SA Tourism briefed the Committee on its 1st Quarter Performance Report for 2018/19.
SA Tourism had a total of 27 key performance indicators but that some were not yet due for reporting. For Quarter 1 the target for international tourist arrivals was 2.5m with actual performance sitting at 2.4m, a deviance of 5%. Factors that affected the numbers included safety concerns, the water crisis in Cape Town and also the discussion around land expropriation without compensation. Of concern was the drop in total number of domestic trips of 14.9% for the Quarter when compared to the same period in 2017. For Quarter 1 the target for total number of domestic trips was 5.3m with actual performance sitting at 4.1m, a deviance of 23%.On the number of domestic holiday trips the Quarter 1 target was 0.4m, actual performance surpassed the target with the figure sitting at 0.6m. The increase was attributed to SA Tourism boosting its marketing campaigns. On the number of graded accommodation establishments achieved the Quarter 1 target was set at 1 445, actual performance was 1 242. There was a deviance of 14%. The Committee was given an overview of the financial performance of SA Tourism for Quarter 1. SA Tourism’s expenditure was well on track. On human capital the SA Tourism Board had approved a structure with a total of 202 positions. At the end of Quarter 1 a total of 155 positions had been filled with 47 vacancies.
Members were concerned about the decline in tourist arrivals for the Quarter. Members would have liked to have seen how factors like the water crisis in the Western Cape, crime, visa regulations and discussions around land expropriation without compensation etc had contributed towards the downturn in numbers. The impact of each factor needed to be quantified. Was the impact of each factor the same? SA Tourism was asked what plan it had in place to address the underperformance. The Committee needed more detail on the public relations campaign of SA Tourism. Members asked what percentage of all SA’s beds was from graded establishments. SA Tourism was asked whether it had considered making grading free whilst making it compulsory. SA Tourism was asked whether there were consequences when board members did not attend meetings. Members asked what SA Tourism could put in place to mitigate the economic recession that SA was experiencing. Members were hugely concerned about how badly domestic tourism was faring. Members wished to see domestic tourism as a priority to SA Tourism. Members were concerned about SA Tourism’s high staff turnover rate at top management level. SA Tourism was asked what the underlying cause was. Members commented that even though large amounts of money were being spent on marketing, the problem was that marketing efforts did not speak to destinations and locations. People needed to know what was out there and how to get there. Members felt that the deals and discounts offered by the industry during Tourism Week should be on offer year round. Members also felt that there were huge opportunities around township tourism. There was a need to develop products in townships. On the reduced demand in the Western Cape during the December peak season, SA Tourism was asked whether they had discussed the matter with the Province. Members observed that the presentation had not said anything around Airbnb. SA Tourism was asked to speak on the matter. Members further asked what SA Tourism’s efforts around rural tourism were. Members were concerned about negative messaging around tourism in SA. SA Tourism was urged to follow up on incidences of crime that had been reported. In this way SA Tourism could communicate on developments if there were any. The Committee needed to see greater impact being made.
Responses to questions that remained unanswered by SA Tourism would be forwarded in writing to the Committee.
Ms Pamela Yako, Chairperson, SA Tourism Board, said it was an honour to attend the meeting. The Board was new and was still finding its feet. It was relevant that SA Tourism was speaking to its performance given that September was Tourism Month.
Briefing by SA Tourism on its 1st Quarter Performance Report 2018/19
Mr Sisa Ntshona, Chief Executive Officer (CEO), SA Tourism, stated that in total there were 27 key performance indicators but that some were not yet due for reporting. International tourist arrivals to SA had contracted by 1.3% in 2018 compared to the same period in 2017. For Quarter 1 the target for international tourist arrivals was 2.5m with actual performance sitting at 2.4m, a deviance of 5%. Factors that affected the numbers included safety concerns, the water crisis in Cape Town and also the discussion around land expropriation without compensation. SA Tourism was working with the Tourism Business Council of SA (TBCSA) and Tourism Marketing SA (TOMSA) on these matters. However arrivals for Africa had increased by 0.2% for the same period.
Of concern was the drop in total number of domestic trips of 14.9% for the Quarter when compared to the same period in 2017. For Quarter 1 the target for total number of domestic trips was 5.3m with actual performance sitting at 4.1m, a deviance of 23%. On the number of domestic holiday trips the Quarter 1 target was 0.4m, actual performance surpassed the target with the figure sitting at 0.6m. The increase was attributed to SA Tourism boosting its marketing campaigns. Staff satisfaction score, vacancy rate and compliance with the Employment Equity Act were all key performance indicators whose annual targets were not yet due for reporting and hence there were no Quarter 1 performance figures.
In 2017/2018 the Tourism Grading Council of South Africa (TGCSA) did not achieve its target. The year closed on 5 058 Graded Establishments against a target of 5 932. As this unit has rolling 5 Year rolling targets, the previous years underperformance is still affecting the performance of the unit. It is however noted that the entity is experiencing a much greater uptake of the Tourism Incentive Programme (TIP) Funding in 2018 and this has had a positive effect on the Graded Establishment numbers. New properties in the quarter amounted to 246. The net number of graded establishments has increased every month of the 2018 calendar year and this trend has continued in the quarter. This is largely being achieved with greater focus on reducing cancellations, sales drives done in Q4 are having an effect and the above the line marketing and communications campaign which returned impressive engagement numbers is also having a positive effect on our numbers for the year. TGCSA has recently held a deep dive with the EXCO and MANCO teams at SA Tourism. The purpose of this was to dissect and evaluate the entity’s current performance in order to direct efforts for 2018/2019 in order to ensure targets are achieved.
Mr Tom Bouwer, Chief Financial Officer, SA Tourism, spoke to the financial performance of SA Tourism for Quarter 1. The total annual budget of SA Tourism was R 1 439 564 billion. Its actual revenue was R 1 031 050 billion which was 72% of its annual budget. SA Tourism’s actual expenditure was R450 726 which was 31% of its annual budget. Expenditure was well on track. On human capital the SA Tourism Board had approved a structure with a total of 202 positions. At the end of Quarter 1 a total of 155 positions had been filled with 47 vacancies. The recruitment process was in progress to fill the vacancies by September 2018.
SA Tourism was compliant in all matters relating to the PFMA for the quarter ended 30 June 2018.
The Acting Chairperson stated that given time constraints any unanswered questions by SA Tourism should be responded to in writing.
Mr G Krumbock (DA) said that the decline in tourist arrivals for April-June 2018 was disturbing (Slide 3). The increase in arrivals from Africa was a saving grace. He stressed that the Committee needed to be provided with actual numbers. The Committee needed figures on what effect the 2018 FIFA World Cup in Russia had on numbers. Numbers from the USA was only down by 1%. The USA did not even qualify for the World Cup but Americans still went to the tournament. He pointed out that the USA had a surging economy and he would have liked to see an increase in tourists from the USA. On the number of tourist arrivals he would have liked to know how factors like the water crisis, crime, visa regulations and land expropriation without compensation etc had contributed towards the downturn in numbers. The impact of each factor needed to be quantified. Was the impact of each the same? What plan was in place to address the underperformance? He needed more details around the Public Relations Campaign of SA Tourism. He also asked what percentage of all SA’s possible beds was from graded establishments. He asked whether SA Tourism had considered making grading free whilst making it compulsory. He asked why Mr Oregan Hoskins, as a Director of SA Tourism’s Board, had not attended a single meeting. Had he lost interest?
Ms Bashni Muthaya, Chief Strategy Officer, SA Tourism, responded that perhaps it was prudent to provide members with written responses on matters that she would deal with. On what were some of the reasons for the declines, she said that SA Tourism did have data to this effect. For instance on the water crisis in Cape Town there had been an 11% decrease in tourist arrivals in Quarter 1. Figures were down by 4% overall. On the FIFA World Cup in Russia regarding non-qualifying countries she noted there were huge bookings topped by the USA followed by China. Even if countries had not qualified they still went to the FIFA World Cup in Russia.
Mr Ntshona, on how to be ready to react to future events like the FIFA World Cup, said it was all about the speed of the response. SA Tourism was looking at its performance. On how much factors like crime and the water crisis were weighted in terms of their impact, SA Tourism did not have a specific percentage for each. SA Tourism responded to recurring issues. SA Tourism needed to address the factors like those mentioned. He said that even though there was a dip in numbers in the Western Cape, Avis Car Rental had a 20% increase in bookings.
Mr S Bekwa (ANC) asked what SA Tourism could put in place to try and mitigate the economic recession that SA was experiencing. He was hugely concerned about how badly domestic tourism was faring. It would seem as if SA Tourism was doing nothing to improve domestic tourism. SA had a policy of radical economic transformation. The idea was to get the poor to participate in the economy. SA Tourism had mentioned that it was targeting business people during Tourism Travelling Week. Why was the disadvantaged not targeted?
Mr Bekwa referred to the grading performance figures and felt that there was not much that SA Tourism could do about it. He added that the next time the Committee met with SA Tourism he wished to see that domestic tourism was a priority.
Mr Ntshona, on trying to mitigate the effects of the economic recession, explained that SA Tourism tried to bring all stakeholders on board. Stakeholders like the South African Airways (SAA) were required to do their part. A seamless approach was needed. Jobs were linked to the tourism space. The more the sector grew the more jobs would be created. On grading, he agreed that SA Tourism could not just sit back. There was a need to inform and to educate around what grading entailed. Businesses needed to be educated as well. The difficulty was around how destinations packaged themselves. Visitors did not only stay in hotels. SA Tourism met with Chief Executive Officers (CEOs) of stakeholders in the sector on a quarterly basis.
Mr J Vos (DA) said that he preferred to read the briefing notes that SA Tourism had supplied along with the presentation document. He asked for an explanation on why the Chief Marketing Officer had resigned. He observed that there were many external factors that affected domestic tourism. A great deal of money was spent on marketing campaigns. The problem was that marketing efforts did not speak to destinations and locations. Questions like where to and how had to be asked and answered. People needed to know what was out there and how to get there. It was good that industry had come on board to offer discounts and packages during Tourism Week 24-30 September 2018. He felt that these types of deals should be offered year round. He also felt that there were great opportunities around township tourism. Greater collaboration was needed between SA Tourism and role-players. There was a need to develop products in townships. On the reduced demand in the Western Cape over December compared to the previous year, he asked whether the entity had raised the matter with the Province. He observed that the presentation had not said anything around Airbnb. SA Tourism was asked to speak to Airbnb as it was a game changer in the sector and a big contender.
Mr Ntshona said that township businesses were all part of Tourism Travel Week activities. He pointed out that at present an Airbnb Summit was happening in Langa in Cape Town, Western Cape. Airbnb was the world’s largest online platform. Efforts were being made to get rural people on board as well. SA Tourism was working with South African National Parks (SANParks).
Ms V Bam-Mugwanya (ANC) asked what was being done around rural tourism. What plans did SA Tourism have to get rural people into tourism? She noted that the grading of establishments only benefitted visitors who came to SA. South Africans looked at the reputation of the establishment and did not really take grading into account. If the South African Police Services (SAPS) was to remove illegal grading plaques how would they know which were fake or illegal? How could these types of matters be circumvented? She too pointed out that there were board members who did not attend board meetings. What happened when a board member did not attend three meetings? Was there any consequences? She was concerned about staff turnover at top level management. SA Tourism was asked what the underlying cause was.
Ms Yako said that as the incoming Board they had to deal with staffing and top management matters. As recent as they day before she had met with all SA Tourism’s top managers to get an indication of where they were at, the challenges that they were facing or any other issues. She had analysed the staff engagement survey of which the focus group had been across the board for the organisation.
The Acting Chairperson insisted that SA Tourism respond to the matter of the Chief Marketing Officer’s resignation. She was concerned about negative messaging around tourism in SA. Was SA Tourism’s overspending and pre-payments in line with the Public Finance Management Act (PFMA)? SA Tourism was asked to speak to the implementation of outcomes with the Tourism Grading Council of SA (TGCSA)?
Ms Yako said that there had been an exit interview for the Chief Marketing Officer. SA Tourism was looking at it and it was a priority.SA Tourism was trying to make sense of everything. SA Tourism tried to analyse all data that had been received. Top management and the extended Executive Committee members were all committed. As a new Board, issues needed to be dealt with.
Mr Bouwer responded that there was 100% compliance with the PFMA on overspending and on prepayments. Challenges were encountered because SA Tourism did a great deal of work in foreign countries.
Mr Ntshona agreed to provide the Committee with written responses to questions that had remained unanswered by the following Monday, 17 September 2018.
The Acting Chairperson said that SA Tourism had to do follow ups on incidents of crime that had been reported. In this way SA Tourism could communicate on developments if there were any. She emphasised that the Committee needed to see an impact being made.
The meeting was adjourned.
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