South African Tourism 2021/22 Quarter 1 & 2 performance; with Deputy Minister


08 February 2022
Chairperson: Ms L Makhubela-Mashele (ANC)
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Meeting Summary

SA Tourism  reported that International tourist arrivals declined by -55.6% in the period January to July 2021 compared to the previous period in 2019. A total of close to 1.3 million domestic holiday trips were recorded for January to July 2021. This was 27.5% lower compared to 2020.

SA Tourism  reported an average of 80% achievement of its Annual Performance Plan targets for Quarter 1 and 2.

Members' questions focused less on the quantifiable results and more on the processes of SAT such as its audit action plan to remedy the 2020/21 qualified audit and irregular and fruitless and wasteful expenditure. A challenge acknowledged by both the Committee and SAT was the lack of a permanent CEO and plans are in place to remedy this as soon as possible. Other questions were about the process enterprises are chosen for development by SAT and how towns are identified as development opportunities as well as the larger anxiety of the recovery of the tourism industry during the pandemic.

Meeting report

Deputy Minister’s opening remarks
Tourism Deputy Minister, Amos Mahalela, introduced the presentation in the context of the Tourism Sector Recovery Plan, and how many times it had to be changed because of the rise of new COVID-19 variations and subsequent lockdown regulations. This affected tourism significantly, along with the plan aimed at the domestic market, because during the period under review the international market was all but closed. The briefing will discuss the challenges SA Tourism faced and the remedial actions put in place to mitigate the adverse effects of COVID-19.

South African Tourism (SAT) 2021/22 Quarter 1 & 2 Performance
Mr Mdu Zakwe, SAT Board Audit Committee Chairperson, introduced Mr Themba Khumalo, Acting CEO of South African Tourism (SAT). Mr Khumalo introduce the SAT delegation who would be presenting: CFO Ms Nombulelo Guliwe and COO Ms Hanneli Slabber. The presentation was split into five parts. The first part dealt with the current climate for local and global travel. The second part provided quantifiable measures of the tourism sector performance during the first and second quarters against the tourism sector recovery plan. The third part was SAT financial performance during the first two quarters. The fourth part reported on governance and compliance measures. The final part was the outlook for the third quarter.

The Deputy Minister suggested that the Director General of the Department of Tourism and Deputy Director General of Tourism Research, Policy and International Relations, Aneme Malan, give a brief comment on their oversight responsibilities towards SAT.

The Chairperson consented to this; however, there was no response from either on the virtual platform.

The Deputy Minister said that the department representatives could fill the Committee in later if needed, and asked the chairperson to continue with the normal proceedings.

The Chairperson called on Members to put forward any questions or concerns.

Ms M Gomba (ANC) had some concerns about SAT's financial performance. Noting SAT had received a qualified audit from the Auditor-General, why were no remedies formulated for the disappointing results. She gathered from the presentation that SAT is very strict with controls and disciplinary measures, and queried if there are stringent measures in place to ensure that those responsible for this poor performance are reprimanded.

This led to a broader concern around SAT’s performance management system. Is it working and are there measures to reward staff for good work? Have underperforming units been rewarded financially? Has there been an appraisal of the performance management system?

Ms H Winkler (DA) asked for a progress report and timeline for the appointment of a board chairperson and a CEO. She asked for an update on the investigation into the business-to-business (B2B) and business-to-consumer (B2C) ecommerce portals and when it will be finalised.

Ms Winkler asked how SAT would ensure improvements in expenditure patterns, considering that some projects were halted due to investigations and the coronavirus pandemic. Where could the delays have been avoided and how does SAT intend to improve expenditure? Importantly, has there been fruitless or wasteful expenditure in the period under review?

Ms Winkler asked for more details on the 27 small towns that SAT identified for conventions. She questioned if the South Africa National Convention Bureau (SANCB) had assessed the readiness of these towns to host business meetings. What has the reaction and ‘appetite’ of the associations been to hold meetings in those towns?

Ms Winkler wanted details of other areas of SAT’s operations too, and asked – with regards to enterprise and supply development – how SAT identifies businesses they want to support, what the response been like from those businesses, and how has SAT integrated these businesses to the mainstream tourism economy. This is related to the new grading system for businesses that the SAT has introduced, and Winkler wanted to know the ‘nature’ of the system, and how it is impacted by the fact that the Tourism Business Council of South Africa’s processes have not been automated to meet its requirements.

The Chairperson invited Mr H April (ANC) to speak but he was unable to connect.

Ms P Mpushe (ANC) had network difficulties and instead wrote her questions in the chat. She made the observation that SAT seems to have prioritised the USA market, and asked if other markets are sufficiently supported with the requisite staff. Her second question was what interventions the Minister and the SAT Board undertook to influence countries to lift their travel ban on South Africa.

Mr P Moteka (EFF) addressed the Deputy Minister saying the SAT leadership is not constant, with changes occurring often. This affects the stability of the organisation and makes accountability difficult. He asked what chases leaders away from SAT. What is the cause and what is being done about it? We cannot keep going on like that. If there is instability, there will be no progress, no service delivery and no accountability.

His second concern was that the Committee had been calling for a free rating system for tourist accommodation. Has it happened now? If not, when will it happen? What is causing the delay?

The Chairperson invited Ms S Xego (ANC) to speak but she was unable to connect.

SAT response
Mr Zakwe identified who should address which concerns. He handed over to Mr Khumalo first but he called on Ms Guliwe.

CFO Guliwe replied about the 2020/21 qualified audit that the SAT Board had tasked management to come up with an audit action plan. She confirmed that this plan was in place and tracked by the internal audit function. Progress on the audit action plan is also tabled at the Board's audit and risk committee meeting on a quarterly basis for oversight. She noted that SAT, led by the Minister, had already briefed the Committee on 25 January 2022 to give a sense of where they were with audit action plan.

Ms Guliwe replied about irregular and wasteful and fruitless expenditure during the current financial year. There has not been any in 2021/22, which was part of the audit action plan. What has been confirmed to date are the irregular expenditures from 2020/21. Those instances of non-compliance are taken to the internal audit function to be treated in line with the applicable guidelines and they then update their financials.

Ms Amanda Kotze-Nhlapo, Chief Convention Bureau Officer: SANCB, reported that the hosting of events in small towns was currently a successful project. The reaction from the towns were good, with one meeting held with regional delegates in the Free State. They identified, along with the provinces, the 27 towns according to certain criteria. The first criterion was if the town had quality-assured venues and accommodation. The second criterion was if they had good service providers. These details were compiled in conjunction with the provinces. She noted that the geographic spread of the towns was important. She affirmed that it was a combined effort from the provinces, along with the SANCB, that led to the success of this project.

On the concern about free grading, the Department and Minister were in the process of the policy review, and SAT was awaiting that review. The Tourism Incentive Programme (TIP) for grading, as reported in this presentation, is very successful. It gets a lot of traction and participants have their grading fee subsidised.

Ms Slabber replied that SAT is adequately staffed for other markets, outside of America. She explained the vacancy in the Middle East and Asia office is due to China’s continued border closure. The reason there were so many job advertisements for the American market was because a number of staff left, and this, along with the freeze on hiring, meant that all of a sudden there were many jobs that needed advertising. Vacancies for the European offices on the other hand have been advertised and shortlisted, and the hope is they will be adequately covered from April 2022 onwards.

On the red-listing of South Africa, Ms Slabber identified three main strategies. The first was through in-market communication agencies. The second was through foreign embassies and their ambassadors in South Africa, not only through providing them with the correct contact persons to obtain fast and reliable information on the state of coronavirus in the country, but also by working alongside foreign ambassadors to promote South African tourism. The third strategy is to promote the South African tourism through brand campaigns locally and internationally, specifically pushing the message of Covid-readiness.

Mr Khumalo addressed the concern about performance management, saying that remote working has changed the way in which the organisation tracks performance. There have been broadly two kinds of responses from SAT staff – the majority of staff and colleagues have increased engagement and have been responsible and responsive. However, there is a minority that have taken advantage of the situation by not carrying their load. When this underperformance is identified, a two-step approach is implemented. The first step is to encourage them, providing support where needed, because many people have faced challenges during this period. Although not the first point of call, if this fails, then consequence management is implemented.

On performance, payment of bonuses and salary increases, Mr Khumalo assured the Committee that over the past four years, no bonuses have been paid out to the executive committee members and there have been no salary increases. The SAT management have really taken the reality of the country’s situation on board, and they wanted to show that they could add value back to the country by not taking salary increases.

On leadership instability, and by extension, the supposed lack of accountability at an executive level, Mr Khumalo assured the Committee that although the executive committee does show signs of instability, the current crop of executives - made up mostly of acting executive committee members - are highly experienced and committed to the organisation.

Mr Zakwe introduced fellow board member, Ms Sangweni-Siddo, and asked her to deal with the SAT CEO appointment.

Ms Sangweni-Siddo explained that she is the board member responsible for HR. She began with a preamble about the history of the previous two CEOs who left during the course of last year. Both left SAT as acting CEOs to work in the tourism industry in leadership positions, something she saw as noteworthy.

She affirmed that there was a concern about stability and that the Board did not want a leadership vacuum at SAT for too long. The Board has been in communication with the Minister and has received permission to go ahead with identifying a CEO. Last year there was a selection committee that shortlisted the CEO selection to four. Not satisfied with the shortlisted candidates, the Board’s recommendation to the Minster was to continue with the process. Now they are headhunting and tasked a consulting company to help with this. As of now, the Board’s HR Committee has reconvened a selection committee, and will be meeting three individuals for interviews during February. The Board hopes to wrap this up by end of February, and then hopefully make a recommendation to the Minister.

The Deputy Minister affirmed that on the 25 January 2022, they presented to the Committee an update on the audit findings such as performance measurement – which this meeting also addressed. He wondered if the question on enterprise development by Ms Winkler on how SA Tourism identifies a business – was answered. He was interested in what the response has been among businesses and further how SAT has integrated these businesses into the main tourism stream.

The Deputy Minister gave some context about the vacant Board chairperson position, namely that the current Board's term, which was extended, is coming to an end. The Minister is making sure that when the terms ends they are able to reconstitute a new Board, therefore it is not necessary that there should be a permanent chairperson assigned for two months. On the SAT leadership, he shared the concern about the lack of stability in the organisation along with a high number of vacancies as an area of concern. However, if all goes to plan, with the start of the new financial year all positions will be filled. Thus, the new Board will start on a more stable footing.

The Chairperson affirmed that the question was left unanswered.

Ms Kotze-Nhlapo was under the impression she had answered the question, but readdressed it. In getting the ’27 towns’ SAT worked with all provinces and the SANCB by identifying three towns per province, that were quality-assured. One criteria was that the venue could host at least 50+ people, along with accommodation and quality service providers.

Ms Winkler noted she had asked another question about identifying enterprises for development which is a separate issue to the readiness of the 27 small towns. She asked why there was a delay in the publication of the tourism sector performance report. Her final question was if there were strategies in place to identify new markets in order to offset risks posed by travel bans from key markets.

Ms Slabber replied about the identification of enterprises, saying the first prerequisite is that they have to be market-ready. That decision is usually made along with the provinces, because they are much closer to the ground. Every single selection needs to be auditable, so depending on why they are choosing an enterprise would determine the selection criteria. This would, in broad terms, depend on what training is being done.

On how to ensure that this is an end-to-end programme, Ms Slabber recounted how the logical end to selection ends with the tourism execution unit, where the enterprise gets absorbed into a suitable hub, where they have access to market platforms and product advertising. This helps the enterprise with everything from traditional advertising to being culturally sensitive to being localised in order to get maximum returns.

The Chairperson thanked everyone. The Committee adopted its minutes before the meeting ended.

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