South African Tourism Quarter 2 2023/24 Performance Report

Meeting report

The Chairperson, in her introductory remarks, reminded the Members the Committee meeting was held at a time when the world had been in turmoil because of the Israel-Palestine war. Some establishments have closed, and SA has recalled some of its ambassadors. The Israeli ambassador has been told to leave the country. In the midst of everything, there are South African Tourism (SAT) hubs internationally. So, it was hoped the SAT would assure the Committee that SA international diplomacy and tourism were not affected by what has been happening in Israel-Palestine. Protest marches in Cape Town were in solidarity with the Palestinians. This has affected businesses at a time when the country was expecting lots of visitors. She wondered if there were plans in place to mitigate against this challenge of welcoming visitors, seeing that there have been ongoing protests about the Israel-Palestine war in the country. She said that it was impossible to talk of tourism without international cooperation.

South African Tourism Quarter 2 2023/24 Performance Report
Ms Nomasonto Ndlovu, Chief Operating Officer, in her presentation of environmental analysis and organisational performance, indicated that, in the second quarter of 2023, there had been a notable upswing in both “total trips” and “holiday trips”, in contrast to the metrics from 2019. Specifically, Q2 of 2023 witnessed a total of 10 million trips, culminating in a domestic tourism expenditure.

She pointed out the entity achieved 85% performance in achieving targets during Q2. Of the 52 planned targets, only 44 have been achieved. This was great performance compared to the 71% achieved during Q2 of the 2022/23 financial year.

Concerning the corporate support programme, she reported the entity implemented two of the three planned deliverables from the FY2022/23 Risk Management Maturity Assessment Report, namely the review of the Combined Assurance Framework and project risk assessments. The review of the risk appetite and tolerance framework was not achieved due to a lack of capacity in the business unit. A Fixed-Term Contract would be considered as mitigation.

The entity implemented the planned milestones in the Corporate Compliance Campaign, including the audit action plan for FY22/23 and the allocation of findings to the responsible business units. The determination assessment was conducted on some elements of findings, and the outcome would be socialised. About 52% on the implementation of valid audit recommendations was achieved, exceeding the target of 50%. This was attributed to timeous implementation by management. The action plan to address issues arising from the staff engagement assessment of prior year was implemented through staff feedback sessions and the development of an internal communications framework.

In terms of Employment Equity targets, SA Tourism achieved 66% on women against a target of 60%; 44% on women in senior and top management positions against a target of 50%; 0% on PwDs (People with Disabilities) against a target of two percent; and maintained at least 75% Black people (Africans, Coloureds, and Indians across all occupational levels) against a target of 60%. The moratorium in place currently impacts the achievement of some EE targets, whilst voluntary disclosure continues to be a challenge concerning PWDs. Under-spending in this programme on compensation of employees was due to vacancies.

On the business enablement programme, she said that the quarter-two deliverables of the Integrated Digital and Analytics Operating Framework progressed as planned. This has been attributed to timeous planning of outputs. With regards to the provision of data analytics and strategic insights, several tourism tracking surveys were produced including the International Leisure Brand Tracker Global Fieldwork Report, the Departure Survey Fieldwork Report, the Domestic Tourism Survey Fieldwork Report, the Business Events Brand Equity Survey Fieldwork Report, and the Domestic Leisure Brand Tracker Fieldwork Report.
 
In addition, the Quarterly Trend Analysis Report, two thought leadership pieces, and the quarterly Tourism Statistics and Performance Report were also produced. The quarter two improvement actions from the FY2022/23 South African Tourism Corporate Brand Index were achieved. This included inter alia a joint meeting of CEOs and CMOs of Provincial Tourism Authorities, the Marketing Workshop of the Minister with the sector, and the participation at several sector engagements.

The plan of action to improve the rating as the Best Company to Work for Survey, or equivalent, was not delivered as planned, given delays in procurement. The tender would be re-issued in quarter three. Over-spending in this programme was due to brand trafficking services and global subscriptions committed per contractual obligations.

On the business events programme, the planned milestones in approved Domestic B2B Campaign Plan were achieved, including two case studies and bid support services. The Global B2B Campaign Plan was executed, including the launch of the Exceptionalism Global AV, two sector stories, and delegate boosting. A total of 30 bid submissions were submitted as planned. Two business events were hosted in VTSDs: Training Workshop Driving Professionalism in Events, from 28 to 29 September 2023, in Mossel Bay, and SAACI Congress, from 30 July to 01 August 2023, in Addo. The Post-Show Economic Impact Study briefing for Africa's Travel Indaba 2023 Reimagined was undertaken as planned. Planning for Meetings Africa 2024 Reimagined was undertaken with the formulation of the Communication Strategy. Overspending in this programme was attributable to increased sales events, which required upfront commitment.

Regarding the tourist experience programme, 4 261 establishments were graded against the target of 2 713. Special funding projects, provincial MOUs and the TravelStart partnership were implemented in the drive of the entity to meet the target. The quarter two milestones in the grading model, and TGCSA Value Proposition Roadmap were executed, which included the development of the change management plan, progress reported on the development of the operational model, and the TGCSA Summer Campaign was developed. The entity developed the annual Product Proposition Roadmap, in support of the Product Proposition developed in quarter one. The Three-Year Tourism Value Chain Strategy was approved as planned. The next step would be the development of the roadmap to guide strategy execution. The under-expenditure in this programme was attributable to the production of the plaques project, which would be completed in quarter three.

Pertaining to the leisure tourism marketing programme, the quarter two milestones of FY2023/24 Global Tourism Brand Campaign Plan were achieved. This included a brand activation at the BRICS Summit and an activation at the Rugby World Cup. The global tourism campaign was localised in South Africa through the launch of the Siya Kolisi partnership. The collaborations and/or partnerships achieved in quarter one were implemented through the Siya Kolisi AV launch and the amplification of the Siya Kolisi AV through SATSA digital platforms.

The entity developed and approved the Sho’t Left Summer Deals Driven Campaign Concept for implementation from 01 October 2023 to 14 January 2024. The campaign aims to promote affordable and accessible domestic travel. It implemented 79 distribution channel initiatives against a target of 25. The target was exceeded as the entity leveraged additional opportunities with channels and provinces.
It also implemented the quarter two milestones of the FY2023/24 Global Trade Plan which included an aviation chapter at the BRICS Business Council Annual Report, participation at the Inter-Provincial Cruise Tourism Workshop, and BRICS Aviation Working Group Conference and the Air Algerie Workshop. The quarterly tourism economic impact communication activity was successfully achieved through an opinion piece focusing on tourism performance towards sector recovery. Over-spending in this programme was due to higher unrealised foreign exchange transactions.

(Tables and graphs were shown to illustrate budget allocation and expenditure)

Discussion
Ms M Gomba (ANC) applauded the entity for the good work it has produced even though it had fewer resources, and stated it has done good work in marketing SA.

Ms H Ismail (DA) asked if the pre-payments made were in line with National Treasury regulations. She wanted to know when the roadmap would be developed for the Three-Year Value Chain Strategy and what the timeframes would be; enquired how the Tourism Master Plan and Tourism Recovery Plan would be correlated; wanted to understand if there were contingency plans in place to ensure there would be no over-expenditure at the end of the year.

Ms Ndlovu stated they have reviewed all plans to ensure they are aligned with the Master Plan. During quarter two, they began looking at contracts with pre-payment conditions. The percentage is key, and they could still comply with the contracts. They limit the exposure for SAT and manage cashflows. There were significant outlays in quarter one. She further said that the contingency plan has been part of managing cashflow, and they were going to review POs and see if there is money that would go back to the entity.

Ms Bronwen Auret, Acting Chief Marketing Officer, stated that the Three-Year Value Chain strategy was aligned to Treasury regulations.

Mr K Sithole (IFP) enquired when the vacancies would be filled and if a target was in place. He asked where exactly in provinces the campaigns were being held. He sought clarity on when there would be capacity to carry out the review of the risk appetite and tolerance framework. He also asked why targets were not achieved for people with disabilities. He sought clarity on why nothing was not stated in the presentation about tourism activities in small dorpies/villages/ townships. Lastly, he asked why the action plan to improve the rating as the Best Company to Work for Survey was not delivered.

Ms Ndlovu explained that the plan for Best Company to Work for Survey was an unresponsive tender, which has been re-issued and closed. She said that the entity has been working in small dorpies/villages/townships areas to address geographical space, which forms part of programmes four and five. Concerning domestic tourism, she stated that there was a launch in October, and there is a detailed rollout plan for summer.

Ms Nombulelo Guliwe, Acting CEO, explained domestic campaigns were being run under Shot Left. Currently, they are doing the summer campaign until the last quarter. The entity has been running a 360-degree campaign on TV, radio, billboards, social media platforms, etc. Also, it has been running the Deals Campaign, and they continue to work with provinces for potential activities. The summer campaign was getting linked to other events running in the country that were being done by the private sector. On targets achieved and not achieved, she stated 52 targets were planned for quarter two and the entity achieved 44. That translated to 85% performance compared to the 71% of the 2022/23 financial year.

Mr A Matumba (EFF) remarked the Committee wanted to see the work that has been done, not to hear about work to be done towards the targets. He wanted to know if the entity funded the tourism advertisement about Cape Town. He said there have been no improvements in the Asia hub and that more work needed to be done when it comes to China. He asked what the arrangement was regarding the Tourism Marketing SA (Tomsa) levy and asked if the money was not supposed to go to the entity. He also enquired about the special meetings, and wanted to know how many members the entity has per committee.

Mr Tim Harris, Chairperson of the SAT Tourism Board, stated the advertisement was funded and run by TBSA. There was an MOU between Tomsa, Tourism Business Council of South Africa (TBCSA) and SAT. The advertisement did not involve the SAT budget. The Act gave the board chairperson powers to call for special meetings. These special meetings dealt with reports on wrongdoing, acting appointments, etc. The SAT board has been operating on consensus when it comes to special board meetings, in accordance with the Act.

Ms Ndlovu said they always ensure they do not have significant upfront payments. The arrangement with the TBCSA has been around the voluntary levy. The money comes to the entity when there is approval from TBCSA. Money due to SAT in the amount of R115m has been paid to the entity. She also indicated that there is a focus on the China and India markets.

Ms Guliwe explained that the Asia market, particularly China, opened at the end of February 2023 after the Covid-19 pandemic. So, it was lagging behind. China and India continue to be the big drivers in the market. The entity has continued working with airlines to get direct flights to SA. There would be marketing activities that would be rolled out in that market.

The Chairperson asked when the entity would get tired of telling the Committee it has not reached the targets for people with disabilities. She asked when the entity intends to make progress on the Budget Optimisation Strategy. She enquired if the entity collaborated with Siya Kolisi just to tick boxes and later collapsed the project and asked what the intention to collaborate with him and SARU was. She also asked what the plans were, going forward. She remarked that, even though over-expenditure was recorded in the presentation, there has been no value for money. It is important to break down the over- and under-expenditure and give reasons for them. She stated that upfront payments have been a finding from the AG, and asked what measures were in place to ensure the red flags would be mitigated. She also wanted to understand if there were no board meetings in May, June and early July 2023, seeing that the board was appointed in May 2023. The company secretary must furnish the Committee with this report.

Ms Ndlovu stated that the consolidated report on board meetings would be sent to the Committee. On people with disabilities, she said they were reviewing the entire organogram to identify critical posts to address the matter. She also admitted the Budget Optimisation Strategy was not achieved because they were caught up on the strategy side, but now they have been busy dealing with the policy, and quarter three would be for implementation. Regarding the breakdown of over- and under-expenditure, she stated a report would be sent to the Committee. She further indicated that there has been a conversation within the entity on mitigation plans and pre-payments.

Ms Auret said they were still contracted with Siya Kolisi and his contract expires at the end of June 2024.

The Chairperson asked what constituted an ordinary board meeting.

Mr Harris said that the Committee would get a report on all the meetings that took place since the board was appointed. He explained that ordinary meetings are stipulated in the Act, which should be held quarterly. The chairperson of the board called special meetings.

Mr Matumba remarked that Ms K Zama and S Botha attended the audit and risk committee. He then wanted to know the number of members each committee had, and the rate for virtual and physical meetings. He commented that it was unusual that two people on the board were discussing a budget of more than R1 billion and said that the Act stated that there should be at least four board meetings per year. He asked how far the entity was with the summer campaign because it was creating jobs, and stated that they were told the money for the advertisement marketing Cape Town was from a collaborative fund.

Mr Harris said that the audit and risk committee has two members, and S Botha is one of them.

Ms Ndlovu replied that the fees for board meetings were the same and aligned with Treasury regulations, but virtual meetings have a lower rate than physical ones.

Ms Guliwe explained the Summer Campaign has been running since October 2023 and would stop during quarter four. Research found that two out of three people travel domestically, and information is obtained through social media. The rollout has been done through above and below-the-line marketing, using radio, TV, billboards, digital platforms, etc. The campaign has been rolling out and collaboration is being done with provinces.

The Chairperson remarked that Mr Harris was misrepresenting the Act regarding the number of meetings to be held annually. According to the Act, the board must hold at least four ordinary meetings every year. The report about board meetings should also include the remuneration of members. She further pointed out that she noticed something unusual in the memorandum of understanding (MOU) with the TBCSA, where one person signs for two entities (Tomsa and TBCSA). She asked what the correlation was between the two and if that was legal or not.

Ms Ndlovu said that both entities were under one umbrella. TBCSA manages the affairs of TOMSA and Tomsa manages the collaborative funds. Both entities have one head.

The Chairperson said that all requested documents should be submitted to the Committee. Next time the SAT appears before the Committee, all matters regarding people with disabilities should be resolved and the entity should not report on zero achievement. The SAT should discuss, with the Minister, the uplifting of the moratorium. She was pleased to hear that R115m from the Tomsa levy was transferred to the SAT and that the Trevor Noah advertisement did not affect the SAT.

She stated that, even though the Summer Campaign has been started already, the Committee has not been told where it was launched. Lastly, the entity should brief the Committee in the next meeting on how it was planning to mitigate over-expenditure and submit the breakdown of all over-expenditures and reasons for that.

The meeting was adjourned.