ATC170317: Report of the Portfolio Committee on Tourism on Quarter 3 Financial and Non-Financial Performance for the 2016/17 Financial Year

Tourism

REPORT OF THE PORTFOLIO COMMITTEE ON TOURISM ON QUARTER 3 FINANCIAL AND NON-FINANCUAL PERFORMANCE FOR THE 2016/17 FINANCIAL YEAR
 

The Portfolio Committee on Tourism, having considered the 3rd Quarter Report of the National Department of Tourism on the 10th March 2017 and South African Tourism on the 17th March 2017, reports as follows:

 

1. Introduction

The Committee received briefings from the Department of Tourism and South African Tourism on their financial and non-financial performance for the third quarter of 2016/17 on the 10th and 17th of March 2017 respectively. On one hand, the performance of the Department in Quarter 3 was a cause for concern as there were many outstanding matters from Quarter 2 and Quarter 3 that had not been corrected. On the other hand, South African Tourism also performed poorly during Quarter 3 of the year under review, achieving only four targets out of fourteen targets set for the quarter. Both organisations provided progress made on some of the targets and assured that Committee that most of the targets will be achieved by the end of the financial year.

 

1. Department of tourism

The financial and non-financial performance of the Department of Tourism was as follows:

1. Achievement of targets

In the third quarter of 2016/17 the Department had 71 pre-determined objectives. A total of 45 targets were achieved accounting for 61.2 percent. The performance for Quarter 3 against the predetermined objectives was as illustrated in Table 1:

Table 1: Achievement of Quarter 3 performance targets

Programme	Achieved		Not achieved
	Number	%	Number	%
Chief Operating Officer	16	84.21	3	15.79
Policy & Knowledge Services	14	58.3	10	41.66
International Tourism Management	4	50.0	4	50.0
Domestic Tourism Management	11	55.0	9	45.0
Total	45	61.9	26	38.1

 A total of 26 targets were not met accounting for 38.1 percent underperformance.  This indicates a regression from quarter 2 performance in which the Department achieved 56 of the 80 targets accounting for 70 percent performance. This is a cause for concern as the Department had regressed in their performance in quarter 2 as compared to quarter 1 wherein 91 targets were planned and 70 were achieved accounting for 76.44 percent performance.  This compounding failure of achieving targets in three consecutive quarters means the Department might not be able to meet all its pre-determined  for the 2016/17 financial year.

 

1. Programme performance information

 

The Programme performance information with regard to the attainment of targets in the Annual Performance Plan are as follows:

 

1. Programme 1: Administration

The performance for Programme 1 can be summarised as follows: 

 

• The second draft of the Strategic Plan and Annual Performance Plan for 2017/18 had been submitted to the Department of Monitoring and Evaluation and National Treasury.
• South African Tourism oversight report for Q3 was prepared. The report covers non-financial performance and compliance with the PFMA. It also focuses on the numbers of international tourist arrivals achieved, domestic holiday trips achieved, business events hosted in South Africa.
• Annual target was that vacancy rate should not exceed 8 percent. The vacancy rate was maintained at 6.8 percent.
• Quarterly target set was that women representation in senior management not to fall below 50 percent. The results had shown the target is maintained.
• The set target for Workplace Skills Plan was 25 percent implementation. Two Skills Programmes which constitute 20 percent of the WSP were implemented. These are Enterprise Development and Oceans Economy. Reason for variance was that the Compulsory Induction Programme (CIP) which constituted 5 percent of the WSP was not implemented. The NDT did not have new appointed employees during the period under review to undergo CIP.
• Quarterly target for implementation plan of Department’s Communication Strategy was set at 100 percent. Results indicate that 83 percent implementation of Q3 requirements of annual implementation of the communication strategy was not achieved. The reason for variance was due to the third quarter Corporate Identity Forum meeting which was not held due to unavailability of other stakeholders.    

 

2.2.2            Programme 2: Policy Knowledge Services

 

The third quarter performance in Programme 2 can be summarised as follows:

 

• On the National Tourism Information and Monitoring System, quarterly target was for the NDT to hold a stakeholder consultations on the NTIMS draft regulations. The consultations on the draft regulations were not held. There was a delay in gazetting of the draft regulations for public comments. Consultations was to be prioritised for the Q4.
• Initiatives undertaken to support and promote BBBEE implementation were achieved. Quarterly report on the work of the Tourism B-BBEE Charter Council was developed. The report covers the Councils quarterly meetings, plan of action, and project steering committees.
• Baseline study on the amended tourism B-BBEE Sector Code was conducted. The following milestones were achieved in the quarter: inception report completed, study sampling framework and questionnaire developed; database of tourism enterprises was cleaned.
• Programmes to capacitate tourist guides at World Heritage Sites, namely iSimangaliso Wetlands Park and Cradle of Humankind, were implemented. Progress report on the implementation of training programmes was developed.
• Annual target had of construction at Shangoni Gate tourism development in Kruger National Park had commenced. The application for water usage was submitted. A professional engineer is assisting with hydrology and structural designs. Site was established and physical access mapped in line with conceptual designs. The reason for variance was the delays in commencement of construction due to delays in the appointment of the construction phase service provider.
• The construction at Phalaborwa wild activity hub in Kruger National Park had commenced. Variance was caused by the Environmental Impact Assessment process that took longer than expected, but has been completed and the Basic Assessment Report was finalised. A professional service provider for the construction phase can only be appointed once the Record of Decision is in place.
• The 2015 State of Tourism Report was not finalised and launched, however the 2015 STR new indicators data was collected. The reason for variance was to accommodate a new approach to developing the STR. There were delays in the project in Q2 which had impacted on the achievement of the Q3 target. Q4 target will be achieved as the methodology and timelines for the development of the 2015 STR was reduced from 6 to 3 months.

  

2.2.3          Programme 3: International Tourism Management

 

The third quarter performance for Programme 3 was as follows:

 

• Cross Border Guiding module – identification and selection of candidates to be trained did not take place, however a database of South African cross border tourist guides was developed. The reason for variance was poor response from SA stakeholder engagement session which was scheduled for November 2016. This platform was going to inform tourist guides about the contents of the training module.
• Recruitment of tourist guides and frontline staff for language training (Russian and Mandarin).The Department took a strategic decision to scale down on the Russian training following an opportunity that was presented to fast track the Mandarin training. The Department instead opted to focus on the implementation of phase 1 of the Russian Language training only, while prioritising fast-tracking of the implementation of the Mandarin Training Programme.
• Project plan for phase 2 of language training in Russian for tourist guides was finalised. An opportunity was presented when the Chinese government through their embassy offered to collaborate on the implementation of the programme through co-funding which included making available trainers within the current financial year. Based on that, the Department then took a strategic decision to revise the target to ensure that both planning and implementation happens within the current financial year.
• International placement of 12 learner chefs facilitated – the recruitment and selection of learners for placement was not done. However, the recruitment and selection committee was established consisting of the NDT, SACA and Seychelles Tourism Academy. The delayed response from the Seychelles counterparts in finalising Service Level Agreement resulted in the postponement of interviews with potential candidates.
• Capacity building for effective participation in market access programme – the capacity building intervention has not been developed. The delays were experienced in finalising the Terms of Reference and appointing the service provider.
• Implementation of the Accreditation of Travel Companies (ATC) programme for visa facilitation. The adjudication of applications for accreditation was not done. Letters for calls for applications were sent to the missions. No feedback was received from the identified countries, as such, there were no companies adjudicated and approved as ATC participants. The reason for variance was that the identified countries were based on the report of the Inter Ministerial Committee on Immigration that recommended China, Russia and some African countries. While implementation in China was piloted and implemented successfully, the Russian programme was reviewed following the decision by Department of Home Affairs to waiver of visa for Russians visiting South Africa, as such, it became futile to continue with the programme. The decision was beneficial to the Department in achieving its objective in this regard, thus making this requirement for some companies unnecessary.        

 

2.2.4            Programme 4: Domestic Tourism Management  

 

The departmental performance for the fourth quarter in Programme 4 was as follows:

 

• The social tourism activity facilitated targeting people with disabilities was in line with the Tourism Month. The Department, in partnership with SA Tourism and Gogos on Tour, hosted over 500 elderly people from Gauteng, Limpopo, North West, KwaZulu-Natal and Mpumalanga provinces. The reason for variance was to target the elderly for Social Tourism Activities during the Q4.
• In the implementation of the enterprise development programme there was continuation of the support for 100 enterprises on mentorship, market access, business development and training. By the end of the quarter, 61 enterprises were supported through business diagnostics, mentorship, coaching and market access exposure. The reasons for variance were delays with the appointment of the service providers for all 9 provinces. One enterprise did not attend the Trade Show even though it attended all the training.
• Number of capacity building programmes to implement the chefs training programme targeting 577 trainees and placement was in progress. The number of youth who attends training and work-placements differs monthly due to absenteeism or drop outs. There were 609 in November and 602 in December. The reason for variance is that the target was exceeded by 32 trainees due to more participants who were enrolled in the initial target in order to mitigate the possible drop-outs as previously experienced with youth programmes.
• Training of 300 youth on the Sommelier Training course had not started. The reason for variance was due to procurement of the service provider which commenced late due to the Department needing to consult with stakeholders such as the provincial departments, municipalities and the Wine association.
• Food Safety Programme – the training and placement of learners had not commenced. The reason for variance was that procurement of the service provider commenced late.
• In the target to launch the final Tourism Human Resource Development Strategy (THRDS), the draft THRDS was developed. The reason for variance was as a result of the low uptake of the Skills Audit review which affected the finalisation of the THRD strategy.
• On the number of full-time equivalent (FTE) jobs created through the SRI programme per year, the quarterly target was set at 872. Preliminary data reflects that only 529 FTE jobs were created through the SRI. The reason for variance was the verification of the Departments Asset Register in order to exclude completed projects. The verification of the remaining planned and active projects also had an impact on the planning and commencement of projects. The Department appointed the Government Technical Advisory Centre (GTAC) to assist in the evaluation of remaining SRI projects (planned and active) to ensure their viability.          

 

1. Human Resources Information

 

The workforce representativity as at the end of the Q3 was a total staff complement of 495, of this number 425 were Africans (85.9 percent), Coloureds 28 (5.7 percent); Indians 18 (4.0 percent); and Whites 24 (4.8 percent); Persons with Disabilities 23 (4.6 percent).

 

1. Expenditure

 

The budget and Expenditure Review as at 31 December 2016 for Administration as per AENE budget was allocated R237 456 million, while expenditure was R159 666 million and expenditure as a percentage of ENE budget was 67 percent.  For Policy and Knowledge Services programme an allocation was R1 269 753 billion as per AENE budget, while expenditure was R984 325 million, the expenditure as a percentage of ENE was 78 percent. In the International Tourism programme, an amount of R55 624 million was allocated, while expenditure was R43 150 million. Expenditure as percentage of ENE was 78 percent. In the Domestic Tourism programme, an amount of R446 683 million was allocated, while expenditure was R220 206 million. Expenditure as percentage of ENE was 49 percent. The total allocation was R2 009 516 billion, while expenditure at the end of the third quarter was R1 407 347 billion. This represents an expenditure of 70 percent as per percentage of ENE budget.    

 

 

1. South African Tourism

The Performance of South African Tourism in the Quarter 3 of 2016/17 could be summarised as follows:

1. Organisational performance

The organisational performance for South African Tourism was as follows:

1. Number of international tourist arrivals

• The target for the quarter was exceeded. The performance was driven by the following factors:

• Improved value for money due to the depreciation of the rand;
• Economic recovery by some source markets;
• Additional visa facilitation centres across China; and
• Re-introduction of a direct air route from Brazil and China.

• International tourist arrivals accounted for 2.4 million of total tourism trips and increased by 12.3 percent compared to Q3 of 2015. The fastest growing regions were Asia and Australasia (30.2 percent), the Americas (19.2 percent), Europe (18.3 percent), and Africa-air markets by (12.5 percent).

• In this quarter all regions had grown to new record highs. The arrivals in the quarter were ahead of last year and ahead of all previous years.
• The main driver of a double digit increase in foreign arrivals was tourists visiting for leisure driven in particular by VFR tourists.
• MICE tourists remained relatively stable (down less than 1 percent) while business shopping saw a decline (-10.6 percent) and business travellers saw very growth off a relatively much smaller base (63.2 percent).
• Arrivals continued to grow in 2016 and in this quarter had positive double digit year on year growth with the exception of Africa and Indian Ocean Islands. Asia and the Middle East led the growth over 2015. 

 

1. Number of domestic trips achieved

• Quarterly performance on domestic holiday trips was below target. There was a 22 percent decrease in total trips in 2016.
• Affordability remained the main deterrent to taking a trip, and the South African economy continued to underperform. In the same period, unemployment rose to a high of 27.1 percent. All this contributed to lower disposable income.

 

 

1. Total tourism revenue

• The under-performance was driven mainly by a 40 percent year-on-year decline of Total Domestic Direct Spend (TDDS). The Total Tourist Foreign Direct Spend (TTFDS) performance was 1 percent shy of target.
• Domestic tourist who took a trip in this period spent less per day than usual.
• The increase in arrivals and the growth in spend per day the key drivers of growth in revenue.
  1. Percentage of brand positivity

• Target has not been achieved. The rand’s depreciating against major currencies and increasing inflation resulting in currency loss had impacted SA Tourisms ability to market South Africa as a top of mind tourism destination at the same rate given the declining international budget.
• Consequentially, SA Tourisms impact on brand positivity in Core and Investment markets has declined below target in the following markets:

• Core markets - Australia (25percent), France (38 percent), Germany (39 percent), Netherlands (39 percent), Nigeria (36 percent), UK (37 percent), and USA (39 percent).
• Investment markets - Canada (27 percent), Ghana (28 percent), Japan (5 percent), South Korea (8 percent) and Uganda (35 percent). Positivity in core markets is at 39 percent and investment markets at 27 percent.    
  1. Number of business events hosted in South Africa

• This is an annual target which was not due for reporting, although 72 percent was achieved.
• Approximately 100 events had been registered with ICCA against the annual target of 138.
  1. Number of graded establishments

• Notwithstanding, an increase in the number of establishments graded year on year, the target was met. SA Tourism had a net increase of 102 properties for the quarter under review due to:
• An improved Marketing campaign and PR targeted at coastal trade, online presence and TV reality show; and
• Stakeholder engagements with associations to encourage their members to get graded.
  1. Number of graded rooms

 

The target was not achieved reflecting a 5 percent under performance in the period under review.

 

1. Geographic spread

• The provincial spread in South Africa has improved from an international perspective with the arrivals increasing in 8 of the 9 provinces in the Q3 OF 2016.
• The provinces that led the growth were Free State, Limpopo, Western Cape and Eastern Cape with double digit growth over 2015.
• Gauteng was the most visited province in this quarter and grew to reach just over 1 million tourist arrivals with a total of 7.8 million bed-nights generating an estimated R8.3 billion in revenue. On average tourists stayed 8.0 nights.
• Western Cape was the 2nd most visited province with over 344 000 tourist arrivals with a total of 3.6 million bed-nights generating an estimated R3.8 billion revenue. On average tourists stayed 11.0 nights. 
  1. Domestic Tourism Performance Indicators

• Total revenue created from the domestic tourism market amounted to R3.5 billion in Q3 of 2016, a decrease relative to 2015.
• Holiday trips contribution to revenue is the only category which increased relative to 2015.
• Slightly over half of total domestic revenue continued to come from Visiting Friends and Relatives (VFR) orientated trips however the contribution thereof decreased substantially relative to 2015.
• Fewer trips were taken in Q3 of 2016 relative to Q3 of 2015. The decrease in total trips was largely driven by a decrease in VFR trips however holiday and business trips also decreased in this period.
• The average length of trips taken increased to 4 nights in Q3 of 2016. Limpopo continued to receive the most number of trips, followed by Gauteng and Eastern Cape.
  1. Business Events Overview

• The number of bid submissions for the Q3 of 2016 were 54.
• The number of delegates was 66 100.
• The number of conference days were 233; and
• The estimated economic impact is R1.1 billion.
  1. Tourism Grading Overview

• The Tourism Grading Council of South Africa was not able to achieve the target of a number of graded establishments as it was set at 1 457 and 1 279 was achieved for Q3 of 2016/17.
• The number of graded rooms was also not achieved as it was set at 31 637 but achievement was at 29 918.
  1. Human Capital Update

• SA Tourism is operating at 77 percent (157), capacity against the approved staff establishment of 202.
• The remaining 23 percent (45 vacancies) recorded as vacancies was a percentage of headcount.
• To ensure business continuity and fulfilment of the vacant roles, SAT had appointed temporary staff and interns. 

 

1. Organisational Review Project

• Outcomes of the Ministerial Review in relation to Organisational Structure and HR Development. Key priorities:

• Build and enhance EXCO and leadership team capabilities to carry out their roles and duties as per their KPAs.
• Conduct a review of the role, performance and capabilities of the HR function.
• Create a culture of engagement and empowerment within and across all levels and units of the organisation.
• Review and redesign the organisation structure taking into account the funding and resource constraints including currency risks and losses.
• Skills Audit and understand the skills gaps. 

 

1. Financial Performance Overview

• Marketing expenses of R773.10 million makes up 78 percent of total expenditure whilst remaining 22 percent is made up of Administration costs.
• The administration expense balance of R216.21 million comprises of operating expenses. Marketing expenditure relates to investment in leisure marketing, quality assurance and business events.
• In Administration, SA Tourism incurred R216.2 million in administration costs during the period under review. This amount was R12.1 million less than budgeted amount.
• The reason for variance was savings in HR costs was as a result of vacant positions during the period under review including Country Managers: Australia and Netherlands.
• In Marketing Expenditure, SA Tourism incurred R773.1 million marketing expenditure during the period under review. This amount was R115.92 million less than budgeted.
• The reasons for variance were that, firstly, in domestic marketing, the 2015/16 domestic budget was spent on an approved media buy for the full year, in the first half of the year. This therefore led to the proposed budget splits in 2016/17. However, due to a change in media agency, it was recommended to buy media on a quarterly basis in order to be more adaptive to market needs. The larger part of this is in the travel periods within quarters Q3 and Q4.  Secondly, in Digital Marketing, the digital platforms were in a renovation phase to best respond to data analytical needs (which means converting the 74 platforms onto one common platform). Project is in progress but will only be invoiced on completion in February 2017.

 

1. Expenditure

The financial performance overview for the Department of Tourism for Quarter 3 was as follows:

 

• Budget and Expenditure Review as at 31 December 2016 for Administration as per AENE budget was allocated R237 456 million, while expenditure was R159 666 million and expenditure as a percentage of ENE budget was 67 percent. 
• Policy and Knowledge Services programme was allocated R1 269 753 billion as per AENE budget, while expenditure was R984 325 million, the expenditure as a percentage of ENE was 78 percent.
• International Tourism programme was allocated R55 624 million, while expenditure was R43 150 million. Expenditure as percentage of ENE was 78 percent.
• Domestic Tourism programme was allocated R446 683 million, while expenditure was R220 206 million. Expenditure as percentage of ENE was 49 percent.
• Total allocation was R2 009 516 billion, while expenditure was R1 407 347 billion. Expenditure as per percentage of ENE budget was 70 percent.    

For South African Tourism the expenditure in the Quarter 3 was as follows:

• Marketing expenses of R773.10 million makes up 78 percent of total expenditure whilst remaining 22 percent is made up of Administration costs.
• The administration expense balance of R216.21 million comprises of operating expenses. Marketing expenditure relates to investment in leisure marketing, quality assurance and business events.
• In Administration, SA Tourism incurred R216.2 million in administration costs during the period under review. This amount was R12.1 million less than budgeted amount.
• The reason for variance was savings in HR costs as a result of vacant positions during the period under review including Country Managers for Australia and Netherlands.
• In Marketing Expenditure, SA Tourism incurred R773.1 million marketing expenditure during the period under review. This amount was R115.92 million less than budgeted.
• The reasons for variance were, firstly, that the 2015/16 domestic budget was spent on an approved media buy for the full year in the first half of the year. This led to the proposed budget splits in 2016/17. However, due to a change in media agency, it was recommended to buy media on a quarterly basis in order to be more adaptive to market needs. The larger part of this is in the travel periods within Q3 and Q4.  Secondly, in Digital Marketing, the digital platforms were in a renovation phase to best respond to data analytical needs (which means converting the 74 platforms onto one common platform). The project was in progress and will to be invoiced on completion in February 2017.

 

7.         Committee deliberations and observations

 

The Committee deliberated on the performance information for both the Department of Tourism and South African Tourism and made observations on the following matters:

 

7.1        Observations for the Department of Tourism

 

7.1.1     Mandela Capture Site signage

 

The Committee raised concerns about delays in the provision of signage at the Mandela Capture Site. The Department indicated that it had engaged Umgeni Municipality and also the relevant provincial Department of Transport. Two applications for road signage had been considered, the one was for R103 and the other was for the N3. The South African National Roads Agency Limited (SANRAL) had approved signage for R103 but had declined signage for the N3. For other sites, the Department had done interpretive signage not road signage.  The Committee is however not satisfied with this state of affairs and would like the matter to be pursued further.

                                           

7.1.2     Concerns about learner drop outs on the Blue Flag Beach programme

 

The Committee acknowledged that the Blue Flag Programme was about enhancing the quality experience for beach goers. The unemployed youth had been recruited as part of the Programme and they received training on environmental issues, water quality and others. It was a cause for concern that a total of 200 learners were earmarked but only 180 had participated in the programme as some learners dropped-out. Some of the reasons for drop-outs were given as long hours, female learners falling pregnant, and some going back to school. This matter was raised as a serious concern since the learners who dropped out had taken spaces for those who might have appreciated the Programme given the high unemployment rate amongst the youth in the country. The Department was urged to ensure that they minimise drop-outs in all their projects.

 

7.1.3     Customer satisfaction

 

The Department acknowledged that they did not conduct customer satisfaction survey, it was dealt with at Visitor Information Centres at airports. Visitors filled out survey forms when they visited information offices, particularly at national information gateways. The Committee urged the Department to establish a formal customer satisfaction surveys to inform the country about the perceptions of our tourists.

 

7.1.4     Incubator Pilot Project

 

The Committee noted the good work done in the incubator pilot projects and urged the Department to have similar incubators all over South Africa. The private sector needed to be taken on board.

 

7.1.5     Accreditation of Travel Companies (ATC) in Africa

 

The Committee observed that some of the challenges experienced with regard to the Accreditation of Travel Companies in Africa were that when some operators were given the opportunity to facilitate travel they had a tendency to push up fees. There was a need to reach out to those operators and to communicate that it was better to get a bigger market share than to overcharge people and get fewer tourists. The Committee urged the Department to meet its ATC targets in the current financial year. 

 

7.1.6     Oceans Economy

 

The Committee was concerned about the poor participation of the tourism sector, especially the previously disadvantaged communities in the Oceans Economy. The Department explained that oceans economy was not only about activities along the coastline as this implied creating routes, and the involvement of townships and rural economies needed to be facilitated. The coastline needed to be linked to township and rural areas and the role of the Department was to facilitate this participation. The idea was to expand the experience, route development and product development.   

 

 

7.1.7     Benefits of payment of membership fees to international organisations

 

The Committee wanted clarity on the benefits of membership to international bodies and value for money for membership fees. The Department explained that if South Africa did not pay its membership it ran the risk of losing its right to participate in multilateral and regional bodies. These bodies developed protocols and if membership fees were not paid up, then participation would not be allowed. For example, being a member allowed South Africa to influence the agenda on the body of work of the Regional Tourism Organisation of Southern Africa (RETOSA). It was further pointed out that South Africa as a member of the United Nations World Tourism Organisation (UNWTO) served on its Executive Council and was part of the statistics committee. The Committee commended this work and wanted constant feedback on the participation of the Department in these international fora.

 

7.1.8     Impact of the language training

 

The Committee acknowledged the sensitivity of certain markets to be addressed in their languages when they are on holiday in South Africa. The Department alluded that there were certain markets that were sensitive and wished to feel welcomed when they visited SA. China was one such market, and they would be greatly appreciative if, for example, guides on Robben Island could explain things in their Mandarin. Everything was being put in place for the Chinese market that is growing exponentially. It was also indicated that the Russian language training had not been affected by the Mandarin training being fast-tracked. The Department was urged to look at other markets with similar language needs in order to facilitate enabling language programmes.

 

7.1.9     Local Government Training

 

The Committee wanted to know what the impact of the Local Government Training Programme. The Department assured the Committee that the Local Government Training Programme was a National Qualifications Framework (NQF) rated qualification. The Department worked with local government officials on destination development which had to be incorporated into IDPs of municipalities and also assisted with unblocking of obstacles where necessary.

 

7.1.10   Grading policy matters

 

The Committee wanted to know how far the Department had gone with effecting the policy proposals made in relation to grading being made permanent in South Africa to improve quality assurance of the destination. The Department was reluctant to respond on the proposed legislation as the Minister still had to table the policy proposals to the Cabinet. If the policy is approved then it would come to Parliament.

 

7.2        Observations for South African Tourism

 

7.2.1     Decline in domestic holiday trips

 

It was a cause for concern to the Committee that the domestic holiday trips had declined by 22 percent, and South African Tourism had to improve on this indicator. Certain interventions needed to be considered such as how SA Tourism collated statistics on domestic tourism and how domestic activities that were happening around the country were captured. The sample sizes were too small and SA Tourism should use more technology in that regard. It was also acknowledged that SAT needed live data but at the moment this data was not readily available.

 

7.2.2     Organisational structure

 

It was acknowledged that SAT was reviewing its organisational structure and had built analytics into it. However at the moment SA Tourism was feeling its way through as it did not own the product that it was marketing, the industry owned the product. The industry mainly focused on international and not so much on domestic tourists and this needed to change and more focus should be paid on domestic tourism.

 

7.2.3     Domestic tourism infrastructure

 

It was acknowledged that there was stock that belonged to provinces and local government that could be used on the domestic market, and SAT was working closely with the National Department of Tourism on unlocking this potential. An incremental amount of R200 million had been received for infrastructure for domestic tourism and SAT needed to ensure that some of it was used to improve domestic tourism infrastructure.  

 

7.2.4     Sho’t Left campaign

 

It was observed that there was no window in the Sho’t Left campaign website where bookings could be made. It was therefore important for SAT to ensure collaboration with the private sector in this regard. Sports tourism was another opportunity that was available for exploration to improve domestic tourism. The Premier Soccer League had come on board, and such platforms had to be used, partnerships with stockvel and taxi associations was also being pursued.

 

7.2.5     Market intelligence

 

Improvements in market intelligence were needed as there was not enough being done to understand the domestic tourism market.

 

 

 

7.2.6     Inclusive growth

 

The Committee acknowledged that the private sector plays a pivotal role in tourism and they should be encouraged to grow the sector and bring new players in the fold. SAT had to ensure that it became granular and had to have a book button on the Sho’t Left campaign to ensure that citizens can book to emerging tourism enterprises as well.

 

7.2.7     The role of the National Department of Tourisms

 

The Department appreciated the engagement the Committee was having with SAT as it allowed for better understanding of underlying issues. The figures spoke for themselves that domestic tourism was not doing well. The reporting process did assist to better understand what it needed to do to improve. The NDT is an enabler and understood its role. Some of the issues raised were about unblocking policy issues for SAT to do their work. For example, long lines at O.R Tambo International Airport were some of the issues that needed to be addressed. The NDT had to decide on what institutional arrangements could be put in place.   

 

7.2.8     Decline in domestic tourism

 

It was indicated that the quarterly performance on domestic holiday trips was below target. There was a 22 percent decrease in total trips in 2016. Affordability remained the main deterrent to taking a trip, and the South African economy continued to underperform. In the same period, unemployment rose to a high of 27.1 percent, in the narrow definition of unemployment. All this contributed to lower disposable income.

 

7.2.9     Technology and data

 

It was observed that the issue about technology and data had to be aligned with how the market trends were evolving. When South Africans were under financial pressure then it affected the consumer behaviour.

 

7.2.10   Discounted pricing

 

The Committee was concerned that the prices  to access government parks, resorts, and museums was too high for South Africans, and urged that the attractions should consider dual pricing. SAT alluded that there would be different prices charged at different times of the day. International tourists could afford prices at prime times whilst South Africans could go when it was cheaper. Dual pricing had for years been used by hotels and airlines. It all depends on where the tourist was in his / her life, for example a student whose parents were paying the bill would not care about the price whereas the pensioner would more financially prudent.

 

7.2.11   Relevance of SAT to local authorities

 

The Committee was concerned that the work of SAT was not aligned with municipalities. South African Tourism conceded that the coordination with municipalities was all about alignment of activities. The work that the SAT did had to be translated into action at local level. Alignment of efforts was also the key amongst all stakeholders.

 

7.2.12   Improving Geographic spread

 

The Committee repeated its clarion call about improving geographical spread of SAT programmes. SAT alluded that the events should be used as a magnet to attract people to participate in domestic tourism. Events needed to be held in outlying areas so as to attract people to those areas.

 

7.2.13   Tourism Indaba

 

The Committee wanted to know about the plans for the upcoming Tourism Indaba. This was also about the change of the event from being a weekend event to be held mid-week. SAT indicated that the tourism industry had noted that Indaba was old and stale and needed to be refreshed. The stakeholders were taken on board and the industry had been consulted on what would be acceptable date. It was clarified that there had been stakeholder engagement and that by the time that buyers came to Indaba, the deals had already been made.

 

1. Recommendations

 

After scrutinising the reports from the two organisations and making a number of observations, the Committee recommends as follows:

    

1. The Department of Tourism should engage the Department of Home Affairs to find a permanent solution to the congestion in the international arrivals terminal at the OR Tambo International Airport.

 

1. The Department should further engage the Department of Transport in resolving signage for the Mandela Capture Site along the N3 highway in KwaZulu-Natal.

 

1. The Department, working with South African Tourism, should develop a comprehensive customer survey programme.

 

1. The Department should devise mechanisms to reduce drop outs on its programmes to ensure value for money and impact of its programmes.

 

1. The Department should identify other markets with strict language requirements and facilitate implantation of language programmes that address such needs to tap into the market share of such countries.

 

1. South African Tourism should finalise the alignment in the methods of collecting tourism statistics with Stats SA and report to the Committee on the finalised model.

 

1. South African Tourism should intensify its domestic tourism programmes to increase the number of domestic trips

 

9.         Conclusion

The Committee was generally concerned about the financial and non-financial performance of both the Department of Tourism and South African Tourism in the period under review. The two organisations however assured the Committee that the annual targets will be met as the backlogs incurred over the three quarters had already been addressed in the work done in the fourth quarter. It was also observed by the Committee during the briefing sessions that the substantial amount of work that was not done by the third quarter had already been covered in the progress report given for the fourth quarter. The Committee is therefore confident that both the Department and South African Tourism will achieve a larger percentage of the annual targets tabled in the Annual Performance Plans for 2016/176 financial year.

 

Report to be considered