South African Tourism 2022/23 Annual Performance Plan; with Deputy Minister

Meeting report

Opening remarks
The Chairperson opened the meeting and welcomed Committee Members and South African Tourism (SAT) representatives who were present. She indicated that she is confident that the meeting will be fruitful because of the recent Indaba SAT held.

SA Tourism Annual Performance Plan 2022/23

Mr Robert Manson, Acting Chief Strategist, SAT, briefed the Committee on SAT’s APP for the 2022/23 financial year.

Challenges  

He indicated that the unprecedented COVID-19 pandemic and its effects have decimated the ability of many of the MPIF source markets to travel to South Africa. He said that the source market travel restrictions, international government regulations, and slashed airline routes continue to impact the ability of international travel to South Africa. He further indicated that the relative priority of the 24 markets must be considered, in conjunction with dynamic and current information on variables that will affect the likelihood of travel from each market. He said that it included the COVID-19 pandemic severity and outlook, Government Stringency Index, Accessibility (land, air, and sea), and vaccination rollout. These variables significantly impact confidence levels for travel.

Recovery plan

The current and medium-term outlook for international travel remains volatile and continues to be in constant flux as the virus evolves, pandemic trajectories fluctuate and vaccine development and dissemination advances. It will be impossible to predict travel patterns and that is crucial for SAT’s marketing efforts to be dynamic and adaptive to differing pandemic phases in relevant markets to achieve the long-term desired growth. There is also the need for a consistent presence in the MPIF markets to ensure that destination South Africa remains a top-of-mind destination. Domestic followed by regional tourism in supporting tourism recovery in the medium term is critical. He then indicated that domestic and regional markets will contribute 86% of South African tourism spend in 2021 and 82% in 2022. He added that the importance of domestic and regional tourism in the ground recovery is evident in the patterns of accommodation occupancies across 2020. There is a need for drastic re-imagination of tourism in South Africa focusing on servicing and growing domestic and regional tourism to drive recovery of the tourism sector in the near to medium term.

Programmes, targets & budget allocation

Ms Nombulelo Guliwe, Chief Financial Officer (CFO), SAT, took the Committee through a detailed section of SAT’s programme targets and budget allocation.

See presentation for further details

Discussion

Ms H Winkler (DA) asked SAT what its recruitment processes of board members are because there are a number of interim positions on the SAT board. She then asked what international marketing strategies are being implemented and what measurements are in place to determine Return on Investment (ROI). What measurements will be put in place to re-package the pricing of domestic tourism? The pandemic has a major impact on international tourism and to lessen the impact SAT will have to place more emphasis on domestic travel. The pricing in the tourism industry is based on an international standard and excludes domestic travel. She highlighted the targets for 2030 and asked SAT what is envisaged in regards to employment statistics, contribution to Gross Domestic Product (GDP) and tourist statistics. She asked if it is conducting brand tracking to determine if SAT is competitive with other competitors. She enquired about the status of the health passports and if SAT is working with stakeholders to re-establish routes that stopped because of the pandemic.  

Ms S Xego (ANC) commended the presentation made by SAT and raised concerns that it has not appointed a permanent CEO. She asked the Deputy Minister to provide the Committee with an update on the recruitment process of the SAT board because its current board’s term is coming to an end. The APP of SAT seeks to address the audit outcomes and improve the economy. She said that the Committee welcomed any programmes that showed financial benefits. She urged the Committee to adopt the APP of SAT.  

Mr M De Freitas (DA) asked SAT what the requirements are for a market to be placed on its watch list. He assumed that the reason markets were placed on a watch-list was historical and asked SAT to unpack its watch-list. The majority of SAT’s programmes revolved around leisure tourism and asked SAT to elaborate on it because the goal is to generate more employment. Business tourism might generate more money because an event like a conference can attract over 100 delegates more than a family of four. Domestic tourism is doing well because it was the sector which kept business afloat during the period of hard lockdown. He said that domestic tourists are disadvantaged in relation to international tourists who travel with international currency and based on surveys done, domestic tourists raise concerns about the pricing of tourist sites. What is SAT planning to ensure that domestic tourists are offered preferential pricing? The Committee agreed that businesses should be graded and that they must be available to every business for free. What is being done to achieve this goal?      

Ms L Makhubela-Mashele (ANC) highlighted the target to achieve 21 million tourists by 2030. She indicated that the pandemic caused a number of travel restrictions. She then asked if SAT revised this target while drawing up the recovery plan. She raised concerns about its Internal Audit Controls (IAC) because a number of its levies are collected by the Tourism Business Council of South Africa (TBCSA). The Auditor-General’s (AGs) findings indicated that funds were misused and caused the former CEO to be charged. She then asked what Internal Control Measurements (ICM) it will implement to ensure that there are no repeat findings.    

Ms M Gomba (ANC) commended the APP of SAT and enquired about the GCP. She asked when it reviewed the GCP because it assured the Committee that it will conduct a review.  When did SAT conduct an Imbizo because every business must have the opportunity to be part of the Grading Council? She enquired about the Indaba SAT held in Kwazulu-Natal (KZN). How many stakeholders were invited from rural areas and if the percentage of attendance was higher than the previous Indaba SAT held? It is also important to note the impact of the pandemic because a lot of stakeholders could not attend and a lot of businesses no longer exist.   

Ms P Mpushe (ANC) enquired about SAT’s choice to only have international offices in certain countries. She then asked about its partnerships with other State-Owned Entities (SOEs) because of its budget constraints.

Responses

Mr Themba Khumalo, Acting CEO, SAT, responded to the question regarding its recruitment processes. Interviews were conducted and a candidate was elected for the Chief Operating Officer (COO) position. Further engagements will be done with the candidate regarding the acceptance of the position. SAT will also be conducting interviews for the Chief Quality Assurance Officer (CQAO) who overlooks the Grading Council. A number of General Manager (GM) positions have been filled and SAT is currently stabilising the organisation by filling key positions. He assured the Committee that all its recruitment processes are following government requirements.

Responding to the concerns Members raised about the domestic market that it was the main focus in the pandemic to keep the sector stable, Mr Khumalo said SAT continues to focus on domestic travel by conducting programmes that look at demands and educating the domestic traveller about tourist opportunities. The biggest campaign was held in September 2021 called travel week. This is the ‘black Friday’ of tourism, whereby there are a number of discounts across the entire sector. All stakeholders in the sector are involved to ensure that domestic travellers have access to the sector. On the supply of domestic travel, it is working with other SOEs and the issue of affordable pricing is being discussed. It is a complex issue because businesses still need time to stabilise and recover financially. SAT is working with stakeholders that offered new products and experiences during the pandemic that are targeted at domestic travellers. He assured the Committee that SAT is working towards addressing the issue of affordable pricing.

He responded to the question on brand tracking saying that SAT runs international surveys and benchmarks South Africa’s brands with its competitors. During the pandemic it was difficult to conduct these surveys, however it is currently collecting data to ensure continuous benchmarking. He added that it currently conducts sentiment surveys to determine what tourists think about its services compared to its competitors.

Regarding the requirements of the watch-list, there are a number of different marketing avenues SAT can use to access the markets on the watch-list. SAT works together with the Department of International Relations and Corporation (DIRCO) to ensure that it can access international markets. SAT has a robust system in place to ensure that it assists organisations that bid to host international events. Once organisations win their bid, SAT will collaborate with the organisations to ensure that a strategy is in place and that incoming delegation numbers are maximised.

He responded to the question on the Grading Council that the review of it must be prioritised. SAT has reviewed the Grading Council and decided to implement strategies of other organisations. The current staff focuses on the financial implications. Air Bed and Breakfast (Air BnB) has a Grading Council whereby the user grades the product and the experience. SAT wants to have a balance between product experience and user information. SAT aims to have a versatile Grading Council to ensure users about the quality of a product.

Speaking to the question on the Indaba, different types of Small, Medium and Micro Enterprises (SMMEs) were invited to the Indaba. The Indaba included 90 SMMEs from rural areas called the ‘hidden gems’ and these types of SMMEs provided products that would not get the correct marketing. The Indaba provided a speed marketing platform that allowed SMMEs to exhibit and present their products to buyers. He added that 60 speed marketing platforms were held.  SAT is pleased with the outcome of the Indaba because it provided opportunities to SMMEs.

The target of 21 million tourists by 2030 was a policy pronouncement by the President. Due to the pandemic, SAT did not reach the trajectory of 16.5 million tourists. Mr Khumalo indicated that SAT will implement a strategy that aimed to achieve this target and that sufficient resources have been allocated to it. The target can be achieved with the restructuring of the infrastructure in the market. He assured the Committee that it is busy tracking the process and that it will provide the Committee with a report on its progress.

Mr Manson agreed with the comments made by the Acting CEO on the markets. He added that the markets on the watch-list are very important to SAT. SAT closely analyses international markets to determine what investments are required to be successful in the markets.

Ms Amanda Kotze-Nhlapo, Convention Bureau Officer, SAT, commended the Committee for attending the Indaba it held. She added to the comments made by the Acting CEO that ten SMMEs were invited from each province. The indaba had a Grading Council and SMMEs had the opportunity to engage with buyers. She said that the attendance of the Indaba did increase and that it supported SMMEs that did not have the finances to exhibit their products. The Indaba was very successful because it allowed the SMMMEs that did not have an exhibition stand to work together. The main focus of the Indaba was on the quality of the products that were displayed.

She added to the comments made by the Acting CEO that SAT did not determine the pricing of the Grading Council. The SAT incentive programme for the Grading Council is very successful and when a business qualifies for the programme it will have free access to the Grading Council. SAT is currently engaging with the Department of Tourism (DT) to determine how SMMEs that do not qualify for the incentive programme can be assisted. Due to the pandemic, there was a decline in SMMEs that were part of the Grading Council. SAT did see new SMMEs that joined the Basic Verification Programme (BVP). She added that majority of the SMMEs were owned by women. SAT will continue the BVP and look to target the Provinces of KZN and Limpopo.

Ms Guliwe responded to the question on the AGs findings. SAT presented an Audit Improvement Plan (AIP) which will track the progress of the internal and external Audit Control Measurements (ACMs). A key target in its quarter four report was to achieve valid internal and external AG findings. She confirmed that the audit outcomes for the previous financial year were resolved. She assured the Committee that SAT did not have the same transactions as indicated in the previous AG findings. SAT is currently reviewing its Memorandum of Understanding (MOU) with debit collectors to ensure that funds are not misused.

Agreeing to the question on SAT’s finances, Ms Guliwe confirmed that it collaborates with other SOEs to ensure that its budget is consolidated. SAT also allocated resources within the office of the CEO to work closely with provincial stakeholders to ensure that the tourism sector moves forward. SAT weighs the financial benefits of every programme before resources are allocated and follow the criteria outlined by National Treasury. She added that SAT conducts quarterly reviews of the financial and non-financial work it does to ensure budget allocators are held accountable.

She responded to the question about business tourism that this sector is a priority for SAT. In programme three of the APP, business market and branding were included to establish labour marketing skills between leisure and business tourism. She added that programme four of the APP also highlighted the importance of business tourism.

Adv Mojanku Gumbi, Interim Chair, SAT board, responded to the question on marketing strategies. She assured the Committee that SAT will always strive to achieve great ROIs. SAT returned 60% of its marketing budget during the pandemic because there was no need to advertise at that time. The appointment of the CEO is a process that needed to be finalised by the Minister. The process was delayed because of the change in Ministers and the Minister requested time to settle. The Board of SAT completed the recruitment process and sent its recommendation to the Minister on 6 April 2022.   

The Grading Council is a policy issue that needs to be resolved. SAT will have to appear before the Committee if it cannot achieve the 2030 target. Adv Gumbi indicated that there was an issue with the Collaborative Fund (hereafter referred to as the Fund). The new MOU states that SAT cannot be an applicant and a decision-maker of the Fund. Applicants may apply for the Fund and then the Development Bank of South Africa (DBSA) will engage with SAT. The Grading Council is a process that included merging the marketing of Brand SA and SAT. This process was also delayed because of the change in Ministers.

She said that the final policy decision remains with the Committee and that the Tourism Amendment Act indicates that the board of SAT are the Accounting Officers. This will be difficult because the Board only engages on a quarterly basis and is not involved in the daily operations of SAT. She emphasised that this will need to be noted by the Committee when considering the Amendment Act.

Mr P Moteka (EFF) asked what measurements it will implement to mitigate the impact the pandemic had on its 2030 target and did it invest more funds in domestic tourism.

Mr De Freitas asked the Chair of SAT board to elaborate on the final comments she made. He indicated that it will be important for the Committee to note the comments made.

Ms Winkler asked SAT to indicate what marketing strategy it will use to advertise Brand SA.

Mr Khumalo responded that it based the marketing strategy on brand stature and conversion. SAT mixes the market strategy to ensure the sale of a product and that people travel to SA. It focuses on channel communications that are linked to the sale of products. The market strategy looks at all types of digital channels to ensure that the seller of a product is able to track the engagement of buyers. Brand strength is created through classical advertising, Public Relations (PR) and global advocacy. He added that it uses the same market strategy, however it is adjusted to the markets on the watch list.

Domestic tourism is one of the main focuses of SAT. At an international level, all countries have strong domestic markets because it creates stability in the sector. He added that having a strong domestic market will strengthen the social cohesion of a country to accept international travellers.

The target set for 2030 is achievable, however a business case needs to be conducted. The business case will highlight exactly what resources are needed to achieve the 2030 target. Regional marketing in Africa and access to the international market will play a role in achieving the target. He assured the Committee that SAT will provide it with an update report during the Financial Year.

Adv Gumbi responded to the concerns raised by Mr De Freitas. The Committee needed to review the Amendment Act because it stipulates that the SAT board is the Accounting Officers. She emphasised that it needed to be reviewed because the board is not employed on a full-time basis and consists of non-executive members. The mandate of the Accounting Officer will be difficult because it will be held accountable on decisions that it did not make. She indicated that it is important for the Committee to note this issue.

Deputy Minister of Tourism, Mr Amos Mahlalela, confirmed that the process of appointing a new SAT board is almost finalised. The advertising of the vacancy and interviews was done and a Select Committee was appointed and made its recommendations to the Minister. The Department aimed to table the recommendation to Parliament in the meeting on 25 May 2022.

He agreed with the comments made by Adv Gumbi that the Amendment Act needed to be reviewed. The Accounting Officer needs to be the CEO and the SAT board will be the Accounting Authority in terms of the Public Framework Management Act (PFMA). The Department is in the process of reviewing The White Paper and will allow the Amendment Act to take into effect. The White Paper will also address the issue of the appointment to the SAT board. He added that The White Paper process is currently under public scrutiny and will allow the public to make input. It will also deal with the issue of grading. The Department engages with different stakeholders about the importance of grading.

He responded to the question on SAT’s international offices that due to budget constraints it is informed by international markets where to place offices. Regarding the target for 2030 SAT will need to conduct internal engagements to determine what targets will be practical to achieve. The pandemic had a negative impact and delayed the tourism sector’s growth. He responded to the question on global health passports, saying that the matter is handled by the Department of Health (DOH). An international standard of travel needs to be established to ensure the safe travel of tourists in different countries. The DOH will conduct an engagement whereby the public can provide input regarding the issue of international travel requirements.

The Chairperson thanked the Deputy Minister and SAT for attending the meeting and presenting SAT’s APP.

Committee minutes
The Committee considered and adopted the minutes of 29 March and 3 May 2022.
 

Report of the Portfolio Committee on Tourism on Oversight Visit to Mopani and Vhembe District Municipalities, Limpopo Province,

The Committee was taken through the observations and recommendations of the report.

The Chairperson granted Members who were part of the oversight visit a chance to provide their inputs.

Ms Mpushe urged the Committee to make firm recommendations about the projects. She highlighted the fruitless and wasteful expenditure of the project. She added to the observations, that no progress was made on the project and that the community was aggrieved that the Department did not embark on the project that is envisaged. She recommended that consequent management needed to be conducted on the officials that embarked on the project. She then suggested that the Committee mediates an engagement between the Department and community before any resources are allocated. She recommended that the Committee invite the Department and community for a briefing. She suggested that the Committee conduct another oversight visit to the municipality. A number of projects in Limpopo are not doing well and the Committee needed to intervene in projects that involve the Department.

Ms S Maneli (ANC) indicated that the Ngovhe project is in a terrible state. The community allowed the facilities to be vandalised because the officials did not implement the initial plans. She recommended that the Committee ensure that officials embark on the initial plans of the Ngovhe project.

Ms Gomba supported the recommendations made by Members about the Ngovhe project. She requested that the Committee establish the initial funds allocated to the Ngovhe project. Considering the sentiments of the Chief of Ngovhe there were previous structures in place that the Department had to improve. She recommend the Committee engage with the Department to provide clarity on the Ngovhe project. She then indicated that the Committee need to determine the stakeholders that needed to be held accountable.

The Chairperson indicated that she noted and agreed with the recommendations made by the Members. She suggested that the engagements with the community and the Department be held before the report is tabled to Parliament. It will ensure that the report is enhanced and that the report consists of informed recommendations. This is important to note because of the allegations of a stakeholder who deviated from the initial project plans. She suggested that the Committee adopt the report with the additional recommendations.

The report was adopted with additional recommendations.

The meeting was adjourned.