ATC141020: Report of the PC on Tourism on the Southern African Tourism Services Association (SATSA) Annual Conference 2014
Tourism
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 7 th 9 th 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 womans 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 8 th August 2014 as the 7 th was a Golf Day and the 9 th was a closed session of Annual General Meeting for SATSA members.
2. Key issues from the Ministers 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 Ministers 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 1 st 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 / arent 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 Africas 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.
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