Tourism Incentive Programme (TIP): Department of Tourism briefing

Meeting report

Tourism Incentive Programme (TIP)
The National Department of Tourism (NDT) briefed the Committee on its Tourism Incentive Programme (TIP). The delegation comprised of Mr Bernhard Meyer, Chief Director: Tourism Incentive Programme and Ms Petra van Niekerk, Parliamentary Liaison Officer: Office of the Director General. Formal apologies were tendered for Minister Derek Hanekom, Deputy Minister Tokozile Xasa and Mr Victor Tharage Acting Director General for not being able to attend the meeting.

Mr Meyer undertook the briefing and elaborated upon the four focus areas of the pilot phase of the TIP, which kicked off in April 2015.

Market access support: allowed for reimbursement of certain costs and participation in predetermined international marketing platforms. One of the objectives was to unlock untapped market potential and introduce new players to the market. The targeted enterprises would be small to medium sized inbound tourism enterprises with an annual turnover of less that R35m.The focus would be on transformed and market ready enterprises. Members were provided with specifics on the implementation progress. Challenges identified were the requirement that businesses had to pay upfront and get reimbursed after participation, which limited the number of applications received, and that it excluded smaller businesses that did not have the funds to pay upfront. The NDT had followed the pay upfront and get reimbursed later route because of Public Finance Management Act (PFMA) requirements. Corrective action to be taken was to amend and refine programme guidelines to better accommodate small enterprises.

Tourism grading support: On offer was a structure and incremental system of rebates on annual assessment fees paid to the Tourism Grading Council of SA (TGCSA). The objective was for greater conformity to quality standards through wider participation in the tourism grading system. The target audience was the existing TGCSA members, including both newly graded establishments and those that renew their grading and membership. Members were provided with specifics on implementation progress. Some challenges identified were delays in obtaining information on graded establishments from TGCSA. There was also a slow initial uptake by establishments. A major challenge was that sole proprietors and partnerships were not accommodated in the guidelines. The way forward was to amend and improve the programme guidelines to accommodate sole proprietors and partnerships.
 
Project sustainability and enhancement: provided for development assistance grants for community based projects in which the NDT was already involved in, such as Social Responsibility Implementation (SRI) projects under the Expanded Public Works Programme (EPWP). Support included skills development and training, management contracts and operational systems as well as market access support. There was also development assistance to strengthen iconic attractions like world heritage sites, national parks and botanical gardens etc in order to improve visitor experience and destination competitiveness. This area of support was initially only available for existing government programmes and would at a later stage be extended to the private sector. Detail on implementation progress was provided. The next step was the finalisation of project plans for all projects and the drafting of service level agreements for all projects.

Renewable energy retro-fitment pilot: to subsidise the retro-fitment of tourism facilities with renewable energy systems to enhance the visitor experience. The objective was to alleviate pressure on the electricity grid and ensure reliability of electricity supply. The pilot would follow a phased approach starting with state owned destination areas like world heritage sites, national parks, botanical gardens and SRI projects. For example a 500kW PV mini-grid would be installed at Robben Island. Subsequent phases involved a staggered subsidy to incentivise retro-fitment by private sector enterprises.
Procurement and contracting would be in terms of the PFMA. Key initiatives included consultation with key government departments and institutions and obtaining access to the Industrial Development Corporation’s Expert Panel on Renewable Energy. The way forward saw the appointment of a technical advisor and the development of technical specifications for each site. 

On governance and management the prescripts of the PFMA were followed. An adjudication committee had been appointed by the NDT’s Director General and met on a monthly basis. On expenditure estimates for the pilot phase the 2015/16 budget allocation was R180 397 000. The transfer estimate was R173 597 000. Figures for outer years 2016/17 and 2017/18 were also provided.
 
On stakeholder engagement and awareness there was the TIP launch and presentation to the Portfolio Committee on Tourism in March 2015. Internal awareness sessions took place from April 2015 to June 2015. The first round of industry awareness workshops took place from May 2015 to June 2015. The next step was to have a second round of workshops for quarter two in smaller centres in each province.  Alternative platforms and communication channels were also being considered.

Discussion
Mr W Faber (DA, Northern Cape) pointed out that in the Northern Cape there was a huge grading problem of hotels and guesthouses. If pilot projects on renewable energy were going to start on government when was it going to extend to hotels and guesthouses?

Mr Meyer noted that the Tourism Grading Council of SA (TGCSA) resided with South African Tourism (SAT). He conceded that the integrity of the grading system was problematic and was an issue that was being addressed. A review of SAT was taking place and a decision on where the TGCSA should reside would be taken. The grading system would therefore be looked at. The initial focus of the renewable energy pilot was on government but later it would be extended to the private sector.

The Chairperson spoke to the provincial spread of the TIP. Often provinces like the Northern Cape, the Eastern Cape and Limpopo Provinces were overlooked or neglected. Was it a strategic element of the TIP to address geographic imbalances? He asked whether the NDT was engaging with provinces on renewable energy sources. The briefing made mention of the Department of Science and Technology but no mention was made of the Departments of Public Enterprises and Energy.

Mr Meyer was aware that certain provinces were less visited and were often not focused on. The focus was more on the larger provinces like Gauteng, the Western Cape and Kwazulu-Natal. Perhaps that was for historical reasons or because tourism was bigger in those provinces. The intention by the NDT was to even out the geographic spread and to focus more on the lesser visited provinces. For example tourism month for 2015 was to be celebrated in the Limpopo Province. On market access the NDT already had a good spread. On renewable energy at provincial level there was no direct interaction with provinces as yet. The NDT did however deal with provinces directly on its own projects. Some of the provinces dealt with were Gauteng, Mpumalanga, Limpopo and Western Cape. There was also no direct engagement with the Departments of Public Enterprises and Energy as yet. There was no deliberate attempt by the NDT to exclude these Departments.

Mr L Mokoena (EFF, Free State) also spoke to the spread of the TIP. He noted that the Free State Province had both the N1 and N3 national roads passing through it. Thus far a TIP workshop had only been done in Bloemfontein and Clarence was next on the list. He felt the implementation of renewable energy sources should not be done by the NDT but rather the Department of Energy. 

Mr Meyer confirmed that the first round of TIP workshops would take place in Bloemfontein whilst the second round would take place in Clarence. The NDT would consider widening its TIP awareness campaign. The Domestic Tourism Branch of the NDT was working with provinces. There was a project around the N3 national route. The comments around renewable energy sources were noted. The initial step was to make state owned properties viable using renewable energy sources.

Mr Faber observed that the briefing had alluded to the fact that the NDT as part of its TIP would only be able to take a new business overseas to advertise itself on an international platform if it had some sort of track record overseas. He felt it to be a catch 22 situation. How would a new business with limited funds get such exposure?

Mr Meyer, on market access of small businesses, said the NDT did have initiatives to assist small businesses. One such initiative was the Tourism Enterprise Partnership (TEP). The idea was to introduce the TIP for non-market ready businesses. There was a deliberate attempt to extend the TIP to market ready businesses because one needed some skills to be market ready for international shows. It was not a size issue about being market ready. In 2016 the intention was to rollout a mentorship programme. To participate in huge international shows cost a great deal of money.

Mr Faber pointed out that owners of big game farms in the Northern Cape went on their own to Europe and the USA to market themselves, and asked whether the TIP would be available to them. He asked whether golf tourism would also qualify.

Mr Meyer noted that the big game farms focused on hunting and went to the USA, Russia and Spain and other countries to market themselves. The larger hunting outfits had huge revenue bases. Strictly speaking some of the hunting outfits could qualify but there was hesitation to include hunters because of rhino poaching and other unsavoury practices. If the criteria were met they could qualify for the TIP. Golf tourism could be taken into consideration. 

Mr Mokoena felt that grading should be mandatory. It should be accessible and effective.

Mr Meyer responded that it was a long ongoing debate. At present grading was voluntary. A review of the grading system was taking place.

The Chairperson informed Mr Meyer that the Committee expected him to report back to the Committee in March 2016 on how the TIP had assisted small, medium and middle-sized enterprises. He also asked Ms van Niekerk to provide the Committee with the contact details of local tourism contacts in the provinces.

Mr Meyer noted the comments made by members and said that he would be happy to provide the Committee with a progress report the following year. 

Ms van Niekerk agreed to provide the Committee with contact details of local tourism contacts in the provinces.

The Chairperson said the Committee went on oversight visits and he personally would have liked to have stayed at smaller establishments rather than the bigger established ones. This was however not necessarily the way that all Members felt. Unfortunately the Committee did not have a choice as travel agents made the bookings. He asked whether the NDT could not speak to travel agents over the issue. Incentives should also be extended to tour operators.

The meeting was adjourned.