SA Tourism briefed the Portfolio Committee on its 2020/21 special adjustments budget. The CFO said total revenue of R1.5 billion was revised downward to R438 million due to a reduction in the allocated of R826 million. There was also a downward revision in projected exhibition income and levy fees. Tourism had frozen non-essential vacancies and added that curtailing the cost of compensation was already on the cards before the pandemic. Compensation of employees will be adjusted from R243m to R237m.
SA Tourism CEO said that considering the constrained fiscal space and marketing limitations, SAT has reduced budgeted spend significantly. Its strategic objectives will focus on foundational and transformative initiatives that will position the organisation to best support the recovery plan of re-igniting demand, rejuvenating supply and strengthening enabling capability. SA Tourism through the Department of Tourism (DoT) will continue to monitor the environment with National Treasury. Upon readiness of the sector based on the Risk-Adjusted Approach, DoT shall motivate to National Treasury to consider resourcing tourism’s recovery efforts from a marketing and development point of view. SA Tourism will continue strengthening industry collaboration through the Tourism Business Council of South Africa (TBCSA) on industry recovery initiatives. It is a “Domestic First” Recovery.
The Chief Marketing Officer discussed the forum where the chief marketing officers of all provincial tourism authorities get together with SA Tourism to ensure their marketing is aligned so they collaboratively deliver marketing to the world and domestically with an aggregated budget for efficient uses of .
SA Tourism launched a hashtag a month ago #ShareSouthAfrica were they have invited all South Africans to contribute their stories about what is happening in their localities so people can know what attractions are available at a local level. That contribution has been rich, and they have great stories in places that are not normally on the radar for tourism. They have harvested all of that so that they can ensure that as the sector opens up, traffic is directed to those attractions.
The Minister said that the Ministry will continue to be an advocate for the Tourism sector based on the advice of the health advisory team. The Tourism portfolio would wish to see people moving again but it is a delicate balance between lives and livelihoods. They have decided to go back to the drawing board since the pandemic numbers are going higher. South Africa is likely to become one of the top five most affected countries and what they are going to do is look at what the most affected countries are doing about tourism and learn from them. The health sector said that there is likely to be an increase in cases leading to a shortage of hospital beds. This has dire consequences for economic activities which affects tourism to a great extent. It is important for the country to contain the virus. However, they remain hopeful that once it is contained this will give confidence to global tourists to feel safe in South Africa.
Minister's opening remarks
Minister Mmamoloko Kubayi-Ngubane said SA Tourism will present its revised budget and APP. She highlighted that this meeting is happening after the President’s 12 July announcements on how they are going to proceed as a country in dealing with COVID-19. Tourism has adopted the risk-adjusted strategy, but announcements bear more consequences for the tourism sector given the new restrictions on movement with the curfew and the suspension of the sale of alcohol.
The Minister said that the Ministry will continue to be an advocate for the Tourism sector based on the advice of the health advisory team. The Tourism portfolio would wish to see people moving again but it is a delicate balance between lives and livelihoods. They have decided to go back to the drawing board since the pandemic numbers are going higher. South Africa is likely to become one of the top five most affected countries and what they are going to do is look at what the most affected countries are doing about tourism and learn from them. The health sector said that there is likely to be an increase in cases leading to a shortage of hospital beds. This has dire consequences for economic activities which affects tourism to a great extent. It is important for the country to contain the virus. However, they remain hopeful that once it is contained this will give confidence to global tourists to feel safe in South Africa
The Minister said that this is not the time to be pointing fingers and blaming each other as a sector. This is a time to be holding hands and working together to find lasting solutions to balance both lives and livelihoods. Sometimes as the Minister of Tourism she is expected to stand against the decisions of government as it is not in the best interests of the sector; but she will never do that. She is a member of the Cabinet and those decisions bind her as she is part of them and violating them would be going against her oath of office.
South African Tourism (SAT) 2020/21 Special Adjustments Budget
Mr Sisa Ntshona (SAT CEO) said that considering the constrained fiscal space and limitations on marketing, SAT has reduced the budgeted spend significantly, focusing on foundational and transformative initiatives that will position the organisation to best support the recovery. Three strategic objectives are central to South Africa’s tourism recovery: re-igniting demand, rejuvenating supply and strengthening enabling capability. SA Tourism through DoT will continue to monitor the environment with National Treasury. Upon readiness of the sector based on the Risk-Adjusted Approach, DoT shall motivate to National Treasury to consider resourcing tourism’s recovery efforts from a marketing and development point of view. SA Tourism will continue strengthening industry collaboration through the Tourism Business Council of South Africa (TBCSA) on industry recovery initiatives.
SAT CFO, Ms Nombulelo Guliwe, said the total revenue of R1.5 billion was revised downward to R438 million due to a reduction in the allocated of R826 million. There was also a downward revision in projected exhibition income and levy fees. There have been discussions about looking at the staff composition, even before the pandemic. We looked at what we needed to do as SA Tourism to be efficient. We highlighted projects we have to do to ensure we have a policy environment aligned to that of government. SA Tourism had frozen non-essential vacancies, adding that curtailing the cost of compensation was already on the cards before the pandemic. Compensation of employees will be adjusted from R243m to R237m.
• Programme 1: Corporate Support programme budget was R140.936m which has now been adjusted to R111.445m.
• Programme 2: Business Enablement ensures strategy development and centralised research insights and analytics to support the core business and provide open-source information-sharing with the tourism sector to strengthen collaboration. This programme aligns to the strategic objectives of re-igniting demand, rejuvenating supply and building an enabling capability. The Initial amount under this programme was R94.710m which has now been adjusted to R33.807m.
• Programme 3: Leisure Tourism Marketing programme is responsible for destination tourism marketing, targeting leisure tourists in both the international and domestic markets. This programme aligns to the strategic objective of re-igniting demand. The initial amount was R1.1bn which has now been adjusted to R226.382m.
• Programme 4: Business Events programme markets South Africa as a business events destination. It aligns to the re-igniting demand strategic objective. Initial amount was R140.932m now adjusted to R23.291m.
• Programme 5: Tourist Experience Programme is responsible for delivering a quality experience to international and domestic tourists through a) Grading establishments b) Product capacity building c) Itinerary building. It aligns to the strategic objective of rejuvenating supply. Initial amount was R72.532 now adjusted to R44.061 [see document for details].
Mr M De Freitas (DA) asked if the reduction of the budget would not result in the repurposing of the staff
Mr H April (ANC) welcomed the report and said to the Minister that she should not succumb to pressure from anyone to bring a different view from that of the National Coronavirus Command Council (NCCC) and what government has agreed upon.
Mr G Krumbock (DA) noted that the President said that different provinces will reach their peaks and declines at different times. If that is the case, is it possible to market some provinces before others or do they have to wait and open the country as a whole?
Ms M Gomba (ANC) said that since SA Tourism is talking about the freezing of posts and staff reduction, she asked if that is going to affect the DoT organogram. If yes, will that not affect its effective running in achieving its deliverables?
Mr K Sithole (IFP) asked if there are staff that are going to be affected by the restructuring. If so, how many? He asked if they have a strategy to market tourism domestically.
Mr H Gumbi (DA) said that it is very difficult to look at an entity and its budget and isolate it from politics and what is going on with the pandemic naturally. So under the circumstances, this is a well-presented budget. Health Minister Mkhize’s answers to Parliament's questions about the preparedness of the country is something that should be shocking and worrying especially for the tourism industry. This is because a lot of people in the tourism value chain are out of jobs and they are not yet really prepared for the peaks of the pandemic. This means they are preparing a budget yet not knowing when exactly they are opening up. There is a deep lack of capacity in the state to get things done and a lot of lack of political will and inconsistencies. The likelihood is that with this ongoing lockdown they are not going to develop a significant capacity to deal with the health crisis. So there is both a health crisis and a serious jobs crisis. At the end of the day, they cannot divorce the politics of what is happening and the political leadership in managing this crisis with the kind of budget that is going to be taken. This is because the budget might be there but tomorrow it might be irrelevant in the context of everything that is going on.
Ms S Xego (ANC) asked if the domestic tourism strategy before COVID-19 is the same one they will use now. In the presentation SA Tourism mentioned that there are postponed bookings and meetings such as the Indaba. Does that not have implications on the revised budget? They plead with the Minister that she must continue to engage with National Treasury in lobbying resources for extra funds as an intervention for the lost jobs and businesses.
Mr L Makhubela-Mashele (ANC) asked what the size and the impact will be of the revenue streams that are not coming. Moving forward, as they move to a post-COVID-19 era, what will Tourism do to ensure that it encourages businesses in the sector to continue and earn revenue.
Mr P Moteka (EFF) asked how jobs will be affected as a result of the revised budget. How many projects in villages and townships will be affected? He asked if they have prioritised local tourism since nothing is happening at an international level. He asked what changes they will see since all the focus can now turn to local tourism.
The Chairperson thanked the Department of Tourism and SA Tourism for adjusting their plans and budget. However this does not mean that parts of the budget that have been suspended or put aside are no longer important for the activity of enhancing growth and sustaining tourism in South Africa. He suggested that the SA Tourism board continue to communicate a message that says that those programmes that have been compromised due to COVID-19 do not make them unimportant of irrelevant.
Secondly, from a communications point of view on alcohol, Government is not opposed to people engaging in entrepreneurship involving alcohol. There are some restaurants which think that opening restaurants without it being accompanied with access to alcohol is as good as not opening. The decision is not because government does not want restaurant owners to have an income. This was only done to reduce risky human behaviour affected by alcohol. So it is not about who owns or who controls the alcohol industry. He asked if there is a possibility for medical health tourism.
He suggested that there is a need to introduce a degree of predictability and certainty through communication. It will be important that every fortnight there will be communication coming from both DoT and SAT so that those in the tourism sector know that at a particular day and time they will be receiving communication. This will assist with their planning and with their understanding.
Lastly, he suggested that they have some kind of a communications line which they popularise were people can put forward proposals on how to deal with aspects of the economy that are tourism-related. They can then demonstrate the extent to which these proposals are featuring in the discussions between themselves and TBCSA (Tourism Business Council of South Africa) as representing the voice of the private sector.
Ms Sthembiso Dlamini, SA Tourism Chief Operations Officer, replied about the repurposing of the staff. As an entity there have been discussions at relooking and repurposing SA Tourism even before COVID-19. One aspect they had started focussing on during this COVID-19 period is to look at what they have to do as an entity which will enable them to be efficient. They have identified projects to enable them to have a policy environment aligned to that of government.
The second aspect they have looked at is how to strengthen their internal control environment to ensure they look at all the items picked up during previous audits so that they can act on these findings and close them during this period. The other area is to create operational efficiency and how to digitise their environment.
Over and above looking at the recovery plan and what it recommends they had already started looking at what they have to do as an entity to ensure that they are ready when the sector opens. They have identified a couple of projects they are running via the enterprise project management. These are the projects that will enable South Africa to be ready to go to market as soon as the industry is open. Some of these projects are about how they contribute towards transforming the sector and also creating market access for new entrants into the tourism sector. These include enterprise supply and development projects done internally which do not necessarily require funding hence they are not part of the APP and adjusted budget.
The second area they are looking at which will enable them to be ready when the sector opens is that of attractions and experiences. They are looking for new attractions and new experiences that they can begin to package and sell to their clients. The project is looking at how they can create a database of new experiences and attractions that might have existed previously but have not been given market access. This also looks at what they are doing in villages and rural areas. The digital platform which is a technology hub ensures that they give market access particularly to small business and new entrants into the market.
On the prospect of any job losses at SAT, Ms Dlamini noted that currently they have not restructured the organisation.
On the freezing of vacant posts, Ms Dlamini replied that they have highlighted the areas that they think need to be filled so that they can do so as soon as possible just as an interim solution because they do not know where they are going to end up as an entity.
SAT Chief Marketing Officer, Mr Mzilikazi Khumalo, discussed the forum where all the chief marketing officers of the provincial tourism authorities get together with SA Tourism to ensure that their marketing is aligned so they collaboratively deliver a singular platform of marketing to the world and domestically. This forum has meet regularly within this COVID-19 window and noted the meeting dates of 25 June, 9 and 13 July. They will be having their final meeting on 20 July to consolidate their marketing efforts. There are five work streams in which they are collaborating. The first one is to align their strategies and the second one is to align their content and messaging. The content they are putting together comes from the ground i.e. villages, rural areas on which the provincial authorities have detailed insight about what products and opportunities there are and how to drive domestic tourism especially in this window of COVID-19. The third workstream is around digital collaboration to ensure that all their websites and digital platforms are communicating a consistent message. The fourth workstream is consolidating their event calendar because as the sector begins to open up, they will become one of the biggest drivers to see a resurgence in domestic and then eventually international travel. The fifth one is the alignment of all their campaigns.
He assured the Committee that every single province is on board for the consolidated plan and the funding of this particular programme has been aggregated to ensure they do not duplicate what they are doing and so they are very efficient in how they deploy the investments on marketing.
On the crowdsourcing of ideas, SA Tourism launched a hashtag a month ago #ShareSouthAfrica were they have invited all South Africans to contribute their stories about what is happening in their localities so people can know what attractions are available at a local level. That contribution has been rich, and they have great stories in places that are not normally on the radar for tourism. They have harvested all of that so that they can ensure that as the sector opens up, traffic is directed to those attractions on the ground that have been highlighted by users.
Ms Amanda Kotze-Nhlapo, SAT Chief Convention Bureau Officer, said that on the one hand, they have saved money with meetings such as Meetings Africa 2020 and six trade exhibition platforms that they could not participate in. This has had a saving of about R50 million plus. There are two trade shows they are not sure if they will continue. If these do continue, they will ensure that their country officers participate on behalf of South Africa so that what is out of sight is not out of mind. There are projects that they are looking at and reviewing, that is, the Indaba and other platforms and how they will participate and put these platforms forward with all the advanced technology they have learnt.
Some of the meetings did take place, but they were virtual meetings. What they did is they worked with their chief marketing officer (CMO) and had an opening from one of their people so that others can remember us as a country that we are here and that we are still waiting for them to come back to South Africa.
SA Tourism Board Chairperson, Mr Siya Dube, welcomed the suggestions made by the Chairperson. He noted that the revised budget does not affect the staff, it only affects goods and services. On the revenues that SAT has lost, the quantum is about R144 million which they are not going to receive. The other amount they are not going to receive is from postponed or cancelled events which is R112 million.
Part of the opportunities that the COVID-19 crisis presents is for SAT to relook at its processes and the way that it does things. There could be a lot of savings that can be achieved. For example, even though currently they are not marketing activities as they did before COVID-19 there are still some limited marketing activities which are below the line which cost far less than the traditional methods. So they are going to look at what they can do better going forward.
Deputy Minister Amos Fish Mahlalela replied on the opening of provinces that South Africa is a unilateral state and the products that they sell are integrated. The country does not have boundaries and hence the idea of some provinces opening before others is not going to happen.
The Deputy Minister replied that medical tourism should not be encouraged because at the moment they are facing a shortage of hospital beds which is one of the reasons the sale of alcohol has been suspended. He responded about the question about the jobs affected that the entire value chain system is being affected. Lastly, he noted that the strategy they used before COVID-19 for domestic tourism is going to be changed to adapt to the current situation.
The Committee adopted the minutes of the previous meeting before the meeting was adjourned.
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