ATC210514: Report of the Portfolio Committee on Tourism on Second and Third Quarter Performance Report for 2020/21 Finanacial Year, Dated 11 May 2021

Tourism

REPORT OF THE PORTFOLIO COMMITTEE ON TOURISM ON SECOND AND THIRD QUARTER PERFORMANCE REPORT FOR 2020/21 FINANACIAL YEAR, DATED 11 MAY 2021

 

The Portfolio Committee on Tourism, having considered the Second and Third Quarter Performance Report of the Department of Tourism and South African Tourism on 9th March 2021, reports as follows:

 

1. Introduction

 

Section 32 of the Public Finance Management Act (Act No. 29 of 1999) prescribes the requirements for the monthly and quarterly reporting by the government departments.The oversight and Accountability Model of Parliament also lists monthly and Quarterly Treasury Reports as category 3 financial instruments used by Parliament for oversight and accountability. This report is,thus,intended to provide the Portfolio Committee on Tourism’s scrutiny(hereafter referred to as the Committee) of the Department of Tourism  (hereafter referred as the Department)  and South African Tourism’s Second and ThirdQuarterfinancial and non-financial performance for the 2020/21 financial year. The report also provides a detailed analysis of the impact of the operational environment on the work of the two organisations in the period under review.

 

In toto, the Department achieved 55(82.09%) of the 67 targets identified for the Second Quarter. Of the 12 targets not achieved, the Department completed significant work towards four (5.97%), whilst the remaining eight (11.94%) require intervention. In terms of financial performance, the Department spent R550 million (37.1%) of the R1 481.0 billion adjusted budget.

 

In the third Quarter, the Department achieved 52 (77.61%) of the 67 targets identified for the Quarter. Of the 15 targets not achieved, the Department completed significant work towards six (8.96%), whist the remaining nine (13.43%) require intervention. In terms of financial performance, the Department spent R800.5 million (56.1%) of the R1 426.8 billion adjusted by the end of the ThirdQuarter.

 

The operational environment, mainly the impact of COVID-19, played a huge negative role towards the non achievement of the predetermined objectives. The imaopct of COVID-19 in the work of both the Department and South African Tourism warrants a thorough unpacking to provide the context of the unprecedented reprioritisation of budget and planned activities in the Annual Performance Plan for the 2020/21 financial year.

 

1. Overview and assessment of the Operational Environment

 

The advent of COVID-19 pandemic in South Africa came at an inconvenient time for planning, immediately after the 2020/21 Annual Performance Plans were finalised.  It was anticipated, due to the COVID-19 restrictions (Risk adjusted Strategy), that the travel, tourism and hospitality sectors would experience a delayed re-opening. The situation was worsed by the timing and the duration of the delay that were not clear to assist with proper planning for the time ahead. This had a huge impact on all the Department’s programmes as follows:

 

2.1        Programme 1: Corporate Management

 

Some operations had to be recalibrated to ensurethat the entire organisation continues to function and ensuring that there is compliance, even under a different operational environment.  Some the operations were affected in the following ways:

 

• Human Resource Management as it related to sitting of disciplinary hearings and the recruitment and conducting of job interviews
• Communications with stakeholders was affected, for example, public enquiries were limited to email and call centre as no members of the public were allowed to access the building and internal communications were limited to posters and electronic communications. Needless to say that a very effective staff bulk messaging system was development with about 99 percent reach for emergency messages, as well as some updates on operations (COVID-19cases, water disruptions, strikes, etc.)
• Certain outreach and stakeholder programmes could not be executed, such as exhibitionsand printing of publications.
• The IT function had to be adaptive to new normal with most staff operating rotationally between remote working and also from office. This included procurement of additional IT tools of trade, online platform licenses, etc.
• The Legal Unit was operating under a highly litigious environment with the litigations against the Tourism Relief Fund being a one such example. The continuous development of tourism related directions also required extensive stakeholder engagement as the substantive matters were from a regulatory point of view with no precedence.

 

The Department developed various business protocols to ensure seamless operations continue, for example, staff rotation roaster for physical reporting to the office and online staff information sessions. The provision of psychosocial support to staff has continued in order to assist with coping strategies for the impact of the COVID-19 pandemic, to achieve service delivery and find a work-life balance.

 

2.2        Programme 2: Tourism, Research Policy and International Relations

 

The impact of COVID- 19 restrictions had a negative impact on Programme 2,  amongst others on: 

• Uncertainty on the time of the commencement on the ground, for example, the data collection at establishments.
• Face to face data collection for monitoring and evaluation projects were replaced by online surveys.
• Availability of suitable service providers for projects that were planned to be outsourced.
• Increased usage of technology to host meetings virtually.
• Limited site visits to the various projects sites.

 

2.3        Programme 3: Destination Development:

 

Programme 3 was impacted as follows:

 

• The Department had anticipated that the sites where Expanded Public Works Programme (EPWP) participants are placed for workplace experiential learning would not be fully operational by the Third Quarter. However, when the restrictions were lifted, more EPWP participants were placed in the different tourism and hospitality sites than originally anticipated.
• Virtual meetings continued with various project stakeholders in instances where physical meetings were not possible and site visits, where required,were limited to a small team.

 

2.4        Programme 4: Tourism Sector Support Services

 

Programme 4 was impacted as follows:

 

• Reprioritisation of allocations to provide financial relief to tourism businesses.
• Site inspections for purposes of monitoring projects, interviews and experiential training or placement of learners also had to be suspended when hard lockdown measures were put in place.
• Uncertainty prevailed on when projects would commence.
• Where feasible, incubations, training and monitors projects were migrated to virtual implementation. Stakeholder engagement sessions were also minimal and mostly held on virtual platforms.
• Greater collaboration with stakeholders to identify measures that could be put in place to mitigate the impact of the COVID-19 pandemic in the sector and for learners and incubates. This led to reprioritisation of project deliverables.
• Disruptions in the academic year affected the hosting of the National Tourism Careers Expo and the enrolment of 20 women in the Executive Development Programme at an institution of higher learning.

 

1. Summary of performance

The summary of the achievement of predetermined objectives per Programme in Quarter 3 is provided in Table 1.

 

Table 1: Quarter 3 Performance – Actual Data for 2020/21 finacial year

Branches	Achieved	Not  achieved; significant work done	Not achieved; intervention required	Insufficient information  to express opinion
Corporate Management	78.26% (18 of 23)	17.39% (4 of 23)	4.35% (1 of 23)	0.0% (0 of 23)
Tourism Research, Policy and International Relations	92.31% (12 of 13)	0.00% (0 of 13)	7.69% (1 of 13	0.00% (0 of 11)
Tourism Sector  Support Services	90.91% (10 of 11	90.91% (10 of 11	90.91% (10 of 11	0.00% (0 of 11)
Tourism Sector  Support Services	60.00% (12 of 20)	35.00% (7 of 20)	35.00% (7 of 20)	0.00% (0 of 67)
Total	77.61% (52 of 67)	77.61% (52 of 67)	13.43% (9 of 67)	0.00% (0 of 67)

Source: Department of Tourism Third Quarter Report for 2020/21

 

Table 1 provides a detailed information with regard to the predetermined objectives in each Programme and the information below furnishes detailes on the targets that were achived and reassons for non performance for those that were not achieved.

 

1. Programme 1: Corporate Management

 

The Department reported an increase in its vacancy rate, from a staff complement of 470 employees in June 2020 to 464 by December 2020. The Department maintained its minimum representation of employees with disabilities at 4.3 percent. The Department continued with its support of small micro medium enterprises. The Department reported that the following targets were not achieved:

• 50 percent women representation at Senior Management Service (SMS) level, as a result of vacancies that occurred during the period under review.
• 100 percent implementation of deliverables for Quarter one, two and three of the Department’s Communication Strategy. The Department reported that this is as a result of the Strategic Framework for Events, which was not circulated for inputs as planned, as a result of Covid-19. The Department also reported that the Communications Strategy will be re-written.
• The Gender Equality Dialogue was not conducted and has been moved to  the Fourth Quarter. The Department reported that the facilitator on gender issues was unavailable and the services of the Gender Commission had to be solicited.

 

1. Programme 2: Tourism Research, Policy and International Relations

 

Various reports have been developed by the Department between the two Quarters, which provide both an analysis of the sector’s performance and monitoring of implemented initiatives. One of the reports evaluated the impact of the Tourism Relief Fund on enterprises.

 

The target on developing a concept document for the development of the National Tourism Analytics System Frameworkwas not achieved. The Department reported that this resulted from challenges in timeously appointing a service provider. In the SecondQuarter, a service provider was not appointed for the development of the Tourism White Paper.

 

1. Programme 3: Destination Development

The Department achieved 10 of its 11 targets set in the ThirdQuarter of the 2020/21 financial year for this programme. The Department spent 85 percent of its budget and achieved 90 percent of its targets under this programme. The Department reported that the target on the Rail Tourism survey report was not completed. The report seeks to establish the viability of developing a new rail tourism model in the country.

 

The Department experienced delays with procurement due to the amendment of the 2020/21 procurement plan. However, a service provider for the viability study has been appointed. The Department exceeded its target on the number of work opportunities created in the ThirdQuarter. Instead of 875 work opportunities, 1 469 were created resulting from more Expanded Public Works Programme (EPWP) participants placed at various sites than originally planned.

 

1. Programme 4: Tourism Sector Support Services

 

The Department achieved 12 of its 20 targets set in the ThirdQuarter under this programme. The Department spent 96 percent of its budget, while only achieving 60 percent of its targets under this programme.

 

The Department reported that the targets for both the Second and ThirdQuarter on the Technology Innovation Incubator were not met. In the SecondQuarter, the enterprise diagnostic needs assessment was not developed; resulting in the Department’s inability to monitor anything in the ThirdQuarter. A delay in negotiations with the Technology Innovation Agency (TIA) was cited as the primary reason for the unmet targets. The joint initiative between the Department and TIA is aimed at supporting tourism-tech entrepreneurs who can develop progressive technologies for the industry.

 

The targets for both the Second and ThirdQuarter on the Tour Operator Incubatorwere also not met. In the SecondQuarter, the enterprise diagnostic needs assessment was not developed; resulting in the Department’s inability to monitor anything in the ThirdQuarter. The Department cited delays in the finalisation of its procurement processes.

 

The Department reported that the targets for both the Second and ThirdQuarter on the New Venture Creation Programme for Youthwere not met. The venture is aimed at empowering youth trained in food services to become owners and operators in the food services business. A service provider was not appointed in the SecondQuarter as planned and the programme was not implemented in the ThirdQuarter.

 

The target on the WiT Enterprise DevelopmentProgramme was not achieved in any of the three Quarters. In the first Quarter the programme was not launched due to delays in planning and the fact that beneficiaries were not identified, resulting in these outcomes being moved to the ThirdQuarter. Performance on the targets for both Quarter two and three was not achieved, resulting from delays in finalising partnership agreements.

 

Targets on the following capacity building programmes were not met:

• Tourist Guides– training was delayed due to lockdown restrictions.

• Food Safety Quality Assurers– the service provider has not been appointed and the induction of learners was not undertaken. Delays with this programme date back to before COVID-19.
• Wine Service Training– the finalisation of the close-up report planned for the ThirdQuarter did not occur. The Department reports that there were amendments to the skills programme, which resulted in additional costs. 

 

1. Financial Performance

 

The Department adjusted appropriation for 2020/21 amounted to R1 481.0 billion. This was a decrease from the initial appropriation of R2 481.0 billion, which was adjusted in response to the outbreak of the COVID-19 pandemic. The expenditure at the end of the ThirdQuarter is depicted in Table 2.Adjustment to allocations in the Special Adjusted Estimates Appropriation were tabled in June 2020, resulting in R1 billion being suspended from the Department’s initial budget. At the end of the Second Quarter, the Department had spent R550.0 million or 37.1 per cent of the available budget.

 

A second adjustment was made to the budget, resulting in a final allocation of R1 426.9 billion. At the end of the Third Quarter, the Department had spent R800.5 million or 56 percent of the available budget, R26.5 million (3.2%) less than projected for the period. The underspending was mainly attributable to slow spending of goods and services as a result of delays in the rollout of the EPWP under Programme 3: Destination Development. The implementation of the programme has been impacted by the Covid-19 lockdown restrictions.

 

 

 

 

 

 

 

 

Table 2: Budget and expenditure review at the end of the ThirdQuarter

Programme	2020 AENE Budget (R’000)	Expenditure   (R’000	Expenditure as % of AENE Budget	Variance from AENE Budget (R’000)	% Variance from 2020 AENE Budget	Explanation of Material Variances
Administration	299 644	205 740	69%	93 904	31%	The underspending is mainly attributed to slow spending by the Department due to a decrease in the travel and accommodation spending.
Tourism Research, Policy and International Relations	499 118	383 091	77%	116 027	23%	The underspending is mainly attributed to slow spending by the Department due to a decrease in domestic and international travel and accommodation spending.
Destination Development	465 894	112 042	24%	353 852	76%	The underspending is mainly attributed to slow spending within the Expanded Public Works Programme (EPWP) due to the finalization of an agreement between the department and DBSA to project manage infrastructure projects.
Tourism Sector Support Services	162 204	99 673	61%	62 531	39%	The underspending is mainly attributed to slow spending by the Department on marketing assistance which relate to travel and accommodation expenditure which could not take place due the COVID-19 pandemic.
Total	1 426 860	800 546	56%	626 314	44%

Source: Department of Tourism 2020/21 Third Quarter Report

 

The Department assured the Committee that the allocated budget would be spent by the end of the financial year. 

 

1. South African Tourism

 

South African Tourism has a total of 26 Key Performance Indicators (KPIs) for the 2020/21 financial year. In the SecondQuarter, the Entity was pursuing a target of 20 KPIs, as the remaining are annual targets. It was only able to achieve 16 (80%) of the set KPIs, whilst one (5%) were partly achieved and three (15%) KPIs were not achieved. In terms of financial performance, by the end of the SecondQuarter, the Entity had spent R353 202 million (80%) of the R438 986 million budget allocated, against projected expenditure of R265 725 million (61%) for the Quarter. The Entity thus spent R87 477 million (33%) more than forecast for this period.

 

In the ThirdQuarter, the Entity had a target of 19 KPIs to achieve, as the remaining are annual targets. It was only able to achieve 13 (68%) of the set KPIs, whilst three (16%) were partly achieved and the remaining three (16%) KPIs were not achieved. In the Quarter, the Entity had  an adjusted budget with the total allocation increasing from R438 986 million to R519 612 million. By the end of the Third Quarter, the Entity had spent R496 701 million (96%) of the R519 612 million adjusted allocation, against projected expenditure of R393 150 million (76%) for the Quarter. The Entity thus spent R103 551 million (26%) more than forecast for this period. This leaves the Entity with 4% to spend in Quarter 4.

1. Overview and assessment of programme performance

 

The following information provides the summary of programme performance by South African Tourism;

 

4.1.1     Environmental analysis

 

The operational environment was not conducive to deliver on the tourism mandate in the period under review. The following circumstances prevailed to hinder effective and efficient deliver on the Entity’s mandate:

 

• South Africa went into lockdown on 26 March 2020, all tourism activities ceased operation.
• COVID-19 hit the tourism sector particularly hard, with almost no international tourists arriving on South African shores and restricted internal movement for several months.
• As a country, South Africa implemented a Risk-Adjusted Strategy. Globally, individual countries are implementing their own response regimes, which adds to the complexity of international travel, given different rules for different countries.
• Whilst South African borders are open to accept visitors, international travel has been throttled by border closures in many of our main international source markets.
• The world of travel is exceptionally fluid as a result of the COVID-19 environment.
• The needs and wants of travellers are also constantly evolving as they obtain new information, thus keeping up with consumer behaviour is paramount.
• Despite the many challenges, the impact of the second wave, and threats of a third wave, there are seeing signs of recovery in the sector.
• As restrictions have eased and consumers have displayed higher economic confidence, tourism is on the up with a large majority of travel being attributed to domestic travel and spend.

 

Since the lockdown on 26 March 2020, international arrivals were reduced to minimal levels. Since moving from Level 5 to Level 1, there has been slow recovery in passenger arrivals. The percentage change in international arrivals by region in 2020 compared to the same month in 2019 showed a noticeable uptick in October 2020 for arrivals from African countries other than SADC, with very slow recovery in passenger arrivals up to September 2020.

Despite the many challenges and the impact of the second waves across the globe, the countrt is seeing signs of recovery in domestic tourism. Percentage change in arrivals and departures through OR Tambo and Cape Town International Airport in 2020 compared to the same month in 2019 demonstrates recovery in domestic travel. Domestic air passenger movement was only 55 percent , 65 percent lower than in November 2019.

 

4.1.2     The Road to Recovery

 

The recovery of the sector is driven by the Market Investment Framework as follows:

 

• Considering that tourism is a number one service export and meaningfully contributes to South Africa’s balance of payments, it is a major anchor in the county’s economic recovery.
• Thus, one of the key selection criteria for international markets is identifying economies that are stronger than South Africa’s which can contribute to the country’s growth.
• In mid-2020 an in-depth analysis was undertaken to determine priorities for marketing investment in the next 3-5 years
• This prioritisation uses 33 variables related to performance and outlook, South Africa’s ability to win in the market and return on past investments amongst other criteria.
• In total 24 markets / countries were identified and segmented into 16 growth markets and 8 defend markets.

 

Priority source markets were identified to grow tourism into South Africa over the next five years. However, the onset of the pandemic decimated the ability of many of these source markets to travel to South Africa. South African Tourism must now react, refocus and rebuild to dynamically target regions that will boost the county’s tourism sector in the immediate term.

The Outlook for 2021, according to the United Nations World Tourism Organisation (UNWTO) panel of experts predict global recovery will begin towards the ThirdQuarter of 2021. About 20 percent of experts expect recovery to only pick up in 2022; and the refocus sights will be on regional and domestic markets. Some of the barriers identified as: travel restrictions; slow vaccine response times; and low consumer confidence. The recovery depends on: pandemic trajectory; travel restrictions; and vaccine development.

 

4.1.3     Programme performance

 

The programme performance for the Entity was as follows:

 

4.1.3.1  Programme 1: Corporate Support

The Entity achieved four of the seven targets set for this programme. Thus, whilst the Entity overspent its projected budget for the Quarter, it only managed to achieve just more than half (57%) of its set targets.

 

The targets not achieved in this programme relate to:

• Delays in finalising corrective actions on internal audit recommendations. The Entity reported that these were only concluded in January 2021.
• Quarterly target on 50 percent automation of the supply chain management, legal and internal audit business processes. Delays were experienced with the contracting of a service provider.

 

The Entity reported that it was able to pay its suppliers within the 30-day turnaround time, which is welcomed, as a number of government institutions continue to struggle with this outcome. The Entity was also able to achieve its Quarterly target on the Workplace Skills Plan. The Entity reported that it has appointed 23 youth in its internship programme, exceeding its 2 percent Quarterly target; and was able to meet its equity targets on female representation at management level. However, the target on the recruitment of people with disabilities was not met. The Entity ascribed this to reluctance of people to disclose their disabilities. The Entity reported that it will be embarking on various initiatives, such as a targeted learnership programme, to improve the set target. This is a commendable feat that will, with time, see increased representation in this workspace.

 

 

4.1.3.2  Programme 2: Business Enablement

 

The Entity achieved all of its targets set for the Third Quarter under this programme. The Entity exceeded its target on the number of quarterly stakeholder meetings hosted. Additional meetings were held with stakeholders to discuss the impact of COVID-19 and the recovery of the sector. Another target achieved is the publishing of market insight reports, which are available on the Entity’s website. The quarterly target on the market access programme was achieved with amendments.

 

4.1.3.3  Programme 3: Leisure Tourism Marketing

 

This is the programme most affected by the COVID-19 pandemic, as it gives effect to the core mandate of the Entity. The Entity achieved only two of the four targets set for the Quarter, whilst overspending its budget allocation for the year by the end of the ThirdQuarter. The Entity reported that the overspending is as a result of forward contracting with service providers.

The Entity achieved its target on confirming partnership agreements for the development of user-generated brand content. This indicator focuses on developing partnership agreements with relevant parties to expand the tourism brand appeal and support conversion to arrivals for the recovery of the sector.

 

The Entity is in the process of repositioning its brand for Africa’s Travel Indaba, Meetings Africa and the Welcome Campaign. The target was not achieved for both Quarters. However, the Entity reported that the outcome for Quarter three is awaiting approval.

 

The Entity reported that the target on the user-generated content platform, in partnership with Google, was not implemented in the Third Quarter as planned. The partnership entails using Google to host South African Tourism’s marketing content. The platform is scheduled to go live in the Fourth Quarter. The finalisation of the Second Quarter target on redesigning global and domestic websites will only will only occur in the Fourth Quarter.

 

4.1.3.4  Programme 4: Tourism Business Events

 

The purpose of this programme is to market South Africa as a business events destination. The sub-programmes include South African National Convention Bureau (SANCB) and Strategic events and exhibitions. The activities of this programme have been greatly affected by COVID-19.

The Entity achieved one of the two targets set for the Third Quarter under this programme. In the ThirdQuarter, the Entity reported that it was able to convert ten, less than the 15 targeted, leads into event bid submissions. Outstanding information from clients to process the bids resulted in the unmet target. The Entity was able to generate 100, more than the planned 95, leads during ThirdQuarter. This is as a result of engagement opportunities obtained during the virtual IBTM World Trade Exhibition the sales team attended in November 2020. The leads basically refer to the number of contacts, individuals, associations or organisers that SANCB has made that have an interest in having international and regional business events in the country.

 

4.1.3.5  Programme 5: Visitor Experience

 

The purpose of this programme is to deliver a quality experience expected by international and domestic tourists throughgrading establishments, product capacity building, and itinerary building. The Entity achieved the one target set for the Third Quarter. The target entailed the implementation of the Basic Quality Verification project, which seeks to recognise new entrants in the sector who are not able to be graded at the outset. The Entity reported that five verification officers were placed in four municipalities. The success of the target is attributed to effective engagements with the Eastern Cape Parks and Tourism Agency and various local municipalities in the province.

 

4.2        Financial Performance

 

The budget expenditure of the Entity at the end of the Third Quarter is depicted in Table 3.

 

Table 3: Expenditure review per Programme

Programme	Budget (R’000)	Expenditure Forecast by 31 December 2020 (R’000)	Actual Expenditure (R’000)	Actual Expenditure (R’000)	% of expenditure versus forecasted expenditure to date	Reasons for variance
Corporate support	126 722	97 960	109 291	86%	112%	The nature of services and legal agreement between South African Tourism is such that upfront payments are required for these goods and services. Actual expenditure also takes into account non-cash transactions related to depreciation andamortisation of non-current assets.
Business Enablement	41 275	28 603	33 999	82%	119%	Forward contracting, predominantly for Marketing Investment Framework project.
Leisure Tourism Marketing	283 032	219 113	305 232	108%	139%	The nature of services and legal agreement between South African Tourism is such that upfront payments are required for these goods and services. Actual expenditure also takes into account non-cash transactions related to unrealised foreign exchange losses, depreciation and amortisation of
Business Events	36 897	24 450	24 836	67%	102%	Actual expenditure relates to bid support transactions.
Visitor experiences	31 686	23 025	23 342	74%	101%
Total	519 612	333 150	143 365	96%	126%

Source: South African Tourism Third Quarter, 2020/21

 

The Entity had to revise its priorities and projections because of the COVID-19 crisis. During the period of travel restrictions, the Entity drastically reduced the ration of its marketing expenditure with more focus towards general operating expenditureThe annual budget for 2020/21 was adjusted downwards from R1 560.6 billion to R438 986 million.

The Entity reported that this amount was adjusted further, increasing the budget from R438 986 million to R519 612 million. This adjustment took into account the impact of grading revenue, which increased during the Quarter, and maintenance of commitments with service providers.  Budget allocations were increased for all programmes, except Programme 5. The allocation for Programme 5 was decreased from R44 061 million to R31 686 million.

By the end of the Third Quarter, the Entity had spent R496 701 million (96%) of its annual budget of R519 612 million, against projected expenditure of R393 150 million (76%). The Entity attributed the overspending to upfront payments made to contractors.The Entity made a commitment to the Department that they would have spent all the allocated budget by the end of the 2020/21 financial year.

 

1. Committee observations

 

After an in-depth consideration of the SecondQuarter and the ThirdQuarter financial and non-financial performance of the Department and South African Tourism, and the judicious scrutiny of the operational environment, the Committee has made the following observations:

 

5.1        Financial and non-financial performance during the period under review

 

The Committee acknowledges the difficulty under which the Department of Tourism and South African Tourism had to implement their programmes. In view of the COVID-19 crisis, the Department and South African Tourism had to revise their programmes and reprioritise their activities and projections. The Committee is satisfied that in the SecondQuarter the Department of Tourism achieved 55 (82.09%) of the 67 targets identified for the Quarter and spent R550 million (37.1%) of the R1 481.0 billion adjusted budget. Similarly, the Committee is pleased with the achievement of 52 (77.61%) of the 67 targets identified for the ThirdQuarter and the expenditure of R800.5 million (56.1%) of the R1 426.8 billion adjusted budget by the end of the ThirdQuarter.

With regard to South African Tourism the Committee accept the achievement of 80 percent of the predetermined objectives in the SecondQuarter with an expenditure of R353 202 million (80%) of the R438 986 million budget allocated, against projected expenditure of R265 725 million (61%) for the Quarter.  The Committee also welcomes the 68 percent of the performance against the predetermined objectives with an expenditure of R496 701 million (96%) of the R519 612 million adjusted allocation, against projected expenditure of R393 150 million (76%) for the Quarter.

 

5.2        Concerns about recurring causes for non-performance

 

As alluded, the Committee accepts the SecondQuarter and the ThirdQuarter financial and non-financial performance of the Department of Tourism, albeit the sentiments that better results could have been realised under the prevailing operational environment. In addition to the impact of Covid-19, the Department continued with the trend and pattern of underperformance due to the reasons previously observed and addressed by the Committee. Some of the reasons of non-performance are:

 

1. Poor planning for projects implemented with third parties– for example:

• The targets for both the Second and ThirdQuarter on the Technology Innovation Incubator were not met.
• The enterprise diagnostic needs assessment was not developed. The non-achievement was caused by a delay in negotiations with the Technology Innovation Agency (TIA).
• The target on the Women in Tourism (WiT) Enterprise Development Programme was not achieved in any of the three Quarters. The programme was not launched due to delays in planning and the fact that beneficiaries were not identified
• This points to poor planning on projects implemented with Third parties

 

1. Delays in appointing service providers – for example:

• The concept document for the development of the National Tourism Analytics System Framework was not developed due delays in appointing a service provider.
  • The process of developing the White paper did not commence due to the delays in the appointment of the service provider.
  • The target on the development of the Tour Operator Incubator was not met due to delays in the appointment of the service provider.
  • The targets for both the Second and ThirdQuarter on the New Venture Creation Programme for Youth were not met
  • These targets, and many others, were not met due to delays in appointing service providers which is a matter that has been repeatedly raised with the Department.

 

1. Procurement challenges

 

The procurement challenges persisted, for example, the Rail Tourism survey report was not completed due to delays in procurement.

These are but a few examples of the continued trends that lead to underperformance. The Committee urges the Department to put measures in place to improving on all areas that lead to poor performance.

 

5.3        Governance

 

The Committee is contented with the current governance and general administration of both the Department of Tourism and South African Tourism. With regard to the Department, the Committee noted with appreciation the speed with which the post of the Deputy-Director General responsible for Programme Four: sector Support Services was filled. In that regard, the Committee congratulates Advocate Mmaditonki Setwaba for her appointment and this is deemed as continuity as she previously occupied the post of Chief Director: Legal services within the Department of Tourism. In regard to South African Tourism, the Committee has noted with satisfaction the invitation issued by the Minister of Tourism, in terms of section 13 (3) (a) of the Tourism Act, 2014, for the nominations of suitable candidates to be considered for appointment to serve as members of the South African Tourism Board for a three-year term effective from 01 June 2021 until 31 May 2024. The Committee would like to thank the outgoing Board as they have steered SA Tourism under the challenging times. The Committee has also noted the advertisement for the position of the Chief Executive Officer at South African Tourism. The Committee would also like to thank Mr Sisa Ntshona for his dedication in the public service as he steered and coordinated the tourism sector during his difficult tenure. The Committee noted and appreciates his innovation in bringing the private sector closer to government as he was innovative in spearheading webinars and other communication platforms.

 

1. Advancing transformation of the tourism sector

 

The Committee noted with contentment the introduction of the R1.2 billion Tourism Equity Fund (TEF) in the period under review. The objective of the TEF is toaccelerate the quantitative and qualitative increase in participation by black tourism industrialists in the tourism sector as reflected by their contribution to growth, investment, and employment creation. As noted, this emphasises the focus on scale in the levels of participation of black people in the sector.In addition, the TEF seeks to increase black controlling ownership equity in the sector; stimulate investment in rural, township and small towns tourism assets; and empower women, youth and people with disability. The Committee is of the view that, if effectively and efficiently implemented, the TEF will go a long way in addressing the transformation of the tourism sector in South Africa.

 

5.5        Impact of COVID-19 on the tourism sector

 

The Committee observed with concern the continued negative impact of the COVID-19 pandemic to the tourism sector during the period under review. When the country was put under lockdown on 26th March 2020, the tourism sector literally came to a grinding halt.  As the international birders were closed, the tourism sector was the worst affected economic sector as there were no flights allowed to come to south Africa. This meant that no international tourists arrived in the country. There was also a prolonged restriction of internal movement, which put domestic tourism on its knees.  The impact of these restrictions on movement and trade led to a staggering number of tourism businesses closing down, jobs being jeopardised and the entire tourism economy under demise.

 

5.6        The Risk-Adjusted Strategy

 

When the enduring impact of COVID-19 was perceived, the Committee was quick to advise the Minister of Tourism and the Board of South African Tourism to develop a Tourism Recovery Plan. The Committee applauds the Minister, the Board of South African Tourism and the leadership of the Tourism Business Council of South Africa on a rapid response in developing such a recovery strategy. The Committee also applauds the government for implementing a risk-adjusted strategy that has ensured that the economy is revived whilst taking due regard of saving lives and livelihoods. The Committee also notes that various countries in the world have implemented their respective strategies in response to international travel. The Committee is, however, concerned that this varied international approach to global lockdowns, with their peculiar country specific restrictions have caused uncertainty in the global market. The Committee is also concerned about the sporadic announcements of national lockdowns in South Africa, which has created much uncertainty in the sector. The Committee is of the view that given the necessity to implement the lockdown restrictions from time to time, the government may improve communication in this regard and provide more information to the sector. This will enable long term planning and bring back confidence in destination South Africa.

 

5.7        Emergence of new tourism trends

 

The Committee acknowledges that there will be no tourism business as usual after COVID-19. In essence, there may be no after COVID-1 period at all. The observed global patterns depict an emergence of new travel patterns and the Committee is of the view that these may become permanent features. As these emerging travel patterns are becoming permanent, it is prudent for the country to start planning for this permanent scenario. Some of these new travel trends include compulsory sanitising at the airports; compulsory wearing of Personal Protective Equipment on the planes, decline of group travel and increase of individual or small group travel; avoiding crowded destinations and tourist attractions or facilities; introduction of hybrid meetings in the MICE sector, with virtual and physical components and an increase in demand for virtual tours. This calls for the Department and South African Tourism to be futuristic in their planning and work with the industry to start factoring these emerging tourism trends in product development, marketing and tour packages.  These emerging trends also have huge implications for the Airports Company of South Africa in terms of ensuring that South African airports are on par or surpass the world standards in providing the new facilities and services as dictated by the new travel trends requirements. The new travel trends may also have huge implications for the accommodation sector, particularly hotels. Hotels may need to redesign spaces to cater for social distancing and improved privacy. The Department and South African Tourism should study these new global trends and advise the private sector on the best practices. Studies should be conducted to understand the emerging consumer behaviour and how this is going to influence future global travel.

 

5.8        Roll-out of vaccinations to tourism frontline workers

 

The Committee acknowledges the three-phased roll-out plan for COVID-19 vaccinations. It is common knowledge, as announced by the Minister of Health together with the National Coronavirus Command Council (NCCC), that the first phase will take the frontline staff, doctors, nurses and health workers; the second phase will consider senior citizens and those with comorbidities; and the third phase will consider all citizens. The Committee is of the view that the tourism industry also has workers who can be classified as frontline staff. These include workers such as tour guides, front desk staff at hotels and others such as those working at tourist attractions and information centres. The Committee encourages the government to consider prioritising these workers in the phased vaccine roll-out.

5.9        Need to mitigate against brand damage

 

The Committee has observed the negative publicity about South Africa as a result of the discovery of the new COVID-19 variant known as 501Y.v2 in the country. The discovery of this variant has created negative publicity for South Africa in the tourism markets as the global media houses have dubbed this variant as a South African variant. This has added to the negative perceptions the country endured before the onset of the pandemic. As the Committee contends that the new variant has been erroneously referred to as a South African Variant despite other countries having the save strain of the virus. As reported, this negative message has caused may foreign government to issue travel advisories against South Africa and some closed their borders to travellers from South Africa. Consequently, South Africa has lost out on inbound bookings for the shalf of 2021 as there have been increased cancelations. This calls for South African Tourism to conduct a robust global PR exercise to counteract this misdirected messaging. The Committee also calls for a whole government approach in streamlining communication between the scientists and government to the international audience.

 

5.10      Activating domestic tourism

 

The Committee has noted and agreement at a global level that the recovery of the tourism sector will be driven by domestic tourism. In South Africa, the domestic tourism was affected by the lockdown restrictions placed on travelling and gatherings. The second lockdown was more devastating as restrictions and the ban on the sale and on-site consumption of alcohol, visiting of beaches, rivers and dams, and the early 9pm curfew happened during the busiest time of the festive season of 2020. This is the peak season of the domestic tourism season in South Africa. Now that the country has been put on Level 1 with relaxed restrictions, the Committee should request SA Tourism to outline the actions that will embark to activate and reignite domestic tourism. The Committee calls for government to prioritise domestic tourism. The private sector, through the auspices of the Tourism Business Council of South Africa, should be lobbied to reimagine domestic tourism. To this effect, the private sector should adapt to domestic tourism the facilities that were previously synonymous to an exclusive preserve for the international market.

The Committee commends the Minister for her efforts as she has started some campaigns in reactivating domestic tourism. South African Tourism should reinforce the Minister’s efforts by working with the Tourism Business Council of South Africa to provide and promote more affordable domestic holiday packages.

 

5.11      Initiatives to reopen business tourism

 

The Committee has noted the development of a number of technology based solutions aimed at rapid testing for COVID-19 to provide health passports to various scenarios. Of note, is the Health Passport World testing and vaccination technology available in South Africa. The Committee has noted that this secure system combines testing and vaccinations with the latest digital technology to provide an efficient Health Passport system. Through this system, people have immediate access to their personal COVID-19 status, which can bedigitally scanned for integration with existing travel, health and event systems. The Committee also noted that the system is built to work with all official COVID-19 vaccinations and test types. As such, the system quickly integrates with public health systems, venues, airports, test centres and event ticketing. The Committee urges the Minister to closely scrutinise this solution, together with other similar innovations, to expedite the process of immediately helping to reopen business tourism and engage her counterparts to explore this system for allowing attendance of sporting events by spectators at stadiums.

 

6.         Recommendations

 

Having made a number of observations on the financial and non-financial performance of the Department and South African Tourism, and having assessed the prevailing operational environment, the Committee recommends that the Minister of Tourism:

 

6.1        Encourages the Department of Tourism and South African Tourism to improve on their planning, particularly on projects implemented with the third parties.

6.2        Impresses on the Department to improve on planning, internal monitoring and evaluation, internal audit, eliminating delays in the appointment of service providers, overall project management, improve on supply chain and procurement of service providers to track deviations from project time frames thus avoiding delays in the implementation of planned projects.

6.3        Ensures the effective and efficient implementation of the Tourism Sector Recovery Plan to ensure that the sector is reignited and rejuvenated.

6.4        Engages the Cabinet counterparts to ensure a coordinated communication of government policy decisions in relation to the country’s future response to COVID-19 as it relates to the Risk-Adjusted Strategy.

6.5        Instructs the Department to conduct a trend analysis study to understand the emerging tourism trends and consumer behaviour as influenced by the impact of COVID-19 in order to inform future plans and for South Africa to be abreast of global trends.

6.6        Engages the Minister of Health and the National Coronavirus Command Council (NCCC) to prioritise the tourism frontline workers in the second phase of the roll out of the COVID-19 vaccinations.

6.7        Advises the Board of South African Tourism to develop an international public relations campaign to mitigate the negative message about the South African variant of COVID-19.

6.8        Advises the Board of South African Tourism to develop a revised domestic tourism strategy that ensures the development and activation of domestic travel in order to encourage South Africans to travel within their own country thus expediting the recovery of the sector.

6.9        Engages the Tourism Business Council of South Africa to adapt to the domestic market the tourism products previously used to cater for the international market.

6.10      Ensures an effective and efficient implementation of the Tourism Equity Fund.

6.11      Engages the government and the National Coronavirus Command Council (NCCC) to explore the possibility of opening Meetings, Incentives, Conferences and Exhibitions (MICE) sector of business tourism; attendance of sporting eventsand social gatherings through employing the innovative technologies such as the secure system developed by Health Passport Worldwide that combines testing and vaccinations for efficient health passport for mass gatherings.

 

1. Conclusion

 

The Committee accepts the SecondQuarter  and ThirdQuarter financial and non-financial performance of the Department and South African Tourism. The Committee also acknowledges that the COVID-19 infested operational environment impacted negatively on the performance in the period under review. The tourism industry is one of the least funded sectors and the most affected by COVID-19. The economic impact of tourism has been acknowledged by the government, yet the sector remains underfunded. The impact of the pandemic has worsened the situation as total of R1 billion was taken from the appropriated budget in the period under review to fund the infinitives to save lives and livelihoods from the pandemic.

The Committee urges the Minister of Tourism to seriously advocate for facilitating the recovery of the tourism sector. The Minister is urged to continuously engage the Cabinet to adopt a whole government approach towards the recovery of the sector. The Minister is also urge to facilitate the adoption of the Tourism Recovery Plan and funding thereof to ensure that the tourism development and marketing initiatives are funded to expedite the recovery of the sector.

It is a matter of common course that the recovery of the sector will depend on domestic tourism. The Committee commends the Minister for her attempts to activate domestic tourism. However, more needs to be done in terms of planning and tailor-made packages to reignite and promote domestic tourism. The Committee will continue to pay close scrutiny on the interventions implemented by the Department and the Board of South African Tourism to stimulate domestic tourism.

 

Report to be considered.