South African Tourism: Cash flow projections and quarterly reports

ENVIRONMENTAL AFFAIRS AND TOURISM PORTFOLIO COMMITTEE
29 August 2006
SOUTH AFRICAN TOURISM: CASH FLOW PROJECTIONS AND QUARTERLY REPORTS

Chairperson: Mr L Zita (ANC)

Documents handed out:
Cash Flow Projections and Quarterly Progress Reports of South African Tourism slide presentation

SUMMARY
The Committee was briefed about the manner in which SA Tourism has expended money to increase tourism awareness both nationally and abroad. The discussion addressed the factors influencing the reported results, Black Economic Empowerment (BEE) and the plans that SA Tourism had to embrace that phenomenon, what the performance of the tourism department was relative to other sectors of government and the challenges faced by SA Tourism and its goals for the near future. While the Committee agreed that SA Tourism’s performance was a job well done, they commented on the lack of domestic tourism.

MINUTES
Targets and actual figures of cash flow and a report of SA Tourism performance:
Mr Moeketsi Mosola (CEO SA Tourism) explained that his presentation was not about requesting further funding from the Committee but rather it was about engaging with the Committee to improve tourism in SA. He provided detail on tourist arrivals into the country. Actual arrivals had grown by 10.3% in 2005. The first three months of 2006 recorded the highest number of arrivals yet. Return on tourism investment statistics showed that R243 per R1 of investment expenditure was achieved. Foreign tourists had spent R609 billion in the domestic market since 1994. SA Tourism’s strategy to deliver continued growth was explained including the marketing ambitions. Different strategies had been devised for different markets and the potential and plans for key target markets was discussed and deliverables were outlined.

Vital needs to further enhance growth in the tourism industry included increased state funding, a reduction in domestic crime and making efficient the process to acquire visas by potential tourists.

Discussion
Mr J Combrinck (ANC) asked about the effect of crime on tourism. He referred to Mr Mosola's comment that Airports Company South Africa (ACSA) was looking to expand its current fleet of planes as an initiative to improve tourism in South Africa (SA). He disapproved of this, saying that ACSA was already inefficient in handling its current fleet and would not be able to manage more planes. He raised a concern that rich people were benefiting more from tourism than blue collar staff whose returns (that is, salaries) were independent of the high return that companies were generating. Lastly he complimented SA Tourism for their efforts in integrating all the provinces and for promoting SA as a tourist destination and brand as opposed to certain provinces getting preference above others.

Mr A Mokoena (ANC) asked what the achievements of the Black Economic Empowerment (BEE) Scorecard were to date and raised concern about BEE transactions benefiting those holding very senior positions and not filtering down to low income earners. He suggested that SA Tourism have a campaign to mobilise what he called “black tourism.” That is encouraging specifically black South Africans to travel and get to know their country better. As opposed to Mr Combrinck who was in support of SA Tourism marketing itself as one brand, Mr Mokoena disagreed with that and said SA was a country filled with diversity and each province should be left free to market their province in a manner that reflects the culture of that province.

Mr I Cachalia (ANC) asked how successful SA Tourism has been in training black tour guides. What safety and security measures did the department envisage for guests arriving in 2010? Had SA Tourism collaborated at all with the Department of Health to come up with health packages for tourists, that is, good quality, easily accessible and affordable health.

Mr Mosola addressed these matters raised by the members as follows:
Safety and Security – Mr Mosola responded by saying that people needed to take a more calm view when it came to crime. Comparing the number of tourists that came in 2005 to the crime incidents for that year, people could clearly see that crime figures were comparatively low. However this did not dispel the fact that crime was a serious problem. This could stop potential tourists from coming to SA if a travel centre agent told the prospective tourist that SA was not safe. SA Tourism needed to formulate a clear plan on how to tackle the crime issue and one of the major focuses would be to involve communities for the resolution.

BEE Element – Mr Mosola said that this was quite a complex issue because of the nature of transactions that take place in BEE issues. He however stressed the point that broad-based empowerment was important and that SA Tourism worked hard to engage with the industry.

The nine provinces – Mr Mosola stated that there was no need to cover up the regional differences in the country. However if there was a billboard advertisement in an overseas country marketing SA Tourism it was not necessary for the billboard to state which province a potential tourist should visit because that was not imperative to the decision-making process. SA Tourism focused on marketing that used high-resolution quality pictures of SA, the impact of which would, for example, appeal to a United Kingdom citizen during winter when they saw the bright blue clear skies and luscious green trees in SA.

Skills and Language – Mr Mosola replied that the financing of small businesses continued to be a huge challenge because one the most critical skills in tourism was language. Currently they sent approximately twenty students to China, Germany and France to learn the languages and cultures of those countries. He believed that SA needed to develop a more radical approach when it came to language.

Health – Mr Mosola mentioned that there were a small number of tourists strictly coming into SA for health reasons. Those people formed part of a small sector called health tourism.

Mr R Shah (DA) asked if the ten percent growth that was projected for the number of tourist arrivals in SA included or excluded economic migrants and refugees. He asked for more info on seasonal variation and how this could be solved. Finally, were visa requirements stringent or realistic?

Ms R Ndzanga (ANC) asked what had happened after the World Summit to the tour guides that had been employed during the Summit. Also what happened to the students that SA Tourism took overseas for educational training? Did they continue to work for the tourism industry, and what policies or strategies did the industry use to retain them? Lastly, was SA ready for the 2010 World Cup in terms of grading of conference rooms, establishments etc.

Mr D Maluleke (ANC) suggested that SA Tourism considered having information centres in each province and promote railroad traveling to tourists because of the beautiful scenery when traveling by train. Perceptions that people had about trains related to the times when SA was experiencing a great deal of political unrest and those perceptions needed to be addressed and changed. He mentioned that the "backpackers" era was currently in full swing and the black community should take advantage of such opportunities.

Mr L Khoarai (ANC) asked if SA Tourism was working with local government.

Mr L Zita (ANC) asked how sustainable the jobs coming out of tourism were and asked what the intentions of tourists coming from other African countries were. For example were they coming to shop because they did not have such variety back home. He asked if the BEE Scorecard was transformative enough and what percentage could be implemented in the next five years. He asked for a definition of middle class black people. He commented that South Africans were strangers in their own country. During vacation, most black families returned to their family-origin town. He asked how SA Tourism could possibly use that factor for tourism by having a website for example for “Amagoduka” (meaning for those that are going back to their real homes).

Mr Mosola responded to the issue of African travelers by saying that tourism was deemed to be a white-dominated industry but there were always black people from other African countries traveling to South Africa. Some came for business purposes (that is, to purchase goods for resale) and others for pure leisure and entertainment. Travelling was not a part of the black history although for whites and Indians it almost formed part of their DNA. This called for a need for SA Tourism to create awareness amongst Africans that traveling should be part of their “to do” list. He added that while cultural differences could explain the lack of traveling amongst Africans, black people also complained that staying in hotels inconvenienced them because they were always told that they were too loud and the hotels did not have the type of food that they liked.

In response to the question about students sent overseas for training, Mr Mosola stated that these students did not struggle in finding job placements as most of them would got job offers and were signed up even three months before returning to South Africa.

Mr Mosola said that with respect to the BEE Scorecard, transformation in the tourism sector had been very slow and that there was no excuse for it eleven years later. SA Tourism needed to put much more focus on that.

He commented that they would look into the suggestion about placing information centres in each province as that formed part of tourism infrastructure. They would also start working closely with other national government sectors as they wanted to see greater returns and much more diversity within the tourism industry.

Addressing Mr Shah’s question about refugees in SA, Mr Mosola said that even though the perception was that there were many refugees coming into SA every year, the percentage coming in was about 1% which fell well between the margins of error.

The Chairperson commented that the meeting was a success and adjourned it.