Minister and Deputy Minister of Tourism in attendance at briefing by SA Tourism on its 2012

Meeting report

The Chairperson welcomed everyone to the meeting in particular Minister Marthinus Van Schalkwyk as well as Deputy Minister Tokozile Xasa. Thereafter, he invited the Minister to address the Committee.

Address by Minister of Tourism
Minister Van Schalkwyk said that tourism was about people and was one of the fastest growing sectors in South Africa. 2011 was a good year for the country but it was not as good as 2010. Tourism arrivals globally in 2011 sat at 980 million. Globally 1bn trips had been undertaken thus far in 2012. There was an expected increase in international travel trips by between 3% - 4%. The percentage for the previous year had been higher at between 4% - 4.5%. Tourism was a priority sector in government’s planning and policy framework. In 2011 the tourism sector worldwide had 258 million direct/indirect/ induced employment opportunities. This figure represented 9% of the global workforce. Of the 258m, 100m were direct jobs and 1.6m was indirect jobs. In the period 2008-2009 tourism contributed to SA’s Gross Domestic Product, foreign exchange earnings and poverty reduction.  There was huge potential for tourism to grow in South Africa and this in turn meant benefits to the economy. It was understood that markets were continuously shifting and that consumer preferences were also evolving. Consequently market research had to be done on demand patterns. New opportunities in Africa and emerging markets in India and China were being prioritised. Recent tourism arrival statistics from January 2011 – November 2011 were positive. Emerging markets like China and India showed growth of 27.2% and 22% respectively. Traditional markets for South Africa like the United States only had growth of 0.6% and Europe also showed smaller growth. The tourism industry in South Africa had an inclination to measure successes in terms of European markets which should no longer be the case. Outbound tourism in many countries in Europe had stagnated. South Africa was stable in Europe but there was no spectacular growth. The one market that impressed was the German market. It had stagnated for years but now was showing promise. In January 2011 – November 2011 the German market saw a healthy growth of 9.9%. Given the economic climate this performance was exceptional. SA Tourism and the National Department of Tourism had done well as South Africa had outperformed its direct competitors.

Arrival targets for Africa were positive for the last five years. Mozambique, Angola and Nigeria were showing the highest arrivals to South Africa. The Ministry was working closely with South African Airways (SAA) on new flights into Africa. SA Tourism focused on Africa as Africa was responsible for more than 70% of arrivals every year. Tourist arrivals from Africa grew at 10.3% annually from 2003-2010. Africa’s contribution to total tourist arrivals increased from 68.1% in 2003 to 70% in 2010. It was much higher than growth of the rest of the world which sat at 3.3%. The value which Africa brought to the country’s economy went beyond tourism. There was business from hotels, tourist attractions but also from manufacturing and downstream industries. There was growth in the African market from purpose based travel to leisure based travel. A few objectives were to increase regional awareness of the country and to increase arrivals and spend from Africa. The Africa air market was a sizeable opportunity to attract high business and the leisure traveller to SA instead of going to Europe to shop. The intention was also to open five SA Tourism offices in Africa by 2015. Funding had been made available for the focus on Africa, R50m in the first financial year and R84m each for the two subsequent financial years.
Domestic tourism comprised of 70% of the tourism value in SA. It was a priority as there were huge socio-economic benefits. The Domestic Tourism Strategy was on the verge of being launched. Research had been done to analyse the domestic tourism sector. Innovative product development was also needed to increase spend. Increase in arrivals had to be translated into economic benefits to South Africans. Travel barriers were also being looked at. The Air Lift Strategy had expired in December 2011. The Department of Transport was the line function department responsible for this function. A new air lift strategy was being finalised and would be going to Cabinet soon. The issue of visa requirements was also being considered. Another important issue was the development and improvement of public and private infrastructure.

SA Tourism Strategic Plan and Budget for 2012-14
SA Tourism briefed the Committee on its Strategic Plan and Budget for 2012-14. The SA Tourism delegation was quite comprehensive but the briefing was mainly undertaken by Mr Thulani Nzima, the Chief Executive Officer. He was assisted by Ms Roshene Singh, Chief Marketing Officer and  Mr Frank Kilbourn, Vice Chairperson of the SA Tourism Board, also made inputs where necessary.

Mr Nzima noted that at the end of November 2011, growth sat at 2.7%, taking the impact of the 2010 FIFA Soccer World Cup into consideration the growth rose to 7%. The idea at the outset was to link government priorities with SA Tourism’s priorities. Hence he detailed the targets of the National Tourism Sector Strategy (NTSS). One of the aims was to have 15 million foreign arrivals by 2020. It is expected that domestic tourists would grow by 3.4 million from 14.6 million in 2009 to 18 million by 2020 and total trips to grow from 30 million to 54 million, with holiday trips increasing by 5 million. Another target would be to increase tourism’s contribution to the GDP from an estimated R189.4bn in 2009 to R499bn in 2020. The tourism sector was also committed to create 225 000 jobs by 2020- 177 000 in the tourism sector and 48 000 through direct government investment. Members were given insight into SA Tourism’s research based methodology. The SA Tourism review adopted a “fresh eyes” approach by considering all the countries in the world, and filtering them based on a set of objective attractiveness criteria. The results of the review would illustrate the suggested core, tactical investment and watch-list markets with each region, the regions being Africa &Middle East; UK & Americas; Asia & Australasia and Europe. The importance of Africa to meet NTSS targets was highlighted. As mentioned by Minister Van Schalkwyk, Africa delivered more than 70% of all arrivals annually to the country. Africa was growing fast as could be witnessed by the remarkable growth in GDP and GDP per capita 18.9% and 16.3% respectively from 2003 to 2008. The African continent also represented untapped potential. SA Tourism developed five strategies to deliver on the outcome ie invest only in selected markets to deliver volume and value; convince consumers that South Africa could be trusted to deliver memorable experiences; engage stakeholders to deliver quality visitor experience that re-affirm the brand promise; work the distribution channel to promote South Africa and lastly to energise and empower the organisation to innovate and achieve excellence. The five strategies were converted to five programmes to comply with the National Treasury Annual Resource Plan template. SA Tourism identified six strategic orientated goals:
Annual arrivals to SA to increase to 12 068 030 by 2015 (NTSS target) and 15 000 000 by 2020 while the number of domestic tourists per annum should increase to 16m by 2015.
The average spend per arrival in SA from R11 960 to R12 536 per person during the 2012/13 calendar year.
To become the most preferred tourism brand by 2014 by obtaining an average positive brand awareness percentage of 79% in all markets where brand tracking was done.
To deliver on the quality experience expected by the international and domestic tourist by having at least graded 6 172 tourism products in SA by March 2013.
To continuously improve internal policies, procedures and business processes so that it supports the spending of no less than 98% or no more than 102% of its consolidated annual approved budget as well as the achievement of clean annual audit reports.
To grow SA’s business events industry, and continuously improve the culture within the organisation by living the SA Tourism values and thereby reduce its average annual turnover rate to no more than 10% while achieving an average score of at least 3.3 in the Deloitte Best Company to Work for survey.  

Members were given an overview of air markets in Africa and SA Tourism’s three hub strategy approach which covered East Africa, West Africa and Central Africa. Some details on what various African countries expected from South Africa were for example that Kenyans were price sensitive and wanted to do what locals did. Nigerians were very business orientated and 800 travel shops in Nigeria had agreed to sell SA products. SAA already had 14 flights a week out of Nigeria to SA. Persons from the Democratic Republic of Congo travelled a great deal to Europe. They were big spenders and wished to learn more about a country they visited. The Angolans visited SA as a weekend getaway.
Domestic Tourism was also elaborated upon. In 2010 there was 29.7m annual trips undertaken compared to 35.9m in 2007. Further figures were provided on domestic tourism spend and the length of trips for the years 2007 - 2010. Keeping in mind the targets set out in the NTSS, it was important to identify the most attractive segments on which to focus activation efforts for domestic tourism. The new domestic tourism strategy objective was to segment South African domestic travellers into groups that share similar needs and behaviours, and provide recommendations around the marketing strategy to engage and increase participation of these segments in domestic tourism in SA. This would enable SA Tourism to meet its key objectives around tourism culture transformation and growth. Domestic Tourism should be a holistic approach wherein each stakeholder should play a part ie NDT, SA Tourism, provincial and local authorities and the industry itself.

Due to time constraints SA Tourism could not comprehensively cover all the detail contained in the briefing document. Specifics on the budget could not be covered. Mr Nzima did venture to say that SA Tourism did well in keeping within its budget. Additional funding received for expenditure on Africa had been ring-fenced. Funds were spent where they were supposed to. The Committee was urged to peruse the briefing document for further detail.

Discussion
The Chairperson asked how SA Tourism intended to increase the average spend per tourist in SA. He stated that national, provincial and local government did not have a joint marketing strategy. What plans did SA Tourism have to harmonise the relationship? He also asked what SA Tourism had done about addressing the perceptions that tourists had about safety and security in SA.

Mr Nzima made sure that SA Tourism focused on product development. The focus was on packaging rather than on day selling. When offerings were in package form it was more affordable and hence tourists had more cash to spend. Average spend would increase if visa costs, transport costs, hotel costs and restaurant costs were more affordable. A holistic approach was needed. SA Tourism had a product development team. A great deal of work was being done on safety and security. Tourists had to have a positive image of SA. It was a serious challenge on how to handle it. The idea was not to have a full force campaign. The success of the 2010 FIFA World Cup was evident that it was just a perception, but people nevertheless came to SA. SA should have capitalised more on the success of the 2010 FIFA World Cup. SA needed to send out a message that it was a good destination and not necessarily a safe destination. SA Tourism looked at quick interventions to address the issue.

Mr R Shah (DA) felt that education was key for the development of the tourism sector. Students who graduated from tourism studies were not adequately trained and could not find jobs. Continuous human resources refreshing were needed. The tourism curriculum was not meeting the needs of the industry. He asked what SA Tourism was doing about tourism education in schools. There was a lack of tourism culture in SA. There was a lack of alignment between SA Tourism and provincial agencies in marketing efforts. There seemed to be a mismatch. Was SA Tourism competing with provincial agencies? There was also a lack of co-ordinated effort between the national, provincial and local government spheres. He suggested that the regulatory environment of tourism should be looked at so as to promote Small Medium Micro Enterprises (SMMEs). There was furthermore a lack of co-ordinated effort amongst government departments themselves as tourism was cross cutting. Tourism affected the Department of International Relations and Cooperation (DIRCO) for example. Did SA Tourism work with DIRCO? He was not convinced whether SA Tourism’s brand slogan was saying what it should.

Mr Nzima stated that SA Tourism took the bridging gap very seriously. SA Tourism had an internship programme of its own. For those students who did well in the programme SA Tourism offered jobs to them.  He acknowledged that tourism should be taught to kids early on already. The issue of the regulatory framework and SMMEs was important and spoke to the distribution channel. There were low barriers of entry in tourism. By sheer creativity of one’s mind one could join the industry. The private sector should be encouraged to embrace SMMEs. SA Tourism encouraged the support of SMMEs. SA Tourism embraced SMMEs from a supplier and procurement point of view.
The issue of how tourism impacted upon other government departments like Home Affairs and Education for example and the synergy that was needed required engagement from everybody in the value chain. SA Tourism engaged with government departments. It worked closely with DIRCO.

Mr Kilbourn spoke to the issues of brand alignment and alignment with national, provincial and local governments and noted that it had been a challenge in the past. Progress was being made. MinMECS would be used to drive the message through. There should not be a multiplicity of efforts by the different spheres of government. He explained that the new payline of SA Tourism “inspiring new ways” had come about through a collective government effort. The NDT, the Department of Trade and Industry and everyone else in government had no objection to it and could live with it. It even came to Parliament for approval. All other paylines used by various countries had to be ruled out hence the compromise was to settle on “inspiring new ways”. The payline had to be one which various departments could align with.

Mr Nzima referred to the alignment of efforts on branding by provinces and municipalities and stated that a committee had been set up by the NDT. SA Tourism took the lead in the committee. Chief Executive Officers of organisations in the tourism industry sat on the committee. Regular meetings were held to discuss the issue of alignment. The first point of departure was the NTSS. Thereafter barriers were identified. Once barriers were identified lobbying followed. The idea was to prevent the duplication of activities. A national calendar of events was shared. The role of SA Tourism and of the provinces was considered. It was important for alignment to have synergy.
Brand alignment had already been completed. Everyone had the same logo. A duplication of activities was what needed to be prevented so that resources could be better utilised.

Mr S Farrow (DA) stated that Tourism was one of the most cross cutting ministries in government. For example in the Eastern Cape there were many wild coast resorts which were inaccessible because of bad roads. So perhaps the Department of Transport was the department that should look into the matter. He was concerned that there was not enough dialogue taking place about how tourism could be improved if other government departments came to the party. For example Indians were put off by SA’s stringent visa requirements and hence did not bother to come to SA.
Job creation in tourism was key as it was even mentioned in the President’s 2012 State of the Nation Address. At present there was one job created for every sixteen tourists. He agreed with Mr Shah that SA Tourism’s new catchphrase “inspiring new ways” did not seem good enough.
Concern was also raised about whether graded establishments were actually meeting the standards for what they were graded. He had visited supposed 5 star establishments which did not seem to meet even 3 star quality requirements. Was there a regulatory body in place to check on whether graded establishments were meeting the requirements of their grade? Another function of a regulatory body would be to check that establishments were not also pricing themselves out of reach of tourists because they were graded highly.
The biggest cost visiting SA was the cost of the airfare. SA should perhaps offer packages that would make it more attractive to come to SA. The packages could include visits to other sites in Africa like the Victoria Falls and the Serengeti. He was aware of stability issues in some parts of Africa.
Problems at Robben Island and with SANParks were issues which needed addressing. What was being done to address these issues?

Mr Nzima, referring to quality control of the Grading Council, stated that there was an independent body which performed the function. There was an auditor which audited graded establishments.
On the issue of offering tourists value for money, everyone involved should come on board.
SA Tourism was engaging with SANParks to address the outstanding isues.

Ms C Zikalala (IFP) was very impressed that the rest of the African continent was visiting SA. Nigeria, Democratic Republic of Congo and Kenya were some of the countries whose citizens were visiting SA. Safety and security was an issue that was important to both SA and tourists. It seemed to be under control. Tourism was doing well to create jobs. Jobs in turn eradicated poverty. She asked what happened to the Sho’t Left Campaign that had been advertised widely some years back .Where was it. She was glad that universal access was covered for disabled persons at graded establishments.

Ms M Njobe (COPE) stated that it was unfortunate that the Committee could not have met with SA Tourism the entire day as the allocated time for the meeting was far too short. She was happy about the organisation’s efforts on domestic tourism and the greater emphasis on Africa. Why were SA Tourism’s offices in Nigeria and Brazil not opened yet? Having an office in Nigeria could perhaps assist with dealing with visa issues. Other organisations that the Committee had met had alluded to the fact that perhaps SA Tourism was not the correct entity to deal with domestic tourism. The Committee would give SA Tourism the benefit of the doubt and see how it dealt with promoting domestic tourism. If it fell short another entity could be given that responsibility. The alignment of marketing efforts between SA Tourism and provinces and the alignment of national, provincial and local government were issues that needed to be addressed. Was it true that SA Tourism was to fund communication with provinces and municipalities?

Ms Njobe asked how successful the roadshow on grading had been. Who were SA’s competitors in relation to tourism? On a recent visit to Mexico the Committee had first hand seen how good the tourism industry in that country was. The Mexicans said that Americans were visiting their country in large numbers. If the USA was one of SA’s core markets how did SA compete with the Mexicans?
On the issue of safety and security there should be greater alignment between national, provincial and local governments. She stated that she had been embarrassed by the raping of two Swedish tourists in the Eastern Cape not too long ago. She was glad that accommodation in the mid level price bracket was also being promoted.

Mr Kilbourn explained that the additional budget allocated was for use in the expansion of new markets in Africa and for use on promoting domestic tourism. There had been legal difficulties in opening up the office in Brazil. With the additional funding the offices in Brazil and Nigeria could now be staffed and opened. 

Mr F Bhengu (ANC) stated that many issues had been raised and that some would have to be directed to the NDT. On some of the issues the Committee would have to make recommendations as to what needed to be done. He was glad that SA Tourism was working closely with the NDT. The passion that drove SA was its history. Sometimes “we as SA forget where we come from”. Did tourism in SA speak to SA’s history? He referred to SA Tourism’s logo and stated that perhaps the whole of SA could contribute as to what it should be. There could be a drive to come up with the best option.
Members have listened; it was now time to engage the NDT and to make recommendations.

Mr Nzima stated that SA Tourism sold the historical importance of the country very aggressively. SA’s variety was its uniqueness. SA Tourism embraced SA’s historical importance.

Mr Shah asked why could a facility not be developed for when a tourist visited a neighbouring country like  Botswana and had obtained a visa, then the same visa could also grant them access to SA and vice versa. If one travelled to the UK, one could simply hop on a train and be in France within a short period of time without requiring a visa. It was something which ought to be thought about.

The Chairperson responded that the issue of visas was not within the mandate of SA Tourism. The point was noted nevertheless. He expressed concern about the proliferation of fake grading plaques. The fake looked very similar to the genuine plaque. The proposed Tourism Bill which the Committee was still waiting on would address this matter. On the issue of crime, correct perceptions should be created. There seems to be a small percentage of crimes related to tourists. Even in the US and Europe tourists were warned about crime spots.

Committee Minutes
Due to time constraints the Committee postponed the consideration of minutes until another time.

The meeting was adjourned.