sub-committee had met twice. The remuneration, travel, hire car and accommodation costs of board members were indicated.
Mr G Krumbock (DA) said that as important as any of SAT’s strategic objectives were, their goal surely should be to grow the number of both international and domestic tourists, because if they did not then there was no real point in having them. Referring to the KPIs listed by SAT, he noted an interesting statement made that the bulk of international tourists coming into the country were from neighbouring countries such as Mozambique, Zimbabwe and Lesotho, and said that if this market sneezed, then the entire international tourist market caught a cold. He commented that three-quarters of the country’s market came from that source, and it did not necessarily contain high-spending international arrivals. For now, Angola was an exception, as it had been mentioned as a country with a lot of petro-dollars. However, this fact might not remain the same with the ruling style of José Eduardo dos Santos coming to an end and the new President leaning towards creating a more egalitarian society where the high spenders would not be as great in number.
He said this then begged the question of whether South Africa’s largest market was also the most profitable. It would appear that some of the other international tourists could spend much more per capita than the three biggest markets within the 75%. His reason for this statement was because the KPIs which had been achieved did not indicate numbers in terms of what the target was. He asked the SAT to comment on how they were shifting focus to more high-spending international arrivals, what the targets for this shift might be, and whether he was correct in assuming that it was a desirable objective, bearing in mind that an increase in high-spending arrivals would affect the country’s economy.
On brand positivity, he said that the presentation had stated the reasons for deviations in brand positivity included incidents of crime against tourists. While he understood this, he was concerned by the fact that there were no numbers attached to brand positivity, because if they could measure just how much the brand positivity had sunk, one could link the percentage to the rand impact. This would enable the impact to be estimated more accurately. He had looked this matter up before and had found that there were measurements which were used to determine brand positivity. Therefore, he suggested that if brand positivity declined by half, maybe that could be linked to the decline in the number of tourists arriving due to that specific factor alone. For example, if a German tourist got mugged and Germany’s figures of tourists coming into South Africa declined as a result, South Africa should be able to measure the losses sustained, as well as the resulting economic impact. Surely, the Committee would like to be able to state statistically that a specific crime, such as inadequate policing, was costing tourism’s contribution to the economy by a specific amount. In turn, this could motivate better cooperation between the Committee and the Committee on Safety and Security, because if it could be proved that a slump in brand positivity could hugely impact on the welfare of the country as a whole by leading to a decline in tourist arrivals, employment opportunities and income. Perhaps better coordination could be established to look after international tourists.
On leisure tourism marketing, SAT had stated that the revenue from international tourists had exceeded the target and that on average, they were staying longer. It had been the trend for some time that although, even domestically, fewer people were travelling, those who were travelling were spending more, so the increase in spend and bed-nights was more than offsetting the decline in volume. From an international tourist viewpoint, he suggested that this was precisely why the figures relating to brand positivity were so important because if fewer people were generating more money then surely more effort should be directed to those markets where they were coming from.
On domestic tourism generally, he said that in a previous presentation, there had been some bewildering terms which basically indicated that SAT did not really understand its market and that there was a need for further research into what drives spending, certain patterns of consumer behaviour within domestic tourism and what drives visiting friends and relatives. This matter was still impacting on domestic tourism today, because they were all still struggling.
On the statistics provided regarding domestic tourists and international arrivals, he asked how far down the road SAT was in obtaining accurate statistics. Had it obtained the facts and conducted the research to ensure they knew what was going on?
Ms P Adams (ANC) said that she had thought she would hear from the chairperson of the SAT board during the presentation. She asked him whether he had received a legacy report and, if so, what it had entailed -- what changes there were and how he would like to implement those changes. On the breakdown of board remuneration and travel costs, she said that matters of finance should not just be overlooked. She asked from where and to where the flights that had been paid for were travelling. The former board’s procedure had been to have all their board and committee meetings in one or two days. In the legacy report, there must be something said about the practicality of this procedure. How did the new chairperson of the board want to move forward in respect of these meetings? Would he want to follow the same procedure? did he think it would be effective?
On leisure tourism marketing, she reminded the CEO that marketing was the SAT’s core business. However, they had achieved only five out of 12 KPIs, which was not even 50%. Was that value for money? The SAT had also distinguished between the fully achieved and non-achieved KPIs. Perhaps they could be more specific by indicating the level of achievement through a percentage, specifically with regard to the markets of Zimbabwe, Lesotho and Mozambique, where they had said that they were going for volume and value. Was the volume from these regions necessarily value? South Africa was so privileged to have a variety of neighbours, including Namibia, Angola and Botswana. What was SAT doing to also increase the volume of visitors from those neighbouring countries, particularly Namibia ,which could be argued to be a second South Africa as a result of many similarities?
On brand positivity, she said that the presentation had reported a decline in brand positivity in Kenya and Nigeria. She said that it was all about perceptions, so what was being done? What had the interventions been? Could the CEO name them and indicate the outcome? If there was no outcome, then there would be no value for money.
On the matter of business events, she observed that SAT had said that they supported international and regional business events. The Members knew that the business events were almost all directed towards the three provinces -- KwaZulu-Natal, the Western Cape and Gauteng. Could SAT specifically state which business event had been in the Eastern Cape and how many delegates had been in attendance? Also, what were they doing to convert business tourism to leisure tourism? When there were business events, were they physically present there? Did they speak to the delegates? What did they present to them?
Regarding the decline in the number of Chinese visitors, SAT had said that a Hub Head had been appointed to deal with the issue of the visas. She asked whether there was a specific mandate that this Hub Head must try to realise. South Africa needed the Chinese and their money.
On finances, she referred to the grading fees, as well as the Programme 3: Tourism INDABA and Meetings Africa. She said that the Adjusted Estimates of National Expenditure (AENE) had allocated a budget of R63 million, and only R43 million in revenue had been raised, but the auditing had not been done yet. She asked whether the CFO could subdivide it in future so the Members could see which main events were the most successful financially, and what improvements could be made. On Programme 5: Visitor Experience, she observed that 94% of the targets had not been achieved, but that 94% of the allocated budget had been spent. She asked whether SAT got value from Programme 5.
Mr J Vos (DA) referred to the issue of business and leisure travel, and commented that the business travellers seemed to spend three times more than leisure travellers before converting. A point had been made previously that there was a need to focus more on that conversion, especially considering that the Cape Town-Johannesburg flight path was the ninth busiest in the world and that most of those flights were filled with business travellers and maybe government officials. He was eager to hear what plans were being developed for the domestic business traveller as well, and on the conversion from conferences. In 2017, more than one million people had attended conferences in South Africa and so there was a great opportunity for conversion. There were also delegate boosting programmes being developed locally. What was SAT doing about that strategy? There was a lot of scope that would be developed with that type of delegate-boosting across all nine provinces.
On tourist safety, he said the CEO probably spoke at many places where he had to promote South Africa, so he asked that when he spoke about tourist safety, did he agree that maybe it was time for South Africa to have tourist police? Some other countries were doing this, and it instilled a lot of confidence amongst travellers, not only necessarily for international, but also for domestic tourists. There was a perception that it was not safe travel in certain places, and those barriers needed to be broken down and the culture of travel instilled in every part of the country. He commented that having the Chief Strategy Officer amongst the SAT officials was fortunate, and that they would have to conduct research on the issue of tourist safety as the country was getting bad publicity because of it, even though it may be unwarranted in some cases.
He referred to the recent VAT increase and subsequent high fuel increase, and said that these had certainly impacted on the ability of South Africans to travel. Would it be possible to consider an incentive travel approach, as it had now become very expensive to travel even without looking at the household budget. While he supported SAT’s “Five in Five Strategy,” he was concerned that they would not be able to meet the targets due to external impacts.
On international travel, the presentation had spoken on the issue of visas on arrival, but not so much on the e-visa. The e-visa was certainly something which needed to be celebrated. Currently, there was a pilot project on e-visa run by the Department of Home Affairs, and while SAT could not take charge of this project, it certainly would impact on travel. Regarding marketing, what would SAT be doing once this pilot project had been rolled out? How would they communicate with their key source markets and others on the benefits of e-visas?
The CFO had indicated that SAT spent about 77% of its budget on marketing, which was a lot of money. They got approximately R1 billion, which meant that about R770 million was allocated to marketing. Were the tourism advertisements that were shown on television speaking to actual destination marketing? Were these advertisements showing real experiences in real places and showing the affordability of these experiences? To him, it seemed as though while they were great advertisements, they did not highlight actual destinations that tourists could actually visit. These advertisements were developed by firms which SAT appointed. Perhaps they needs to change their marketing strategy if they wanted to speak to the domestic market, because those advertisements did not show showcase the remote areas such as those in Mpumalanga, where tourists could do homestays, or those in the Northern Cape, where tourists could go on hiking trails, or the Garden Route, with all its adventure tourism hotspots. The advertisements did not even tell the viewer where to visit at the end, they merely said, “Inspiring Places,” with the SAT logo -- which should also be changed. Perhaps SAT officials could comment on this issue because a lot of money was being spent on marketing and it does not seem as though they were getting value for money.
Another report had discussed the large amounts of money being spent on consultants. He felt it was important that SAT discuss this information further. How much money were they spending on consultancy? Were they getting value for money? Did they know the type of markets that they wished to entice, and were they communicating with those markets successfully?
He had noticed that some of the SAT board members had not attended any of the board meetings. He remarked that these members were appointed based on their skills and contribution, and it was concerning that some of them did not attend the meetings where they could make these contributions. How was the chairperson of the SAT board intending to handle this?
He said that SAT’s last “Briefing Back” had stated that R5 million had been allocated to domestic tourism, but had been returned to the National Department of Tourism (NDT), given that the sector was struggling with growing domestic tourism. He asked whether this was true and, if so, could SAT explain further on it?
Ms S Nkomo (IFP) referred to the Auditor General’s (AG) report, which she had heard was an unqualified one, but asked to be informed on the two main points which had come up as matters of emphasis. She asked how profound the issues of water, as well as land expropriation without compensation, were on the challenges facing tourism. What was being done to combat these challenges? Even in Europe, people were talking about this issue of expropriating land without compensation and it could be said that it was an issue which all South Africans would like to see being resolved, as it would mean that the qualms of the poor were dealt with.
On the target market which SAT approached for tourism in South Africa, she noted that the report had mentioned that it was generally people who earned from R5 000 per month who were targeted for tourism. She asked how low the SAT started in “conscientising” this R 5 000, so that when people reached it they actually knew about tourism. Did they start in schools? How did their programmes advance as time went on? She remarked that the earlier lessons on tourism started in schools, the better, so that when people reached adulthood they were more conscious.
On the issue of provinces twinning with one another to assist with tourism, she asked to be informed about the Northern Cape specifically, as the report had mentioned that this province had various areas of interest. How did the SAT bring a work force with them when they were working on a project in that area, as flights had been cut off in that area? Did they make use of luxury buses or trains?
She asked how SAT measured tourism experiences in the important areas. When tourists got mugged while visiting South Africa, how did they isolate the issue and get a clear measurement of how much they were losing because of it?
Regarding visas, the presentation had stated that in countries such as Dubai, visitors could fly in and access their visas at the airport upon arrival. Ms Nkomo asked SAT whether they had proposed this idea and held a discussion with the Department of Home Affairs about it. Coincidentally, some of the Members present also sat on the Portfolio Committee on Home Affairs, so they would be able to ask the chairperson of that Committee what type of discussions had been held on this topic.
During the presentation, she had noted that there was something missing from the graph on the budget --the issue of under-spending and real savings. She asked the Members to note that under- spending was not savings. She had also observed that SAT still had a lot of money to spend before the third quarter was finished, so could they say they had made any real savings, considering this?
Ms V Bam-Mugwanya (ANC) commented on how tourism activities were almost non-existent or minimal in most municipalities. She wondered how one could ignite the interest in these municipalities, as tourism happened at the municipal level. What measures had SAT taken to improve its performance, especially considering that the beginning of 2018 had shown a further decline? Even the President had mentioned that tourism was one of the sources which the country could depend on for bettering the economy and creating jobs, as well as mitigating the three challenges of joblessness, poverty and inequality. If SAT did not activate the interest of municipalities in developing tourism from their local economic development (LED) structures, then the country would lag behind. Not only should they encourage municipalities, but they should monitor their progress because there were many interest areas and activities in which SAT could participate.
Ms Bam-Mugwanya also mentioned that it was quite endearing for her to hear that there were some tourism-related programmes which had been created around the Nelson Mandela Centenary -- but who else knew about these programmes? During the presentation, the CEO had spoken as though he was in a different world, mentioning things that they were planning or hoping to do, but most of those things were not evident on the ground.
SAT had indicated a 31% decline in domestic tourism in the early months of 2018, and she wanted to know what measures they had taken to stop this downward spiral. Had they tried to embark on strategies to involve the municipalities and provinces? From observation, these lower levels did not seem to think that they were part of the chain that had to attract tourists.
On grading, she remarked that perhaps there were no recognisable benefits in having to grade one’s establishment, and that an incentive programme should be advertised to whet the appetite to grade. Currently, the establishments did not see the benefits of grading as they made money regardless of whether they had graded or not. Perhaps the Committee could advise on a review of the policy of grading to include incentives such as free and compulsory grading, with benefits to the establishments. Ggrading was important to tourism, as it attracted the visitors to the country’s establishments.
Ms E Masehela (ANC) also addressed the issue of grading, pointing out that the KPI targets which had been set in this regard had not been achieved. Before the CEO explained the distinction between fully achieved as well as partially or non-achieved KPIs, she had asked herself why these KPIs were marked in red and whether this meant that they were not achieved at all. Therefore, she remarked that the marking of both partially and non-achieved KPIs in red was misleading and suggested that perhaps a percentage should be attached to these indicators to indicate the stage of progress they were in. If this was not done, Members would always ask themselves whether these programmes were of any benefit, why SAT had invested so much money in them and yet had made zero progress. She asked how SAT was planning to move forward on grading, because it had always been done voluntarily and had not seemed to yield any good results. Yet when international tourists came to visit South Africa, and things were not good in the accommodation establishments where they were staying, they did not complain about those individual establishments but complained about South Africa as a whole. Perhaps a way forward could be forged where a special unit was established to ensure that grading was made compulsory and incentivised. On the R5 million which had been allocated for domestic tourism but was not spent, she remarked that this was a disappointing finding, because domestic tourism was not doing well.
Mr Ntshona thanked the Members for their questions and remarked that their level of engagement was exciting and much appreciated, as it showed their involvement in the business. He asked the CFO to begin by addressing the questions pertaining to financial matters.
Mr Bouwer began by stating that if the Members preferred that he include the unaudited figures in the report in future, then he would do so. This would make no difference, but he would include them nonetheless. The Members should just be aware that the figures would be unaudited, and that those of the Tourism INDABA and Meetings Africa may change.
He confirmed that the AG’s report was unqualified, and that for the past 15 years there had been neither matters of emphasis, nor notes from the AG. Therefore, SAT was clean in this regard. On the issue of under-spending, he said that he knew that government departments sometimes underspend and report on savings. The SAT department usually had quarterly meetings with the CEO, where they discussed the budget. As a public entity, there was not a requirement that they disclose under-spending and savings. When they did not spend or have inefficiencies, the CEO would instruct that the money be invested in other projects which had not been achieved. He therefore assured the Members that SAT would have no savings or under-spending, but if there was under-spending, those funds would not be utilised for the marketing mandate.
On the amount of money spent on consultancy, SAT had two cases where there were challenges in the Labour Court. Approximately R7 million had been spent there for one domestic case, and another case where an individual abroad had been fired. These cases had been extended for about seven years now, and about a month ago SAT had gone to the Labour Court for a hearing at which they had objected to what the new claims were. He said that it was quite expensive to have legal consultants abroad, as they were paid in sterling. Still on this point, he said that the Information Technology (IT) grading system which they used was also a UK system, and its support and licensing was also paid for in pounds, which was quite expensive. SAT was looking to customise this system, and while they had obtained approval from the Treasury to obtain it for another three years, they had been instructed to look for a custom-made system. SAT had put out a tender in search for a custom-made system, but had received no proper response. Nonetheless, they were still looking at proper processes of customising their IT system. The money spent on consultancy also went towards research.
Ms Sthembiso Dlamini, Chief Operating Officer (COO): SAT, first addressed the questions surrounding the R5 million which had been allocated to national domestic tourism, and said that the money was not an over-spend. The Department had examined the role of SAT in the domestic marketing space and the role of NDT as a Department within the space of domestic development. On how low the Department started, the CEO had also spoken about consumers from the R5 000 per month income bracket upwards being the target market that SAT was approaching. Therefore, they had decided upon this premise, that they would take the R5 million and invest it in domestic development, which would also consist of social programmes to create awareness among school children and pensioners.
Members had wanted to find out what SAT was doing about domestic tourism to ensure that the numbers were turned around, and whether the adverts that were being shown were gaining traction and changing the domestic picture to show clearly the variety of spaces that both domestic and international tourists could explore. The re-launch of the Shot Left campaign was largely driven by research which indicated that South Africans were not actually seeing themselves travelling. Therefore, the advert had been positioned in such a way that it would highlight experiences that would inspire South Africans to travel. The advert was in fact not off the mark, as it targeted the right audience. The campaign had performed very well, even though the number of trips taken during the holiday may not necessarily be related to it.
Currently, the issue which was prevalent within the domestic market was the issue of affordability, and SAT had formed a partnership with Department of Trade and Industry (DTI) to enable them to package affordable deals for the local market. One of the key projects that the SAT was running with Flight Centre in this regard was the facilitation of group travel for stokvels. This project gave SAT an opportunity for lay-buys, and they were waiting for the six-month milestone to monitor its uptake. SAT was now in the procurement phase of looking at aggregators who had the reach, where the trade division could walk in and upload their packages. The reason for this project was that when one looked at the Shot Left deal, she found that the user journey was too long and that by the time the traffic was directed into the Shot Left journey, the user still had to go into another website of the tour operator. Therefore, this collaboration with the aggregators would allow SAT to create the demand and then send the potential customers to the websites which they did not have.
On the achievement of the “Five in Five” goal, she said that in terms of SAT’s market portfolio, one of the strategies had been to defend their business in Europe as the country’s bread and butter region. At the end of 2017, one of SAT’s biggest markets, the UK, had fled because of consumer confidence being low. Since then, the team in Europe had been focused on strategies to defend their market share in Europe and had generally looked for ways to grow certain markets such as Germany and the Nordic countries, where they knew that they still had opportunities. At their last meeting with the Committee, SAT had submitted a report on the performance of the Nordics and how they were planning to extend the opportunity within that region.
SAT had also looked at the developing markets and determined which of these markets they were active in, but whose full opportunities they had not yet exploited. At the last meeting, they had also mentioned that they had done a “deep dive” in the United States of America (USA) and looked for ways to diversify the segments in the US market. Following this, they had identified niche segments such as African-Americans, and were using strategies to target this group and increase the numbers from that region.
Another region which had been identified to try and cover the “Five in Five” was China, and this exploration had led to the creation of the Hub Head’s new mandate in China. China was one of the key focus areas for the year 2018, because when one looks at global performance, one finds that every region was growing out of that market. Therefore, the strategy which had been adopted in this regard had been to link the tourism initiative to the 20-year bilateral agreement between China and South Africa, and leverage that existing relationship. Recently, the Hub Head had looked at South African businesses operating in China, the mission which existed in the South African Embassy in China, partnered with Brand SA which had a representative in China, and looked for South African communities in China to determine how to use the 20-year bilateral, as well as the Madiba Centenary. SAT was also planning to leverage off the Chinese President’s visit to South Africa in July, as well as some of the BRICS meetings that were set to occur.
Therefore, there were efforts in collaboration with the DTI to package deals that would increase visits into the country and close the gap in the achievement of the “Five in Five”. India was another one of the markets which had been identified and although there were visa issues, there were no plans to retract investment in that market because once the visa issues were sorted out, it would still take a long time to gain traction. Therefore, they would stay in that market but try by all means to diversify the tourism opportunities marketed.
On the question about the conversion of business tourism to leisure tourism, Ms Dlamini pointed out that one of the things which the National Convention Bureau (NCB) did was that for each convention that SAT wins, there were onsite support services whereby the SAT partners with the organisers of that conference could pitch a “Sustainability Village” so as to go beyond tourism and direct the delegates to these “villages,” where they could access and experience arts and crafts. Another project which the SAT did in an attempt to convert the visiting delegates into leisure tourists was the selling of packages for day visits, which the visitors could make use of after meetings. SAT also collaborated with the organisers of conferences, where they could sell packages to delegates before they even attended the conference so that they could plan an extended stay for a certain number of days in the country following the convention.
On the domestic front, SAT had now started a project with domestic tourism and the NCB in which they looked for national conferences and interacted with local professional conference organisers (PCOs) and sold them tourism packages. The first pilot project on this front had been the training of a young destination marketing company (DMC), which would be offering the discussed packages to government officials. Ms Dlamini agreed that business travellers were important, because they tended to spend more since the expenses related to the first part of their trip were already paid for.
Ms Bashni Muthaya, Chief Strategy Officer (CSO): SAT, addressed the question on quantifying the impact of negative perceptions around safety and security, and confirmed that SAT did have the data and that they would generate the information for the Members.
Regarding domestic tourism and SAT’s understanding of the “visiting friends and relatives (VFR) market,” she explained that tourism was a complex concept and that domestic tourism was no different. In the context of South Africa, the economic imbalances that existed and how people moved for different purposes required a lot more in-depth understanding than was currently the case. In the 2018/19 financial year, SAT had proposed a plan to understand that component of the VFR market -- how people travelled and what the big drivers were. SAT’s understanding of domestic tourism started on the back of the “Five in Five” strategy, whereby they aimed to grow domestic tourism by adding one million more domestic holiday trips. At previous meetings, they had spoken about the quality of domestic tourism statistics and how they would improve them. They had now embarked on a process to take the data currently available and create some baselines that could improve over time, such as the level of R5 000 from which the incidents of holiday travelling started to appear.
In their understanding of the VFR market, SAT talked about the impact of the economy on discretionary spending and the ability to travel. What they did not have scientific answers for was the question of what the link was between the economic indicators and domestic travel. While they could talk about it and understand that there was an impact, they were still not able to determine what the link was. There was also a need to understand the share of wallet of the average South African and where domestic tourism fitted in. In this regard, they had asked what the average South African was looking to spend money on and where they fit in. Currently, SAT had a segment called “build,” where it had been determined that there were a certain number of people travelling largely for VFR purposes, and that they were predisposed to travel. Some of the desktop analyses to come up with the science behind these levers were under way, and SAT was planning to begin the process of talking to people in the third quarter.
On the comment made about the geographic spread and the KPI of establishing a baseline, she explained that in collaboration with the provinces throughout the 2017/18 financial year, the approach had been to gear all provinces towards the common goal of “Five in Five.” On how this annualised target was translated in the different provinces, she said that SAT was working on a “fair share” concept which had been developed largely in consultation with the provinces, where the growth target had been based on the share of arrivals which that particular province got. The growth target which they looked at was also in line with their “Five in Five” target and overall sought to increase the market share of South Africa as a global destination. Therefore, when the international tourist arrival targets were added up between all the provinces, they amounted to the total annual target and this ensured greater alignment, which fed into the programmes to ensure a greater spread.
Mr Monwabisi Fandeso, Chairperson: SAT board, first addressed the question on the legacy report and said that he had asked the previous board to prepare such a report, which he would be discussing with them in the next week. Nonetheless, some of the areas which had been highlighted by the board members as needing improvement included domestic tourism, statistics leading to insights, the need to support the efforts around regulatory barriers -- even though this was not SAT’s primary responsibility -- as well as the effectiveness and efficiency of the organisation overall. On this last point, he remarked that SAT had spent the last year reorganising, and this had been done for the purpose of establishing a more effective and efficient organisation. Now, they had come to a time where there could be no more excuses. There was no more time to reform the organisation -- people wanted to see results and it was time to deliver.
The Chairperson said that he had not yet engaged with the board or the executive of SAT, and that the meeting with the Committee was the first engagement he had had. He also admitted that it was his first time hearing some of the answers which had been provided by the executive team. On the question about how the board was run and what its relationship with the Committee was, he thought that the Committee meetings should occur with a gap between them and the Board’s meetings, because the board had to absorb and deliberate on the views presented to them by the Committee as the support system. Having meetings on the same day would not allow for this process.
He had quickly picked up the non-attendance of board members at board meetings, but fortunately, the majority of the non-attendees were not on the new board. He was set to have an engagement with an affected member to find out why that member was not attending meetings. He explained that it was his responsibility to advise the Minister, who appointed the board, that the board was not effective due to the appointed members not attending meetings. This was a matter which he would address, as non-attendance by board members was costly to the organisation.
Mr Ntshona addressed the question about consultancy, and asked the Members to note the difference between professional fees and consultancy. The audit and legal fees tended to be classified as professional fees.
On the acronyms used, he explained that a PCO was a Professional Conference Organiser who managed the logistic side of business events. The DMCs were Destination Marketing Companies which package and sell the deals for leisure tourism. SAT did not sell anything, so when they wanted activities to happen in a certain place, they relied on the industry to package and sell the relevant deals. The difficulty within this context was coercing people to do things that they naturally did not want to do. This was why he had also advised that SAT did not market to India but rather stuck to the domestic market.
On the suggestion that SAT should be focusing on value instead of volume in terms of tourism-related targets, he said that the three big markets of Zimbabwe, Lesotho and Mozambique made up 50% of the country’s arrivals, and the rest of the world was only 26%. He emphasised that this had to be looked at as a portfolio of volume and value, and that it had to be considered that if SAT put all their eggs in one basket, then it exposed the economy of the country as a whole. For example, when the world decided that all of Africa had ebola, the very same international market that had big value to South Africa did not come to visit, and had left the country exposed. Therefore, what the regional tourist lacked in value they made up for in volume. SAT’s goal was to always manage the portfolio of value and volume in order to get the right mix.
SAT was also building a business for the longer term, and so while they may see that they were not getting the traction required, they still had to make sure that they could try and turn the tide around in the long term. Sometimes there were fewer tourists but they stayed longer, and those were the results of geographic spread. Also, the second and third time visitors were being steered away from the safari, mountains and beaches as tourism destinations, and getting shown the variety of opportunities which existed in the country.
On the question of whether the country needed tourist police, he remarked that there were macro issues such as water crises, land expropriation without compensation and safety and security which the country faced at times. When these issues occurred, SAT had to be very careful and stay within their tourism lane, because these issues did not solely affect tourism -- they were bigger than that. Safety and security was a national issue in South Africa, and not just a tourism issue. There may well be tourist police looking after tourists, but when a cash heist happened, it would still impact the perception around the safety of the country, even though it had nothing to do with tourists. Therefore, the issue which should rather be resolved was that of trying to ensure safety and security for everyone in the country, not just tourists. As far as safety within the tourism space was concerned, crisis centres and crisis communications were important so that when an international tourist got stabbed or mugged on Table Mountain, for example, there was an effective crisis management system, because these types of incidents tended to make bigger news in the country of that tourist’s origin. These incidents tend to be invisible to South Africans, as they occurred so closely and frequently. SAT wanted to improve on this Tourism Safety Initiative (TSI), and was working with the Tourism Business Council of South Africa (TBCSA) which was the custodian of safety and security issues, to do so.
On the VAT increase and attempts to incentivise travel, he said that one of EXCO’s KPIs was to make sure that SAT linked up with loyalty programmes such as eBucks. SAT humbled itself and went across to the private sector to ask for a relationship of cooperation which would enable customers to redeem these points in travel. The initiative existed but still needs to be led.
On whether SAT’s marketing campaigns depicted people’s actual experiences, he said that part of their evolution had been realising that what was expected from them was no longer making people aware of tourism, but also ensuring that conversion occurs. The biggest shortfall of the Shot Left campaign, for example, was that showed what people could do but was not detailed on how people could make these experiences happen. Therefore, it was no longer viable for SAT to do marketing -- now it also needed to follow up and ensure fulfilment.
On the annexures, he said five tangible points had been identified around domestic tourism.
Firstly, SAT had entered into agreements with established and non-traditional distribution agencies such as Shoprite, where a consumer could go in and buy tourism packages. This collaboration had improved the accessibility of tourism by allowing all types of consumers to access tickets in spaces that they could reach easily.
Secondly, SAT had observed that there was a demand and supply side to tourism and that if they only pushed the demand agenda but did not investigate what was happening at municipalities, then they were bound to fail. Therefore, they had partnered with the Department on the Destination Development Unit (DDU), to identify gaps where there were a lack of tourism experiences in certain areas, and then the Department intervened and created those experiences so people could be directed to those areas with a purpose. If there was nothing to experience in these areas, then people could speak about geographic spread until they were blue in the face. Pietermaritzburg was an example of a potential tourism hotspot, where there was still a lot of litter and grass which all needed to swept up so that SAT could have something to market.
Thirdly SAT, together with the Sector Support Unit (SSU) from the Department, had got to develop new cadres for DMCs, as well as tour operators who would focus on the rural areas and deliberately package for domestic tourism there. Without DMCs and tour operators that were aligned to SAT’s strategies, they would not get anywhere.
Fourthly, he referred to partnerships beyond the immediate space around tourism, and mentioned the Soweto Marathon and cultural festivals as examples of reasons which could be given, under this initiative, to consumers to go places they would not have otherwise gone. He emphasised that consumers needed to be convinced to visit places, using events as a tool, profiling the destination and ensuring that there were DMCs that were able to convert tourists.
Finally, the CEO mentioned that SAT was investing, together with the Department, in a technological system called the National Tourism Visitor Information System (NTVIS), which would ensure that everyone had a bespoke travel agent in their cellphones that would update them on the types of tourism-related activities that they were interested in. This app would also help with data collection, as it would enable SAT to see how often people travelled and where they travelled to. etc.
He hoped the Members could see that SAT was much more deliberate and aware about the domestic space and that they were not merely deer stuck in headlights and throwing money on the road. SAT was also aware of which provinces were performing well from a domestic viewpoint, and those which were not, and this would enable them to channel resources to those areas where there was a deficit. However, SAT faced a challenge in that it had no control over local and provincial tourism institutions -- they could merely influence and coerce the provincial authorities to come on board. Municipalities often did not listen to them and would report that they had more serious priorities such as Reconstruction and Development Programme (RDP) houses and water at hand. This became an issue when considering that tourism happened at the municipal level, and things such as the zoning of a house from a residential to a business space, were done at the local level. One would find that municipalities took two years to rezone spaces, thereby hindering progress in tourism. Nonetheless, the national Department tried to engage, inform and educate the lower levels of government, but that was about as much as they could do.
On the matter of events, he said that SAT could direct events from areas that were doing well, and did not need them, to those which may need them.
Regarding the results, he alerted the Members that they currently had only fourth quarter4 results and that they would provide a wider scope and include some of the elements which had been discussed but were maybe missing from the report when SAT came back to report on the annual result.
On the issue of how SAT presented its annual performance plans (APPs), he agreed that the way they presented tended to be either on or off, and that Members did not clearly get the sense of how far on or off the mark the results were. He also shared this frustration and felt that if they were 99% complete with a project, then this should be clearly stated and not just marked in the same colour as that which was only 20% complete.
On statistics leading to insights, he remarked that this was definitely something that SAT was looking into all the time, because the very same statistics guided them in terms of the investments made.
Regarding the R5 000 per month being the benchmark for the market targeted, he said that the VFR market was seen as a funnel that fed the business later on, and that SAT always had the debate of whether they should stick only to things that talked to their APP and forget everything else; or if they should look at the wider scope. They had to be cognisant of the fact that they were building a business for the future and that a lot of the work they were doing now would have an impact in five years’ time. Therefore, they had to constantly ensure that there was continuity.
On the question of which event was more successful financially between the Tourism INDABA and Meetings Africa, he said that SAT did not measure the success of these events only financially -- they were more than that. It was not necessarily a matter of how much they spent and how much was sold -- these events were an enabling platform, and the real business occurred when the tour operators and DMCs made the deals. These platforms were created to drive the APPs so that if there was a gap in a specific market, they would disproportionately have more operators and trade at these events, which would speak to those specific markets to prop them up.
The Chairperson remarked that from the questions which the Members had posed, it could be gathered that there was a cause for concern with the KPIs, as well as the targets which had not been met, especially on the issue of marketing. SAT’s core mandate was to market South Africa, and if they were not achieving this core mandate, they were failing or something was not going right.
Having made this point, the Chairperson felt that perhaps another meeting should be arranged at which SAT could bring the Committee all the joint marketing agreements, international and domestic, so that they could see whether any value for money was being derived from these agreements. Close to R1 billion was spent on marketing and yet SAT did not seem to be deriving the required results.
She said the issue of safety and security was a major thorn, because SAT could not say safety and security was a broader objective of the country, and then not take an initiative on its own. In tourist attraction sites, there was more visibility of tourism monitors and, as a result, anybody who had a motive to come into those spaces and do mischievous things would likely be deterred when they saw the monitors. Perhaps SAT should provide a strategy around ensuring that there were tourism monitors in most of the tourist attraction sites throughout the country, and indicate what work they were doing towards ensuring that their strategies were effective. People who came to visit South Africa needed to go back and report back to their relatives that the perceptions around safety and security in the country were not true because they had seen tourism monitors who ensured that tourists were safe.
Regarding grading and domestic tourism, she reported to the SAT Chairperson that these were issues which had been prevalent at SAT since the Committee began in 2014. Somehow, money had been pumped into these programmes, yet no tangible results had yielded value for the money invested. It was one thing to say that one wanted to drive the domestic travel space and another to actually specify who was being targeted, and how this driving would occur. There seemed to be a lot of talk surrounding domestic tourism, but there was no tangible strategy which showed that SAT was actually getting to the root cause of the problem. Yes, people did not have money but they did save and could even purchase cellphones that cost R10 000. This therefore showed that the issue was not with people not having money, yet SAT still maintained the argument about affordability.
On the issue of grading, she remarked that it seemed that the incentives and the basket of benefits which SAT continuously put out were not enticing enough to make establishments make grading a top priority. Something was not right. Moving forward, as the chairperson steers this boat called the governance of SAT with the board, he had to ensure that they put all their efforts towards making these improvements.
The Chairperson thanked SAT for the honest engagements whereby they had stated clearly the areas in which they were struggling. They now needed to look at other strategies to ensure that the money which had been invested yielded valuable results. The matters of safety and security should not be pushed aside as national issues, but SAT must also take the initiative to improve in this regard. There were “green scorpions” which went out into the oceans to ensure safety within that space. These were not police, but initiatives driven by sectors and departments to ensure safety within their space. SAT should also seek to do the same in its own space
The meeting was adjourned.
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