Tourism sector: Department of Tourism briefing

Meeting report

The Acting Chairperson, Mr A Cele, said the reason for inviting the Department of Tourism (NDT) was because tourism was one of the key job drivers in the New Growth Path (NGP) and as a Committee it was felt that it was important to exercise oversight on all aspects of the NGP and tourism was one of the focus areas in the year and the Committee was also planning to undertake oversight visits. The information that the Committee would be getting, would be beneficial. Mr Cele then handed over to the chairperson of the Tourism Committee.

The Chairperson of the Portfolio Committee on Tourism, Ms L Makhubela-Mashele, said the Portfolio Committee on Economic Development decided to invite the NDT since they were focusing on Tourism for the year and even made a request that joint oversight visits be done by both committees. The EDD also deals with issues of competition so it was ideal because the DT has been struggling with compliance with the BBBEE code. Small businesses are struggling to find a footing in the tourism sector because of unfair competition so it was ideal that the two departments and committees should work together.

Presentation
The DDG for Tourism Research, Policy and International Relations, Ms Aneme Malan, said the letter that Minister Derek Hanekom received from the Portfolio Committee on Economic Development highlighted a number of issues including the sector’s performance, the sector strategy, the transformation aspect, SMEs, as well as the incentives. The presentation that DT would be giving would focus on those areas, but the department thought it was also important to highlight what the department is doing in addition to those areas.

Key Strategies

Policy

• Levelling the playing field through creating an enabling policy environment- reviewing of the Tourism Act and publishing the Act
• Extracting data that allows for targeted interventions that will contribute towards informed policy and regulatory instruments to support radical economic transformation.
• Strengthening M&E mechanisms to monitor progress, measure the effect and impact of programmes on individuals, communities, enterprises, society and the economy

People

• Enterprise Development and Transformation with the 30 percent women representation campaign
• Training of tour operators to stimulate domestic consumption demand
• Enterprise Development Incubator Programme focused on townships, villages and rural nodes
• HRD – expanding EPWP Skills Development Programme and also initiating the Recognition of Prior Learning (RPL) Programme
• Establishment of a Tourism Transformation Fund
• Tourism incentive Programme

Places

• Destination planning with a spatial planning focus on townships tourism, rural nodes and the oceans economy
• Investment facilitation, utilisation of state owned assets to leverage transformation
• Destination enhancement initiatives
• Implementation of the Working for Tourism Expanded Public Works Programme

Performance
South Africa’s 2015 ranking was highly competitive, with the country leaping from 64th place in 2013 to 48th place in 2015. Unfortunately, the 2017 ranking indicated that South Africa’s competitiveness decreased, placing it in 53rd position. The rankings are determined by 14 pillars which include business environment; safety and security; health and hygiene; human resources; ICT readiness; prioritisation of travel and tourism; and international openness.

Economic Impact

• Tourism contributes 2.9 percent to GDP
• One in twenty-three people in the economy are employed by the tourism sector which is 4.4 percent or 686, 596 employees. More people work in tourism than in mining.
• Most of the jobs in tourism are in transport, food and beverages and accommodation.
• R265.8 billion was the total tourism expenditure with 54 percent being domestic visitors and 46 percent being international visitors

International Arrivals

• 437, 903 arrived from North America
• 107, 582 from Central and South America
• 1, 660, 848 from Europe
• 55, 906 from the Middle-East
• 317, 181 from Asia
• 133, 713 from Australasia
• 7, 559, 342 from Africa

Enterprise Development Programme
The small business sector plays a critical growth role in the South African economy yet it continues to face serious impediments to growth. The Department aims at:

• Reducing SMME failure – globally estimated at over 70 percent within 100 days
• Increasing access to new markets
• Enhancing local economic growth and development – multiplier effect; GDP contribution
• Maintenance of existing jobs and creation of new ones
• Entrepreneur capacity development – facilitation of business skills through training, coaching and mentorship
• Improved service excellence quality in order to improve competitiveness
• Where desirable and possible – graduation into medium to large enterprise

Opportunities

• Qualifying Small Enterprises (QSE) and Large Enterprises (Les) are now more than willing to provide inhouse skills and enterprise mentorship programmes with the support from government
• Accessibility to training facilities and programmes
• NDT and the Department of Higher Education through UMALUSI has reviewed the curriculum related to tourism and hospitality subjects in order to respond to industry needs.
• Partnerships between the government and the private sector need to be strengthened
• Concession opportunities need to be opened for new entrants
• Establishment and promotion of business linkages for previously disadvantaged people to have shared opportunities within the tourism value chain

 South Africa Tourism

General Overview
The SAT is an entity of the National Department of Tourism. It is what is known as a Destination Marketing Organisation (DMO). The function of SAT is to essentially get people to travel to South Africa around the world and to get South Africans to travel within South Africa.

There are 1.3 billion movements across the world at the moment and South Africa has less than 1 percent market share of that. The SAT wants to increase that figure. The continent of Africa as a whole has a 5 percent market share. Continentally, South Africa is third behind Morocco and Egypt. South Africa currently has 10.3 million visitors every year with 74 percent of the arrivals coming from the continent. The country has three big markets, namely, Zimbabwe, Mozambique and Lesotho, with these three countries accounting for 50 percent of the arrivals. These three countries are more than Europe, America, Asia and Australia combined. Outside of the continent the three biggest sources of arrivals are the United Kingdom, the United States and Germany. The world at the moment is leaning on China as it is the world’s largest source market. Unfortunately, South Africa is going the opposite way. Arrivals from China have declined by 17 percent and while everyone else is gaining from China, South Africa is losing out. The first reason is the barriers to entry. The more the country places obstacles, the less attractive it becomes. Tourists tend to go to places with the least resistance. The visa regime is a source of concern especially for a country with 1.2 billion. Processing visas becomes an issue. The second reason is the unabridged certificates and the administration required to process them. The most important issue is ease of access. Safety and security is also important. When an incident happens to a tourist, it does not make big news in the tourism destination, but it makes big news in the source market.

Goals of SAT
SAT has ten offices around the world with different jurisdictions, time zones and currencies. Those offices are tasked with driving trade and trade is travel agencies. The tourists have a choice and SAT does not sell South Africa as a destination but relies on the travel agencies and influences the market. SAT formulated a five-year plan outlining the goals of the DMO. SAT wants to achieve four million more international arrivals in five years’ time, as well as one million domestic holidays in five years’ time. That translates into a forty percent improvement, but it is achievable. SAT hopes to increase the geographic spread for tourism to ensure that all nine provinces take an active part in promoting tourism.

The challenge the country has is that there are only three places that are renowned for tourism globally, namely, the beach, the bush and the berg. The first place that tourists expect to go is Cape Town, then Kruger and then they leave. Everything else is silent. The aim is to reveal the whole country including cultural tourism, heritage tourism, township tourism and all the things the country has to offer. However, the supply and demand have to be balanced. The SAT drives the demand, but the supply has to be provided by other stakeholders. As the number of arrivals increases by the extra four million, the hospitality industry has to provide accommodation.

Tourism is spread into three key areas. The first one is leisure tourism where people travel primarily to enjoy the country’s sights and culture. Secondly, there is business tourism which involves exhibitions, conferences and meetings. This is where infrastructure like International Convention Centres come in with Cape Town, Durban and Johannesburg being the big ones. There is also a need to spread the locations of conferences so that the other smaller ICCs also get some business. There are also challenges regarding spreading the impact of tourism with connectivity being one of them. When SA Express flights get suspended, it causes disruption. It is an ecosystem that is so aligned. The beauty of tourism is that it touches on the entire economy of the country. Tourism contributes to every sector of the economy including financial services because hard currency is used, as well as construction.

Challenges
In tourism, there are very few big players like Sun International, but there are a lot of other smaller operators. The difficulty is that while a splendid job of marketing South Africa may be done, the actual delivery of the service, pricing and experience is done by the private sector where SAT has no control. Over time, South Africa has come to be seen as an expensive destination. Over the last three years, there have been price increases of up to forty percent. Inflation is between 6 and 7 percent and annual adjustments are made. In Europe, inflation is normally 0.5 percent so they are not used to five percent increases. The second thing is the currency; when it weakens it becomes cheaper to visit South Africa and when it strengthens it becomes more expensive. It is not good to market South Africa as a cheap destination because once that is done the country will become a commodity. South Africa should be seen as a value for money destination.

Domestic Tourism
Domestic tourism is also important. Generally, the ratio of international tourists to local tourist is one to seven. South Africa is the other way around, where there is a one to two ratio. There are local lodges and establishments that prioritise international visitors because they can charge more. During the off-peak season they would rather do maintenance than charge less to local tourists. Efforts are being made to ensure that establishments charge domestic prices that are affordable for domestic tourists. The top three domestic provinces are Limpopo, Gauteng and KZN. Western Cape is more international as opposed to domestic. Some threats have come through recently such as the water crisis caused by the drought. Even though the drought is limited to the Western Cape, the world looks at South Africa through the lens of Cape Town.

Africa is judged on totally different standards. When someone goes to OR Tambo and stands in an immigration queue for one hour they start screaming about how behind the country is and yet they can stand in a queue at Heathrow or JFK for three hours. When there is listeriosis breakout it affects tourism. 2015 was rough because of the Ebola outbreak in West Africa and the whole of Africa got affected. The fuel increase has also had a negative effect because tourism is about mobility. On the geographic spread side, SAT wants new entrants into the sector. They should not come in to offer more of the same but to offer different experiences that add to the basket of activities that the country has to showcase. Regarding seasonality, SAT wants to ensure that tourism happens throughout the year so that jobs can be safeguarded and consistent. It is hoped that countries like India whose monsoon season happens during the off-peak season in South Africa can be attracted to come.

Discussion
Ms Makhubela-Mashele thanked both the NDT and SAT for their presentations and she invited the members to begin the discussion.

Mr P Atkinson (DA) asked how the Fourth Industrial Revolution was being harnessed by the Department to provide a product in a more modern or digital way and how it was going to affect things like travellers’ cars, like Uber. He asked what thought had been put into tourism to support the industrial revolution.
He asked what measures had been put in place to enhance conferencing in the country as it could raise a lot of revenue.
On the report that tourist numbers declined in 2015 due to the outbreak of Ebola in West Africa, he asked whether there were other reasons that contributed to this.

Mr I Pikinini (ANC) said a lot that was happening concerning tourism but one of the problems was that there was little sharing of information. He cited the Hole in the Wall in the Eastern Cape which was very popular, but there was need to ensure that locals benefited perhaps through SMEs and accommodation. There was bad road infrastructure and the road marking was poor, so it was easy to get lost, so it was difficult to access tourism sites.

There was a tourist programme in the Eastern Cape which was initiated by the former premier Balindlela and in Grahamstown there is the Grahamstown festival where the idea was to open the doors to people’s homes to tourists and it was promoted very well but was no longer there. There are a lot of donkeys in the area, so they were used by the that tourist programme by the Eastern Cape government. There was a need to find togetherness at all spheres of government and maintain all the viable tourism opportunities. He was raising this particular point because a road was even constructed to promote this festival. Government did not want a situation where someone needs to have connections in order to be helped. All the citizens must benefit equally, and government was following the Madiba style.

On information sharing, Mr Pikinini said there were a lot of graduates without jobs and it was important to share information so that they could get access to opportunities in the tourism sector.

Ms C Matsimbi (ANC) said the presentation was informative. She said gender and racial representation was a source of concern in the sector. The number of Indians was very low, and she wondered why they were not being recruited to join the sector. Many capacity building workshops especially for women had been conducted but the number of women owning tourism businesses like B&Bs was still low and she asked why. Women were in tourism from the time that they were raised as they are the ones who make houses homely. She wondered whether it was not possible to have a deliberate programme to empower women to own tourism businesses.

On the challenges facing transformation, the report stated that there was inadequate awareness and opportunities available in the sector and she confessed that she too was not aware of the information that had just been presented. There was a need for career guidance in schools so that young boys and girls know the opportunities that are there in tourism. The sector was dominated by the older generation who rely on experience rather than education. She asked what the Department was going to do to bridge the gap. Some of the graduates without employment graduated 10 years ago and the education they have does not respond to market needs. She asked whether it was not possible to absorb them and help update their education to the current market needs. The issue of low wages in the sector needed to be addressed.

Ms A Mfulo (ANC) made reference to the tour guides who are made to learn foreign languages like French but are not able to speak local languages for the benefit of the local tourists. There is a need for universal accessibility to allow people with disabilities to access tourism sites and facilities. Hotels that were only catering to foreign tourists and only opened during the peak tourism periods needed to be sanctioned because local tourists needed to have access to them too. She asked whether there was a plan to domesticate tourism to encourage locals.
On learnerships or internship, there must be monitoring to ensure that that there is no abuse because employment is not being offered but young people are being used as cheap labour through learnership programmes.

Mr Cele said the presentation was informative and suggested to the Chairperson of the Committee that the Department be invited again. He, however, was worried that the CEO of SAT, Mr Sisa Ntshona, did not submit his presentation to the Committee because what he was saying was very important and he requested him to do a summary and submit it through the Chair of the Committee. The report indicated that domestic tourism declined by 29 percent and he asked what the Department was doing to boost domestic tourism. On the constraints in the tourism sector, he asked what was being done to assist previously disadvantaged people to benefit from tourism. There were very few people involved in tourism.

Ms Makhubela-Mashele said she just had a comment that what had been presented by the Department and its entity SAT falls on the issue of the non-awareness about the Department and the entity down to the local level, constituency level. If one were to take a random sample at a taxi rank, for example, and ask people if they know about the NDT or SAT, very few of them would know. It was a major challenge because Members of Parliament operate at constituency level. When the CEO of SAT presented the fourth quarter report the previous week, he stated that SAT had started branding even on cars because a picture says a thousand words. A strategy should be formulated on how the Department can engage with ordinary people in the localities to increase awareness of the operations and programmes of the NDT. There is a need for the entity to be more visible.

Mr Ntshona thanked the Members for their questions. On the Fourth Industrial Revolution, they saw it as an opportunity in two ways. Firstly, while most people are worried that their jobs will be automated by robots, tourism was a natural mitigator to that as it was a contact sport. It dealt with emotions and feelings. The opportunity comes in how you use technology as an enabler but also to share information. All people even at constituency level have phones and the question was how to become visible on these on a regular basis. One of the projects that SAT is working on is a tool that allows SAT to do a few things. It will give a calendar of events happening in the country and it will be possible to search by location. It will also allow tourists to interact with owners of B&Bs that do not have brand names and are somewhat invisible. It will also provide quality assurance for private business owners. Linked to the Fourth Industrial Revolution, major Cities in the world are dealing with what is called over-tourism where locals are rebelling against tourists because they drive up the cost of goods and services. South Africa is not there yet but it raises the question of how to spread the impact of tourism. Cape Town is an example because it is very hard to find accommodation in December, but 50 kilometres outside the city there is plenty of accommodation. Technology will be able to assist with that problem.

Artificial intelligence is another thing that will help, for example, potential tourists to pre-visit the country before actually travelling. Google could give them an opportunity to see what the Kruger looks like so that by the time they arrive they have familiarity with the surroundings. Conferencing is big and, on average, someone attending a conference spends about six times more than someone on leisure. South Africa is number one in Africa and the Middle-East regarding conferencing. There are other countries that are coming up like Rwanda which is positioning itself as a conferencing hub. South Africa is high up in terms of conferencing space. The ICC in Cape Town and Durban are being expanded so a lot more activity is beginning to happen. Those conference centres were not profitable about five to ten years ago, but they have now turned the corner.

The decline in tourism was driven by those three countries. The global average was 7 percent and the country measured itself against its own plans and secondly against the global average. If South Africa performs less than the world, then it means someone has made inroads into our market. South America experienced 59 percent year on year growth. There is a new low-cost airline that is beginning to fly between South Africa and there and it is absorbing those numbers. America experienced 7.6 percent growth and Europe experienced 8 percent. The only one South Africa has gone behind is China and India. India was up by 1.4 percent but with a population of one billion people with two offices it becomes an issue because of the visa environment. The key thing is that there have been currency issues in Zimbabwe. People could not take their money out, therefore, the travel numbers went down. When Zimbabwe coughs the entire numbers sneeze. However, the first three months of the year are starting to look brighter.

Each province has a provincial tourism agency that is dedicated to driving within the province. However, the formation differs from province to province. Only the North-West has a stand-alone Department of Tourism which has an embassy for tourism. The Free State has gambling, tourism, parks, economic and liquor license in one space. It is difficult to have a focus with such a structure. There is tourism, but it is probably superseded by agriculture even though there is such a thing as agri-tourism, so the challenge is to see how those two link up. The emphasis from province to province differs. Then there is another layer of tourism happening at local level even at municipality level such as Johannesburg tourism. It is important to have alignment. The municipalities cannot be told what to do but alignment is key. In Grahamstown there is no water, so there is no way that tourists can be encouraged to go there, hence, the need for alignment with municipalities. Tourism is everyone’s business all need to play a part.

On signs and marketing, the brown boards are issued by the local municipality so if anyone wants to open up a B&B it is the municipality that does the zoning. There is an interconnection between the local and national level, hence, the need for alignment. SAT was not just looking at airports as points of entry but also landmarks like Beitbridge. There are efforts to make points of entry welcoming to tourists because Beitbridge is quite depressing. There is competition for resources in places like Mpumalanga where mining and tourism are using the same road infrastructure leading to pot-holes and deterioration of the roads because of the heavy mining vehicles and equipment that use the roads. The challenge for the province is to decide which is a priority between tourism and mining. That is why now tourists prefer to fly to Kruger than use the damaged roads thereby depriving the locals along the roads from benefiting economically from the tourists. There also appears to be collusion because by the time a tourist arrives in South Africa, it is too late for the local players. The tourists have already been sold a package as they are on a route that was designed before they even left their countries. They are on an eight-day package, an itinerary, that is already programmed so trying to market to them when they are here is too late. There is a need to go to the source. There are Definition Marketing Companies (DMCs) which have long-standing relationships with international tourism agencies and the trade in the UK knows them very well and only uses them. Taking smaller players and force-feeding them does not work. That does not mean there are no opportunities. What is important is to identify new markets that are developing and offer new opportunities. In exchange for giving them market access, some pre-conditions could be set to help smaller businesses. In the private sector you cannot force but you can coerce. There is domestic tourism and then there are holiday trips. Most people’s primary reason for travelling is holiday trips and its portion is increasing. Domestic tourism is made up of a couple of components. One is called visiting friends and relatives (VFR). When people travel they decide to stay with friends and relatives rather than in hospitality establishments. Those that have are travelling more and those that do not have are travelling less and this is a reflection of the inequality in the country. People are also no longer going oversees as often as they did and are substituting that with local trips. The key issue now is how to grow the bigger base. The idea is to suck such people into the economy.

Only about 5 million South Africans are able to undertake holiday trips. SAT can look more on the commercial side and the Department can look more at the social side at school level to inculcate the culture of travel so that travel does not become a discretionary spend but something people want to do all the time. In Brazil, the number one destination is actually visiting slums called favelas and yet South Africa hides its townships. There is only one Vilakazi street when there should be more Vilakazi streets. Efforts are being made to promote tourism in townships, however, the stoning of two tourist buses in Khayelitsha validates the point of those who think townships are risky. The point is that when people are excluded they start to break things and this can be seen even in Kruger but when they are included they become part of the solution. There were people barricading the entrance to Kruger because they were tired of watching the tourism buses going through without participating and just being spectators. They see money, but they do not benefit from it. Tourists take photos of them but do not interact with them. Tourism has to be felt by all and, in fact, that is what tourists want. The private sector that has been doing things in one way has to be encouraged to do things in a different way that will encourage wider participation. New players also have to be introduced in the sector.

Ms Morongoe Ramphele, DDG: Domestic Tourism, said to support domestic tourism, the Department had come with a social directory which was developed two years ago in order to respond to issues of affordability. The provinces had been approached so that they could give discounts to elderly and young people. It was an initiative which was developed to assist previously disadvantaged people. The community development enterprise was designed to encourage communities to become active participants in the value chain of tourism. The Department restructured last year and established a unit called local government and provinces which gives information regarding the service delivery improvement plan to the provinces so that they appreciate the value of tourism and give support where necessary.

On learnerships that do not create jobs, it is very common because young people are seen as a way of saving. There are some success stories where young people have been employed after being trained and made an impact as in the case of a hospital that employed 20 young people who had just graduated, and they contributed to reducing food wastage by 52 percent. The tour guides are mainly dominated by elderly people and young people need to be infused in. There is a national tourism career expo which normally occurs for three years in a province and it is meant raise awareness about career opportunities in the tourism sector. The last expo was in the Free State and it will move to the North-West. The expo was designed to address concerns by tourist operators who complained that tourism graduates were not well equipped to respond to the market needs and there was also a review of the curriculum. The teachers of tourism were also lacking practical experience of the tourism industry. The Department had partnered with the Federation of Hotels to give educators exposure to the hotel business.

On gender, the majority of the people working in the industry are women and yet they fill up the lowest ranks and are lowly paid.

Ms Shamilla Chettiar, Open Developer: Gauteng Tourism Authority (GTA) said the beauty of the sector was that its work was about integration so a number of different areas are integrated and there is no sector that is not touched by tourism and therein lies the challenge of the sector. The liberation heritage route programme is driven by the Department of Arts and Culture which is the custodian of the liberation heritage route and the custodian of the story that gets told. The NDT looks at how it can develop experiences and routes aligned to the story, but the Department of Arts and Culture leads, and the NDT follows. Therefore, the NDT cannot go ahead of the department as they are not the leaders in that area. It is the same with the issue of transport as the NDT works closely with the Department of Roads and Transport, but transport is a concurrent function. Provinces themselves like Gauteng have developed their own integration plan of tourism and transport. Transport planners are now more influential than spatial planners because where transport development goes there go other types of development. They call them transport-oriented development corridors. The NDT is working closely at national level with the Department of Transport to look at how to unblock the obstacles around people accessing spaces. The Department is also working closely with provinces to see how transport challenges can be addressed. It is, however, complicated because multiple layers of government are involved and finding the right level at which interventions can be undertaken where there is the right ownership can be challenging. It is not always easy for the NDT to resolve transport problems like the one existing in Mpumalanga as the problem does not lie in the specific jurisdiction of the NDT. However, the NDT tries to facilitate conversations to resolve the problems where it is possible. The Department tries to use its influence around policy and collaborative relationships with national departments to try to unblock some of those obstacles.

Mr Cele asked what criteria was used to determine the people that were allowed to go to Robben Island.

Ms Ramphele said there was a group from the Eastern Cape that requested to be supported to go to Robben Island and some of the members were veterans. The NDT realised that there were people who had spent some time at Robben Island but had never gone back, but the idea was not just to support the former prisoners but other elderly people who wished to go there on a visit. The NDT had already engaged the Island which was ready to give discounts on the tickets. Most of the elderly visitors use their own resources. The Department is advising people to discover their own province before going to other provinces.

Mr Pikinini thanked the Department for the answers and said it was not necessary to be happy with answers because people have different perspectives. Explanations of the Department were good but sometimes it is important to acknowledge when people raise issues and try to do something about it. He accepted the answers as they were. He was happy with the programmes of the Department and partnerships with other government departments were important. He was excited when they started but the answers were too general.

Mr Cele thanked the Department for the presentation and for answering the questions and reiterated that they still needed another session. He also thanked the Chairperson of the Portfolio Committee on Tourism and requested the CEO of SAT to provide a written summary to the Committee.

The Chairperson of the Portfolio Committee on Tourism, Ms Makhubela-Mashele, expressed appreciation to the NDT and SAT for the presentation. She hoped for more future and constructive engagements so that tourism could be taken to the next level and to make it more accessible to new entrants especially young people and women.

The meeting was adjourned.