Report of the PC on Tourism on
the Southern African Tourism Services Association (SATSA) Annual Conference
2014
1.
Introduction
The Southern African Tourism Services
Association (SATSA) convened their annual conference from the 7th –
9th August 2014 in Stellenbosch.
The conference was attended by industry stakeholders which
included SATSA members, government officials and tertiary education
institutions. The Chairperson of the
Portfolio Committee on Tourism was invited to the conference. However, due to
the busy schedule of August as a woman’s month, the Chairperson delegated Mr J.
Vos to attend on behalf of the Committee. Mr Vos was
accompanied by the Committee Secretary, Mr J.M. Boltina and Content Advisor, Dr
P.S Khuzwayo.
This report provides a summary of the
proceedings on the 8th August 2014 as the 7th was a Golf
Day and the 9th was a closed session of Annual General Meeting for
SATSA members.
2.
Key
issues from the Minister’s Key note address
2.1
The Minister of Tourism Mr. Derek Hanekom delivered
a key note address. The speech was
divided into themes, namely, performance in global context, why tourism growth is
a priority, challenges that face the industry, and tourism statistics and
evidence-based decision making. The speech highlighted amongst other issues the
following:
2.1.1
The United Nations World Tourism Organisation expects
global growth in international tourist arrivals to consolidate at around 4% to
4.5% this year.
2.1.2
While growth in tourism demand from emerging markets
continues to be strong, the outbound growth from some of our traditional
markets is also now showing more promising signs of recovery.
2.1.3
While the growth forecasts are positive, we must
remain realistic about potential wild cards: fickle outbound growth from some
regions, potential airlift disruptions due to the spread of epidemics as well
as volatile and rising jet fuel prices come to mind.
2.1.4
Recently, Price Waterhouse Coopers reported that
revenue from all accommodation categories combined rose 14% in 2013, on the
back of solid growth in international arrivals, recovering occupancy rates and
an increase of 8.4% in average room rate.
2.1.5
On the transport side the car rental industry
experienced an increase of over 14% in rental days during the first five months
of the new inbound season.
2.1.6
The industry is facing the following challenges:
-
backlogs in road infrastructure maintenance;
-
airlift pricing and the lack of competition on some
routes;
-
visa regulations and travel facilitation;
-
tourism safety issues - such as those in Hazyview and rhino poaching
2.1.7
Transformation goes to the heart of shared growth.
2.2 Issues raised by the private sector to
the Minister
The discussion with the Minister concentrated more on the New
Immigration Regulations. The major aspects of the Regulations are that:
(i)
Travellers need to apply for visas to SA in person
for biometric information,
(ii)
Parents travelling with children under the age of
18 are required to produce an unabridged birth certificate, or the equivalent
in the country of origin, for each child.
The private sector raised the following issues of concern to the Minister:
2.2.1 The ability of the new legislation to
combat child trafficking is questionable as it is unlikely that people who conduct
human trafficking use airports but are most likely to use land borders.
2.2.2 The Regulations have already started
affecting the industry as there have been cancellations already.
2.2.3 There
is a need for
a speedy rollout of additional visa application centres, particularly in China.
Some operators who generate business from China are extremely nervous and have
consequently stopped marketing anything after October 1.
2.2.4 Seemingly there is no sufficient
cooperation between the government departments as the department of tourism and
the industry were not consulted before the promulgation of the Regulations.
2.2.5 The Tourism Business Council of South Africa
indicated that they had written a letter requesting a meeting with the Minister
of Home Affairs to explain the implication of the Regulations to the sector.
However, the ministry had not acknowledged their letter yet. A request was made to the Minister of Tourism
to facilitate a meeting with the Department of Home Affairs
2.2.6 The concerns raised by the industry were
not just anecdotal but are based on concrete evidence from a study commissioned
by the Tourism Business Council of South Africa. Grant Thornton, the company
that conducted the study, has indicated that the New Immigration Regulation will
cause South Africa to lose 21 000 jobs annually. The Regulations will cost the country 270 000
international tourists annually, and will cost the country around R9.7bn in
lost tourism.
2.2.7 Regulations will
negatively affect family travel as well as school tours and sports tours.
2.2.8 The industry is calling
for a 12-month postponement of the implementation of the new regulations, which
are set to come into effect from October 1.
2.2.9 Tourism contributes 10% to the
GDP and should be funded accordingly to support inclusive growth. Limited
resources in the National Department of Tourism and South African Tourism
hinders tourism development
2.2.10 Other neighbouring countries such as
Mozambique still have very stringent migration regulations such that tourists’
movements are complicated.
2.2.11 The private sector needs to create
partnership with government in order to provide placement for more graduates.
2.2.12 Robben Island is not
properly maintained and government need to improve the state of this facility.
2.2.13 There
are immense challenges with regard to public-private-partnerships, particularly
in state land, with regard to intellectual property, and the Department needs
to assist in that regard.
2.3
Minister’s responses
2.3.1
Answering some of the questions from the industry,
the Minister indicated the following:
(i)
The Minister acknowledged that the new Regulations
could have unintended, negative consequences for the tourism industry. He indicated that he met with the Minister of
Home Affairs, Mr Malusi Gigaba
to discuss the implications of the New Immigration Regulation to the tourism
industry. A joint statement was issued
by the two ministers on the outcome of their meeting.
(ii)
The major resolution of the meeting was that there
was no change in the commencement date and the Regulations are expected to come
into effect on 1st October 2014.
(iii)
The Minister indicated that following engagement
between the two departments, concessions had been made. These include that
people travelling to SA with children will not need to translate the unabridged
birth certificates into English.
Furthermore, the Department of Home Affairs will open additional new
visa application centres where its current capacity does not meet the demand,
especially India and China.
(iv)
However, he indicated that the immigration
legislation and its Regulations fell under the mandate of the Department of
Home Affairs and that his Department was also the consumer of the legislation and
must adapt accordingly. The Minister encouraged the industry to provide more information
to his department as inputs for further discussion with the Department of Home
Affairs.
(v)
There will be an ongoing dialogue with other
departments and provinces to deal with issues of their jurisdiction ibn tourism development.
(vi)
The Ministry will engage the Department of Arts and
Culture in dealing with issues of maintaining Robben Island
(vii)
He will engage the Minister of Home Affairs about
the letter written by the Tourism Business Council of South Africa;
(viii)
The available budget must be optimally utilised
before additional budget could be made available;
(ix)
There is sufficient cooperation amongst government
Departments as issues are also discussed at Cabinet level;
(x)
The country should balance safety and business
interest and the issue of child trafficking is a serious concern that the
Department of Home Affairs is mandated to deal with.
3 Why are / aren’t the Brits coming? How do we get our
largest market humming
3.1 The discussion under this topic
dissected the notion of whether the United Kingdom which is South Africa’s
largest market is shrinking, stable or growing.
The presentations made by various speakers came to a consensus that the
UK market is still important for South Africa and needs to be serviced better.
The panel comprised Nadine Rankin who is managing Director of at AMG, UK-based sales company looking after
KZN, Jan Hutton, Chief Marketing Officer at South African Tourism and Garry
Kershaw, UK and Ireland General Manager for South African Airways. The following issues were raised:
3.1.1 South Africa has only
seen 6.4% growth in arrivals from the UK over the past 10 years but the country
is still attracting a comparative share of travellers from the UK. The country had
experienced slight growth in tourism figures from the UK over the past five
years, in the context of the recession, but the Bits were still coming to South
Africa
3.1.2 The reasons for a
sluggish growth from the UK market was that they were
hit hard by the recession compared to other European countries and therefore
all operators who sourced business from UK suffered.
3.1.3 Approximately, 73% of UK
tour operators are experiencing modest to strong growth in travel to SA. Specialist
operators are performing well because they really understand South Africa and
know the differences between the different provinces, lodges and experiences
offered.
3.1.4 South Africa can do more to
attract the UK market through ensuring that enough budget
is made available for marketing purposes.
Currently, the available budget is spread thinly and cannot fully
service tour operators in the UK.
3.1.5 The inbound trade must
intensify their representation in the UK and embark on more joint marketing
ventures.
3.1.6 South African Tourism
must capacitate its UK office and expose the UK trade to the South African
product through familiarisation trips.
3.1.7 SAT has issued a
statement about Ebola epidemic to address misconceptions about the Africa as
one homogenous country.
3.1.7 About 64% of the UK tour
operators engaged through research indicated that the New Immigration
Regulations, especially the requirement that children under 18 travel with an
unabridged birth certificate, will result to at least a 10% drop in travel to South
Africa. The family market and sports
market are likely to be affected the most.
3.1.8 MICE operators also
reported looking at other destinations because of the new regulations, as well
as concerns around flight availability.
3.1.9 South African Airways (SAA)
pulled out of the London Route and this also affected the numbers. However SAA indicated that this was purely a
business decision.
3.1.10 South African Airways also
indicated that a number of airlines had expressed concerns about the new
Regulations, particularly when it comes to family tours, school groups and sports
tours.
4. Preserving our Rhino: Pro-trade versus
Anti-trade
4.1 The discussion was
premised on the increased incidents of rhino poaching in the country and
whether trading with rhino horn was a solution to saving the rhino. The relevance of this topic was that South
Africa is known for its Safari-based prowess and a big 5 status of wildlife
offering as a tourism destination. The
panel comprised Mr Pelham Jones,
Chairperson of Private Rhino Owners Association (PROA), and Mr Collin Bell, the
founder of Wilderness Safaris and general eco-warrior. The following issues were highlighted:
4.1.1 About 97% of the 380
privately owned reserves are in support of the legal trade in rhino horn; 47%
of respondent were confident that they would continue to keep rhino in the
future, while 53% were uncertain, or already considering selling their rhino.
4.1.2 Private rhino owners own
2.2 million hectares of land on which rhino roam, which combined, is equal to
the size of the Kruger National Park.
4.1.3 Private owners do not
have the resources to protect rhinos from the onslaught of poaching compared to
the state which benefits from donor funding.
4.1.4 On the other hand there
is opposition to legal trade of rhino horn and more emphasis on increased
security measures.
4.1.5 South Africa has been
offered state of the art surveillance equipment to combat rhino poaching but
there has been no uptake.
4.1.5 There is need for better
equipped security forces to prevent rhino poaching.
4.1.6 Legal trade of rhino horn
will only stimulate demand and this will lead to a
extinction of rhinos in South Africa.
5. New
BBBEE Codes and their effect on business
5.1 The Department of Trade
and Industry has introduced proposed new Broad-Based Black Economic Empowerment
(BBBEE) codes. The tourism industry has
to develop its sector codes aligned to the new Scorecard. The panel for this discussion was made up of
Mr Marc Corcoran, President of
the Southern African Vehicle Rental and Leasing Association (SAVRALA); Victor Tharage,
Deputy DG at the National Department of Tourism; and Mr Clifford Ross, CEO of City Lodge.
The following issues were advanced:
5.1.1 If the proposed codes are
implemented in their current form they will affect a number of tourism businesses
that had invested in transformation.
5.1.2 The codes include amendments to the BBBEE scorecard that is used
to certify businesses, and for example, tourism companies that were initially
rated at level six under the existing BBBEE which have moved up to level two,
will be rated level seven under the amended scorecard.
5.1.3 The scorecard applies to
procurement, and tourism businesses will be affected by the downgrading of
their suppliers.
5.1.5 The industry had done
well under the current scorecard surpassing its targets and performing more
than other sectors.
5.1.6 The Department of Tourism
will be embarking on provincial workshops to solicit industry inputs into the
new scorecard.
5.1.7 The trade was encouraged
to participate in provincial consultative workshops to provide inputs into the
new Tourism Sector Codes. A meeting had already taken place between the
Department and the Tourism Business Council of South Africa to map the way
forward.
5.1.8 The industry was urged to
advance transformation as this was in their business strategic interest if they
wanted to continue doing business with government and its entities.
6. Surviving a small tourism business:
Lessons and pointers
6.1 The session was dedicated to small
tourism businesses. The main thrust of the discussion was on challenges that
tourism SMMEs face and how to overcome them.
The session raised the following issues:
6.1.1 Humility, Self-motivation and desire to
succeed are ingredients for the success of any small tourism business.
6.1.2 Tourism SMMEs tend to spend more attention
on operational costs at the expense of marketing.
6.1.3 There are various funding avenues and
government assistance such as the Tourism Enterprise Partnership (TEP) that can
be approached by small businesses for assistance.
6.1.4 Small businesses must be more concerned
about cash flow and reinvest into their business for sustainability.
6.1.5 Small business must seek mentorship from
well-established business on how to run a business and access to market.
6.1.6 Entrepreneurs seeking to start tourism
business must identify a niche in their surroundings for diversification and
unique selling proposition.
6.1.7 The business must serve a greater purpose
and resonate with community for it to be supported.
7. Recommendations
7.1.1 The Portfolio Committee requests the
Department to provide a briefing on the latest developments with regard to the
new immigration regulations and their effect on the industry.
7.1.2 The Department should develop programmes
aimed at developing SMMEs to advance transformation.
7.1.3 As part of the transformation programme,
the Department should consider a tour operator development programme for the
historically disadvantaged communities.
7.1.4 The Department should engage the private
sector to develop internship programmes that will target placements and proper
skills transfer.
Report
to be considered.