SA Tourism Q4 2023/24 Performance & Q1 2024/25 Performance

Meeting report

South African Tourism: Fourth quarter performance 2023/24

Ms Nombulelo Guliwe, Chief Executive Officer (CEO), South African Tourism (SAT), told the Committee that in 2023, the total number of tourists arriving in South Africa reached 8 483 333, which was a 48.9% upswing from the preceding year. However, the arrival figures were still 17% below the 2019 level, which stood at 10.2 million. South Africa’s performance fell below the global average growth of 12 %.

Tourists' total foreign direct spending (TFDS) exceeded 2019 levels by 17.3%, reaching R95 billion, compared to R88 billion. She also reported an increase in domestic overnight trips taken by South Africans, with a total of 38 million trips in 2023. Overnight domestic spending surged by an impressive 22.4%, to reach R121.4 billion.

During the fourth quarter of 2024/25, 85% of the targets were achieved. The financial performance section of the presentation presented expenditure by programme, economic classification and the analysis of goods and services. It also covered statistics on board meetings, committee meetings and board remuneration.

[See attached for full presentation]

South African Tourism: First quarter performance 2024/25

In the first quarter of 2024/25, international tourist arrivals reached 2.4 million, marking a 15.4% increase from Quarter 1 of 2023, and aligning with Quarter 1 of 2020 figures. Africa led as the largest source continent ,with 73.1% of arrivals, followed by Europe with 17.2%. Australasia showed a strong performance, and American arrivals held a steady 4.8%. Foreign spending by international tourists marginally surpassed 2019's first quarter levels by 0.6%, reaching R25.7 billion. The highest growth in spending categories was observed in business shopping, followed by medical and personal shopping. Spending on personal shopping, food and accommodation came to R15.7 billion, comprising 61.1% of the total spend.

There were 8.5 million domestic trips in the first quarter, down 2.3% from the same quarter in 2023. Domestic overnight spending grew by 10.3%, reaching R26 billion. The proportion of spending from holidaymakers and those visiting family and friends declined, with holidaymakers’ total spending decreasing by 5.7%.

During the quarter, 98% of the performance targets were achieved. The expenditure by programme, economic classification and the analysis of goods and services were presented, as well as statistics on board meetings, committee meetings and board remuneration.

[See attached for full presentation]

Discussion

Ms L Ligaraba (ANC) asked about the decline in international arrivals, and whether the Minister and the SAT board had ever engaged international airlines to increase the number of flights to South Africa. Had the entity engaged other government departments and entities to improve airlifts in the country? She enquired how SAT dealt with its risk management strategy in the country offices. She noted that September was celebrated as Tourism Month in the country. She asked if there were activities planned to encourage South Africans to travel within their country, and to ensure the sustainability of such programmes throughout the year.

Ms H Ismail (DA) noted that the Minister had to leave early as part of the agreement with the Committee. She proposed, however, that when the Minister could not attend a meeting, it would be preferable for the Deputy Minister to attend. She recalled the challenges the previous Committee had experienced with a former Minister on these issues. It was important to remember that the executive accounted to the Portfolio Committee at all times. It would not be advisable not to set a precedent where the Minister did not prioritise Portfolio Committee meetings.

She went on to enquire about the board meetings. There had been too many in the past, which was costly. How many meetings were supposed to be held by the board in a year? She remarked that she looked forward to having a functional SAT, without the negativity associated with it in the past. She also asked about the progress made, if any, on whistleblower investigations as advised by the interim board –had the new board received any new whistleblower reports? She asked if any former employee had taken the SAT to the Commission for Conciliation, Mediation and Arbitration (CCMA), and for updates on cases that involved the former chief operations officer (COO) and the chief conventions bureau officer (CCBO). What policy considerations have been submitted to Cabinet regarding the free but compulsory grading of accommodation facilities?

She said SAT had been in the process of creating a bid fund, and she wanted to know what progress had been made in that regard, and what the involvement of the private sector was. She referred to the previous discussions on the possible merging of SAT and Brand South Africa, and asked if there had been progress and proposals made to Cabinet. She noted that the presentation informed them that about six million of the tourists that had visited the country were from Africa and wanted to know which provinces were visited the most. Has any progress been made on discussions around air access to have more international flights coming to South Africa? There had been reports of fiscal dumping by the entity amounting to R35 million -- what was being done to ensure that this did not happen again?

Mr R Gouws (DA) noted the improvements in the organisation’s performance, but wanted to know what stumbling blocks were affecting SAT's performance, as it was clearly below the global average. The presentation revealed that R120 million had been spent under ‘capabilities’, which indicated that some work had been outsourced. Was there no possibility of performing some of the functions internally, instead of paying inflated rates to service providers? What was the reason for the massive negative growth rates against Asia, the Middle East and Europe?

He requested that the Committee start receiving expenditure reports on each of the entity's five programmes, including a cost benefit analysis. Considering that a big part of the budget went towards leisure tourism marketing, would it not be prudent to ensure that "Visitor Experience" got a larger part of the budget to ensure that positive experiences were given to visitors, which may see them return in the future? What was being done to build relations with local airlines to build better airlift capacity, in the wake of South African Airways (SAA) not operating at its full capacity?

Ms E Linde (DA) asked if the successes of the Shot’ Left campaign had been measured, and if the money spent on it had been worth it. Referring to the 91 distribution channels, she said a report on progress and the countries involved would be appreciated. She noted the reports on the Maruping Business Expo but asked if these expos contributed to any successes in the work of SAT. She expressed concern over the reported underspending in programmes 4 and 5 in the first quarter, and wanted to know how this would be rectified. What was the SAT's total membership? Had it considered marketing South Africa as a destination in Taiwan?

Ms T Mchunu (ANC) noted the reported 24% of the budget spent on employee remuneration as being so low because of vacancies and employment terminations in the organisation, and asked how this would be rectified. She proposed that in future the Committee should receive a breakdown of the sector’s contribution to job creation in detail. Have there been any engagements with the Tourism Business Council of South Africa, with a view to increasing the Tourism Marketing South Africa (TOMSA) levy? She proposed that the Committee be provided with a list of the SAT's tourism achievements, especially in relation to previously disadvantaged communities, as well as an analysis of their involvement in the sector.

SAT's response

Ms Guliwe said the key reasons for the decline in international arrivals was that South Africa was dealing with the loss of airlift compared to 2019. The Minister and her Deputy, together with SAT, were engaging with airlines locally and internationally, including through the air access provincial committees in Gauteng, KwaZulu-Natal and the Western Cape.

She assured the Committee that the entity’s internal audit processes were risk-based, and these included country offices, as part of risk management. The R35 million mentioned by Ms Ismail was linked to the New York country office, which was discovered through the audit. There had then been an independent review and a full audit during that period.

SAT had launched Tourism Month. There was also an annual marketing plan that ensured sustainability of programmes throughout the year, which would be shared with the Committee in due course.

On board meetings, the Tourism Act directs that a minimum of four meetings be held annually. From SAT’s perspective, the budget that is approved upfront for board remuneration is managed.

She requested that a detailed account of the whistle-blowing reports be furnished to the Committee through the Minister, as a decision had been made for these to be handled at board level.

She informed the meeting that the CCBO employment matter was no longer at the CCMA, but that the COO matter and others were still being considered there following appeals.

There had been talks about merging SAT and Brand SA, but over the past year, nothing materialised, and the entities continued to work independently.

A detailed report would be provided to the Committee on the provincial spread of the incoming African tourists.

The R35 million linked to fiscal dumping would return to the national fiscus, as per board approval. National Treasury would then be engaged separately on the additional financial needs of SAT.

She acknowledged the concerns on the outsourcing of functions by the entity, and assured the Committee that the matter was receiving attention.

The guidance on "Visitor Experience" was also acknowledged and accepted.

It was important for SAA to function at capacity, particularly as they provide direct flights, thus reducing costs. However, other airlines were also being engaged.

A detailed report would also be provided on the effectiveness of the Shot’ Left campaign. She remarked that she thought the Maruping Expo was one that should be replicated across the country, as it was linked to promoting township and village tourism.

She said that the employee overhead costs were linked to the vacancies in the entity. Under the leadership of the Minister and her deputy, the organogram would be capacitated further, including the commissioning of a skills audit before filling vacancies. The entity would also provide a breakdown of the economic impact of the sector, including job creation.

Mr Talib Sadik, Chief Financial Officer (CFO), said that in addition to the risk-based audits in country offices, they had restructured functions, including the merging of finance and supply chain management. There were concerns about vacancies in these functions in the country offices, and the process to fill these was underway.

On fiscal dumping, there had been a significant drop in pre-payments, which was a big factor. The organisational culture was also now more focused and disciplined.

On overhead expenditure, the main reason for the higher support cost was due to forex losses. Mr Sadik clarified that the 24% spent on employee remuneration was actually for the first quarter, and they were on track to spend the full allocation, in line with the annual budget.

He said the Bid Fund dealt with the South African National Convention Bureau subvention funding. The organisation had received bids from the private sector, which would be aligned with the different provinces and support letters issued. Funds would be made available to the professional conference organiser, right up to the receipt of evidence that the event had taken place.

Ms Thembisile Sehloho, Chief Marketing Officer, confirmed that Tourism Month had been launched on 20 August. In line with their strategy of extending geographical spread and giving opportunities to the rural and township tourism sectors, the launch took place in the Northern Cape. It was focused on sustainability and giving exposure to that part of the country. More activities were undertaken as part of the marketing in the build-up to Tourism Month. Activations around the country, besides radio and television, were underway to support rural and township tourism.

Mr Siya Mthethwa, Chief Strategy Officer, said that Taiwan had not been prioritised in the portfolios that had been identified because there had not been sufficient data to guide the decision. In total, SAT had looked at 240 markets globally, and Taiwan was one of those markets where they could not source all the relevant data required to develop a compelling case to include it. A compelling case referred to data about the political landscape, microeconomic social environment, technology and global travel indicators, amongst others.

Ms Bronwen Auret, Chief Quality Assurance Officer, said they worked with the provincial air access teams and other stakeholders to position route development. September would see Aviation Week coming up, with events lined up in Johannesburg. SAT would be going to Bahrain for an exhibition called Routes World, together with the aviation sector in the country. International airlines were coming back to South Africa, and it was a matter of working on frequency and extended routes, which was exciting.

The Covid pandemic had quite impacted the Grading Council due to the lockdowns. The rebuilding of the base had had to take place, and the growth had been good and steady. The growth of the Council would be further supported by going through the grading criteria review in the coming fiscal year, which sought to expand the categories of graded properties so that the pool of graded products and experiences could be increased into grading criteria. A basic quality development verification programme had been developed, acknowledging that not all properties were ready for grading. This had been piloted in the Eastern Cape in 2021/22, and later rolled out to KZN in the last fiscal year. This programme has shown some successes, including the exhibition at the recent Tourism Indaba of a product in Adelaide (Eastern Cape) that attained a two-star grading through the programme, and the development that was done in conjunction with the Grading Council and the Department of Tourism’s Enterprise Development Programme. A national roll-out was being considered, and further deliberations on this would take place.

The Committee Chairperson sought to clarify a matter that had been raised by Ms Ismail (DA) on the Minister’s appearances before the Committee. She said that Ms Ismail’s suggestion was in line with the decision of the management committee, which was to ensure that the Minister appears before the Portfolio Committee at least once or twice a month, depending on the programme, and in special circumstances where she could not be there, the Deputy Minister would be in attendance.

Committee minutes

The meeting considered the minutes of its meeting of 27 August. The minutes were adopted.

The meeting was adjourned.