executive summary final high-level 2009/10 business plan & budget and 5-year mtef strategic plan...

Executive Summary

FINAL HIGH-LEVEL 2009/10 BUSINESS PLAN & BUDGETAND 5-YEAR MTEF STRATEGIC PLAN

(2009/10 – 2013/14)

Approved by SAT’s EXCO on 1 February 2008Approved by SAT’s Board on 12 February 2008

Amended following DEAT’s written request on 17 February 2009 and will become effective once approved by the Executive Authority (Minister) as per the PFMA

South African Tourism 2008

Slide no. 2

Background

1. In line with the PFMA and Treasury Regulations, SA Tourism needs to submit to the Minister, upon approval by its EXCO and Board, a high-level Business Plan and Budget for its next financial year (2009/10) and an updated high-level Strategic Plan for the organization for the next 5 years (2009/10 – 2013/14)

2. The above marks the commencement of the next MTEF process that includes:• the proposal to National Treasury (during September

every year) for additional funding effective the next MTEF cycle (that commences on 1 April 2009)

• Confirmation by the Minister (during January every year) of budget allocations for the next MTEF period (commencing 1 April 2009), if any


Slide no. 3

What is requested from the Board?

To consider for approval:

3. SA Tourism’s budget parameters for the period 2009/10 – 2013/14, including revised parameters for 2008/9, if any (this includes foreign exchange rates to be used for budget purposes). Section C

1. SA Tourism’s high-level objectives and targets for the next 5 years, which will be the subject of audit by the Auditor-General during execution of the annual Performance Information audit of the organization (including revised 2008/9 high-level objectives and targets, if there are). Section A

2. SA Tourism’s “Big 6” strategies to achieve the indicated high-level objectives and targets for the next 5 years (including revised 2008/9 “Big 6” strategies to achieve revised 2008/9 high-level objectives and targets, if any). Section B

4. Any possible changes to SA Tourism’s non-financial resources to achieve the indicated 4 key objectives and targets over the next 5 years as well as in 2008/9 (human capital, systems, infrastructure and business units). Section D

5. High-level allocation of SA Tourism’s financial resources to achieve the indicated 4 key objectives and targets over the next 5 years and 2008/9. Section E


Slide no. 4

Section A: SA Tourism’s four high-level objectives?

Objective 1 and 2: Achieve total arrivals & spend targets to SA

2007 Actual 2008 Estimate

ARRIVALS

Actual 9,090,881 9,481,762

Best case scenario 10,359,097 9.3% 11,021,005 12.2% 11,059,538 6.5%

All things being equal 9,824,858 3.6% 10,384,337 5.7% 10,433,526 0.5%

Worst case scenario 8,870,816 -6.4% 9,478,613 -3.5% 9,494,509 -8.6%

SPEND2

Total Spend R 7,000 R 9,300

Land markets R 5,800 R 6,500

Air markets R 10,200 R 13,800

LENGTH OF STAY3

Land markets 2

Air markets 6

SEASONALITY4

Land markets 1.69% 1.18%

Air markets 2.30% 2.50%

DISTRIBUTION5

Land markets 1.37 1.24

Air markets 2.17 1.82

TRANSFORMATION6

First measures according to the BEE scorecard

As per Tourism scorecard

R 7,300

R 15,500

2.14%

1.01%1.06%

2.26%

Up by one night

10% modal shift

Up by one night

10% modal shift

As per Tourism scorecard As per Tourism scorecard As per Tourism scorecard

1.91

1.30 1.33

1.96

Up by one night

10% modal shift

1.12%

2.38%

1.27

1.87

2009 Target revised1 2010 Target 2011 Projection

R 9,900

R 6,900

R 14,600

R 11,100

R 7,700

R 16,400

R 10,500


Slide no. 5

Section A: SA Tourism’s four high-level objectives?Objective 1 and 2: Achieve total arrivals spend targets to

SA (cont.) Projection for:

2011Calendar year

2012Calendar year

2013Calendar year

2014Calendar year

Arrivals (in millions) 11.9 12.7 13.4 14.1

Spend per tourist inside SA (in ZAR)

R 8 800 R 9 300 R 9 800 R 10 400

Length of stay Air markets = 10% modal shiftLand markets = increase by one

night

Air markets = 10% modal shiftLand markets = increase by one

night


night


night

Distribution Increase average number of

provinces visited by holiday

tourists by 2.5%

Increase average number of


tourists by 2.5%



tourists by 2.5%



tourists by 2.5%

Seasonality Improve seasonality index

by 5%

Improve seasonality index

by 5%


by 5%


by 5%


Slide no. 6

Section A: SA Tourism’s four high-level objectives?Objective 1 and 2: Notes on targets

1. The 2009 target has been revised and the 2010 target has been set based on the estimated 2008 arrivals. At the time of revising the targets, the full 2008 statistics were not yet available and the statistics until October 2008 were used. Targets are set to coincide with the business cycle. Targets are approved by the Board in February to be used in the business planning process for the following fiscal. Targets are set on the calendar year and relate to a fiscal year’s activities. Projections are for the following year and require ratification as targets when more data is available in order to be more robust and relevant. Targets cannot be revised continuously as the planning cycle is long in SAT and targets are required more than a year in advance for business planning, which is a cycle that cannot be changed. Targets cannot be set for more than 2 years in advance as there are too many variables involved and tourism is a complex industry that responds rapidly to a variety of factors (from currency to war to weather and natural disasters)

2. TFDS (Total Foreign Direct Spend) excludes capital expenditure and was based on the actual data for Jan to Sep 2008 and estimates for Oct to Dec 2008.

3. Length of stay (air markets) is based on a 10% modal shift by market. The main rationale for setting LOS targets for air markets is to maximise their length of stay in South Africa. Most air markets have one high modal peak and several lower modal peaks. The targets have been set based on the top 2 modal peaks for air markets with the aim of increasing the number of tourists at these modal peaks. Land markets on the other hand have one relatively low modal peak. Thus the target is simply set by increasing the current modal peak by one day. SAT also measures average length of stay as this is the global measure for the duration of a visit.

4. A seasonality index has been developed to measure seasonality. The target has been set at a realistic 5% change year-on year as seasonality is a difficult measure to move as it is linked to, among other things, seasons and major holiday periods in the country.

5. Distribution is measured as the average number of provinces visited (for holiday tourists). These targets are set be analysing the trend over time and ensuring that a realistic target is set against the average length of stay of holiday tourists in South Africa.

6. Transformation targets will be informed by the BEE scorecard.

7. It is difficult to set targets for domestic tourism as there is insufficient reliable results. Targets can only be set with real data and to do a meaningful regression analysis, we need more than 5 years of reliable data. Anything less than that would be simple guess work.


Slide no. 7

SA Tourism’s four high-level objectives?

Objective 3

South Africa to be a most preferred Tourism Brand by 2014:

Meaning we should be a top 3 destination on the consideration list of any tourist planning to travel long-haul from any of our core markets, but preferably NUMBER 1!

Awareness PositivitySought Info in the

PastLikely to Visit in Next

18 Months

2007 Baseline 75% 38% 23% 12%

2008 Actual 76% 37% 22% 11%

Global Target 2010 77% 40% 26% 14%


Slide no. 8

SA Tourism’s four high-level objectives?

Objective 4

SA Tourism to be the Best Tourism Organization by 2010:

As decided by the Annual Tourism Awards Committee of the World Tourism Organization, and as attested to by the most credible award committees in our chosen core markets

Annual Measures:– Internal: Clean Audit reports, staff retention of 85%, increase

ranking as best company to work for by 5 positions per annum, training budget spent

– External: In market awards for marketing, destination and national tourism boards


Slide no. 9

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Total w ithout WC 5,731 5,891 5,872 5,787 6,430 6,505 6,678 7,369 8,396 9,091 9,482 9,819 10,125 10,434 10,748 11,063 11,377 11,690 12,004 12,316 12,629

Total w ith WC 5,731 5,891 5,872 5,787 6,430 6,505 6,678 7,369 8,396 9,091 9,482 9,819 10,384 10,434 10,748 11,063 11,377 11,690 12,004 12,316 12,629

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008e 2009T 2010P 2011P 2012P 2013P 2014P 2015P 2016P 2017P 2018P

Note: This estimate includes the FIFA family estimated at 150,000. The estimate accounts for displacement but does not distinguish between ticket holders and non ticket holders. 9

Additional 259k

arrivals

Projections for arrivals in the next five yearsThe growth in arrivals is projected to slowdown dramatically compared to previous years. Despite this slowdown, growth in arrivals to SA will exceed global growth driven by arrivals from land markets

Projections are revised annually as new data

becomes available


Slide no. 10

Based on our estimates, the World cup will have a positive effect on total arrivals resulting in a 5.7% growth over 2009 instead of the natural growth of 3.1%. However, this will then mean that the growth the following year will slowdown to 0.5% as opposed to 3%.

-0.04

-0.02

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

% yoy w ith World Cup 2.8% -0.3% -1.4% 11.1% 1.2% 2.7% 10.3% 13.9% 8.3% 4.3% 3.6% 5.7% 0.5% 3.0% 2.9% 2.8% 2.8% 2.7% 2.6% 2.5%

% yoy w ithout World Cup 2.8% -0.3% -1.5% 11.1% 1.2% 2.7% 10.4% 13.9% 8.3% 4.3% 3.6% 3.1% 3.0% 3.0% 2.9% 2.8% 2.8% 2.7% 2.6% 2.5%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008e 2009T 2010P 2011P 2012P 2013P 2014P 2015P 2016P 2017P 2018P

10Note: This estimate includes the FIFA family


Slide no. 11

Projections by region

2008 2009T 2010T 2001P 2012P 2013P 2014P 2015P 2016P 2017P 2018P

TOTAL 9,592 9,825 10,384 10,434 10,748 11,063 11,377 11,690 12,004 12,316 12,629

Africa - air 307 318 362

342 352 363 373 383 393 404 414

Africa - land

7,087 7,292 7,561

7,769 8,003 8,237 8,471 8,704 8,938 9,170 9,403

Americas & UK

893 942 1,055

986 1,016 1,045 1,075 1,105 1,134 1,164 1,193

Asia & Australasia

323 328 365

345 355 366 376 387 397 407 418

Europe 921 882 977

926 954 982 1,010 1,037 1,065 1,093 1,121

Unspecified

61 63 64

66 68 70 72 74 76 78 80


Slide no. 12

Spend increased in 2008 in both land and air markets resulting in an overall increase of 33% over 2007. However, in light of the global economic crisis, spend is projected to grow at a conservative 6% year on year.

Average TFDS (excluding capital expenditure)

R 0

R 5,000

R 10,000

R 15,000

R 20,000

R 25,000

Air markets R 9,900 R 10,100 R 10,400 R 10,200 R 13,800 R 14,600 R 15,500 R 16,400 R 17,400 R 18,400 R 19,600 R 20,700 R 22,000 R 23,300 R 24,700

Land markets R 6,700 R 7,900 R 7,500 R 5,800 R 6,500 R 6,900 R 7,300 R 7,700 R 8,200 R 8,700 R 9,200 R 9,800 R 10,400 R 11,000 R 11,700

Total R 7,700 R 8,500 R 8,300 R 7,000 R 9,300 R 9,900 R 10,500 R 11,100 R 11,700 R 12,500 R 13,200 R 14,000 R 14,800 R 15,700 R 16,700

2004 2005 2006 2007 2008e 2009T 2010T 2011P 2012P 2013P 2014P 2015P 2016P 2017P 2018P


Slide no. 13

Section B: Revisiting our “Big 6” strategies

• During February 2007, South African Tourism’s Board approved, based on the recommendation from SA Tourism’s EXCO, 6 strategies that will be implemented to achieve the 4 identified objectives and targets for SA Tourism during the 2008/9 – 2010/11 financial years.

• Following careful consideration of these 6 strategies at the recent Exco-Manco Lekgotla, management is of the opinion that these 6 strategies should be retained as previously indicated to achieve SA Tourism’s 4 major objectives and targets during the period 2008/9 -10 and after annual review until 2013/14.

• These strategies will be reviewed annually at the Board’s February meeting.


Slide no. 14

What are our “Big 6” strategies?*

Strategy 1: Share our company’s vision with key stakeholders and influencers

Strategy 2: Use the trade to grow our businessStrategy 3: Grow & nurture our staffStrategy 4: Improve brand traction in markets to increase

positive awarenessStrategy 5: Develop or fine-tune and integrate yardsticks and

systems to obtain operational excellenceStrategy 6: Increase value extraction in SA from all tourists

*during the 2008/9 until 2010/11 financial years to achieve 4 high-level objectives


Slide no. 15

Actions & measures for strategy 1

Strategy 1 : Share our company’s vision with key stakeholders and influencers

Actions (& “owners” in brackets) How it will be measured?

1. Increase/improve dialogue with stakeholders as per board document -Look for insights to the needs of key stakeholders so we can service them better-Understand how to win with each key stakeholder (All SAT managers)

• Conduct industry perception baseline study by Apr’07 and measure perceptual shift in Mar’08

(Global Channel Manager)• Number of meetings/engagements/road shows with DFA

and embassies globally(Quarterly reports from PR and Comms)

2. Messaging – Align stakeholders and influencers to support vision that we all have a collective responsibility for uplifting SA (GM: PR and Comms)

• Track media to measure message alignment :

80% positive about SAT

20% negative about SAT

(GM: PR and Comms)

3. Identify and agree on areas of co-operation with stakeholder organisations(EXCO)

• Documents of understanding with the 3 most critical stakeholders and influencers as identified by EXCO (CEO)

Note: Red text indicates proposed changes to actions and / or measures.


Slide no. 16


Strategy 2 : Use the trade* to grow our business


1. Trade and business tourism strategies are implemented in full across all focus markets (PMs and CMs)

• As per sales contact management system (Quarterly reports by PMs)• Number of meetings/engagements/road shows (Quarterly

reports from RDs)

2. Educate the trade to sell us better (from both a leisure & Business Tourism point of view including addressing perceptions around safety & security) (TRMs, Fundi and BT managers)

• Increase Trade Extranet Registrations from 2,500 to 5,000• Increase FUNDI graduates from 1066 to 2000• Increase Expedia pax sales to SA by 15%• Increase Trade databases from 20,000 records to 25,000

records• (GM: BT, Channel and E-Business managers)

3. Build & retain relationships with Leisure & Business Tourism trade (including on-line submissions of JMA proposals by trade) (TRMs, BT & Channel managers)

• As per sales contact management system (Quarterly reports by PMs)

* Trade includes product owners and travel operators and agents


Slide no. 17


Strategy 3 : Grow & nurture our staff in order to realize our operational goals


1. Improve effectiveness and transparency of performance measurement in the organization (aligned to project plans and company goals) and integrate our values into our work and performance contracts (GM:HR)

• Successful and complete implementation of business plans on budget in achievement of Big 4 company objectives (all SAT staff)

2. Produce a skills competency database (“dictionary”) for each function and develop & implement job-specific training(GM: HR)

•Do skills audit & measure 12 months later whether skills gap has been narrowed

(GM:HR)

3. Improve retention of marketing staff(MANCO)

• Establish base line study on current churn (numbers and reasons) (GM:HR)•Reduce churn by 5%(GM:HR with Manco)•Develop transparent succession planning system (COO and GMHR)



Slide no. 18


Strategy 4 : Improve brand traction in markets to increase positive awareness


1. Expand existing successful ways & find additional innovative ways to reach our target audience per market while being true to the brand key (All SAT marketing managers)

• GLOBAL TARGET FOR 2010:• Total awareness = 77%• Positivity = 40%• Sought info in the past = 26%• Likely to seek info in the next 18 months = 14%(SRU manager)

2. Implement the Brand Key in CI manual for Leisure, Business Tourism & events (CMO)

• CI manual approved and distributed by end April 2007• Number of exceptions in Brand Review limited to 10%(CMO)

3. Improve staff members’ understanding of the Brand and integrate our values and vision into our daily work(Exco and Manco)

• All staff to have completed LTB training by July 2007

• Implement 2 LTB training sessions per year

• All staff inducted by end of 2009

(Manco and GMHR)



Slide no. 19


Strategy 5 : Develop or fine-tune internal systems and communication for better results (to obtain operational excellence)


1. Develop & implement internal communication strategy based on our values and business strategy (COO)

• Improve rankings in Best Company to Work For survey by 5 each year

(all SAT staff)

2. Implement the company-wide Project Management System (Executive Project Manager with EXCO-appointed Project Team)

•Projects executed as planned on time and in compliance with budget

•Budget reallocations are within the agree parameters

(all business unit managers)

3. Ongoing refinement of mapped SAT Business Processes to increase alignment, integration and efficiencies (MANCO + ISO Manager)

•ISO compliant/certification of HR, Admin and Finance by 2010(all HR, Admin & Finance managers with ISO Manager)•All other business policies and procedures filed on intranet(all business unit managers with ISO manager)•Code of good governance adopted by Board and all staff (all business unit managers)



Slide no. 20


Strategy 6 : Increase value extraction in SA of all tourists


1. Mine country research data to establish clear insights into needs and desired experience of target segments (PMs and SRU)

Achieve spend targets in Targets from 2008 to 2011

(SRU Manager)

2. Develop, negotiate & package “products” to upsell tourists and provide them with the right information at the right time and place in SA to maximise their spend(Product & Itinerary Manager & Global Channel Manager)

Achieve spend targets in Targets from 2008 to 2011

(SRU Manager)


Slide no. 21

Review of data

• SA Tourism reviews its performance on a quarterly level. It publishes quarterly reports on all measures of its objectives. These are available on www.southafrica.net/research

• SA Tourism reviews its marketing investment every three years where it takes a ‘fresh eyes’ view of all the travel markets in the world and makes data-driven decisions on where our best investment prospects are against our mandate

• The success of this investment is measured against the targets we set in a rolling three-year cycle

• SA Tourism set brand targets for the first time last year. These are also over a three-year period and reviews with the portfolio review in a three-year cycle


Slide no. 22

Section C: Budget parameters

1. Provide CPIX-related remuneration adjustments annually on 1 July every year:

• 2008: 7,0% (average 2008/9 CPIX as per RMB Financial Markets Research 28/11/07)

• 2009: 6,1% (no average 2009/10 forecast available from SARB; best estimate)





2. Budget for exchange rates as indicated on the next slide


Slide no. 23

Exchange rates used for budgeting

Currency

Average exchange rate for 2009/10






USD ($) 1 = R 10,401

(-17%)

R 10.92

R 11,24

R 11,59

R 11,82

R 12,05

Euro (€) 1 = R 13,801

(-19%)

R 14,14

R 14,50

R 14,78

R 15,08

R 15,39

GBP (£) 1 = R 15,501

(unchanged)

R 15,97

R 16,28

R 16,61

R 16,94

R 17,28

AUD ($) 1 = R 6,961

(-4%)

R 7,03 R 7,10 R 7,21 R 7,32 R 7,42

ZAR 1 = JPY (¥) ¥ 8,661

(-35%)

¥ 8,57 ¥ 8,44 ¥ 8,31 ¥ 8,19 ¥ 8,06

Notes:

1. Based on the 6 month forward exchange rates as published in the Business Day on 19 January 2009 (the % change to previous exchange rates used by SAT for 2009/10 are indicated in brackets)


Slide no. 24

Calculation of overheads

1. Treasury’s guideline on overheads is that it shouldn’t exceed 10% of the total budget of the organisation.

2. As SA Tourism is a marketing organization, its overheads consists of the following:

• Sundry operating cost of non-marketing employees in all business units (Office of CEO Business Unit incl CEO, COO, Mgr Admin, Internal Audit, Legal and IT, Human Resources Business Unit, Research, Finance Business Unit and TECSA).

• Premises and infrastructure cost of all business units (“net premises and equipment”)

• Sundry operating cost of all non-marketing business units (Office of CEO Business Unit (incl CEO, COO, Mgr Admin, Internal Audit, Legal and IT), Human Resources Business Unit, Finance Business Unit and TECSA)

3. On the assumption that there will be no changes to SA Tourism overheads for the remainder of the financial year, actual SA Tourism overheads for the 2007/8 financial year has been calculated on the next page.


Slide no. 25

Calculation of 2007/8 overheads*

Detail/Period Total budget 2007/8 R’mil

Total revenue* 648,76

Applied for:

1. HR cost of Office of CEO Business Unit excl CEO, COO but incl Internal Audit & Legal (R 2,11 mil), IT (R 0,38 mil), Admin (R 2,55 mil) and Human Resources Business Unit (R 6,15 mil) 11,192. HR cost of Research Business Unit 3,933. HR cost of Finance Business Unit 4,524. HR cost of TECSA 1,215. HR cost of overseas Finance Managers 3,556. Total premises & infrastructure cost for all of non-marketing business units (“Net Premises & Equipment” mainline expense item) 27,857. Sundry operating cost of of Office of CEO Business Unit incl CEO, COO, Internal Audit & Legal (R 1,92 mil), IT (R 4,02 mil), Admin (R 1,25 mil) and Human Resources Business Unit (R 0,1 mil) 7,298. Sundry operating cost of Research Business Unit 0,019. Sundry operating cost of Finance Business Unit 4,0110. Sundry operating cost of non-marketing employees in all business units (TECSA) 0,63Total estimated 2007/8 overheads (“B”) 64,19Total 2007/8 overheads as a percentage of total budget (B as a percentage of A) 9,8%

* Based on actual results for Apr – Dec 2007


Slide no. 26

Section D: Any changes to non-financial resources in order to achieve 4 key objectives over the next 5 years1. People

1. Number of employees

Given:

1.1.1 the non-approval of SA Tourism’s request for additional MTEF budgetallocations, as confirmed by the Minster in January 2008;1.1.2 Government’s expected prioritization of infrastructure investment over the next 5 years,which will result in reduced allocations to other ASGISA priorities such as Tourism;1.1.3 Treasury’s guideline that total overheads shouldn’t exceed 10% of total budget,

SA Tourism cannot request for the appointment of any additional marketing staff members to the SA Tourismorganizational structure (as previously approved by the Board, except for the absolutely essential

appointment ofa Marketing Communications Manager in India (for which SA Tourism requests Board-approval).

2. Skill set of staff members

Given the introduction of the EPM Project Management system in SA Tourism effective 2008/9, no new marketing

staff member will be appointed unless he/she has at least 1 year project management experience.

3. Time allocation/management of marketing staff members

In terms of SA Tourism’s Board-approved market prioritization, marketing staff members will continue to spend the

following proportion of total available time on the different types of markets:

Core markets: 60%Investment markets: 20%Tactical markets: 15%Watch-list markets: 5%


Slide no. 27

Section D: Any changes to non-financial resources in order to achieve 4 key objectives over the next 5 years

2. Systems

No change is foreseen at this stage to SA Tourism’s 2 primarysystems (Oracle and EPM Project Management) although SATourism has been experiencing immense problems with support

andmaintenance on its Oracle Financial system (high staff turnover

ofskilled Oracle staff at companies). SA Tourism will continue tomonitor this situation and consider appropriate action only if itmaterially jeopardizes procurement and monthly managementaccounts.


Slide no. 28

Section D: Any changes to non-financial resources in order to achieve 4 key objectives over the next 5 years

3. Infrastructure

3.1 United Kingdom

SA Tourism needs new office space in London and will find alternative accommodation if DFA can’t accommodate SA Tourism in the High Commission on Trafalgar square. An appropriate settlement, currently unbudgeted and which needs to be funded through an applicable reallocation at the time, will need to be negotiated with the landlord at an appropriate time in future (25 years lease expiring in 2014).

3.2 France

SA Tourism is currently occupying a residential apartment in Paris and needs to move to proper office space by 30 September 2008 (subject to the landlord’s approval).

3.3 India

The cost of office space in India has drastically increased over the last 3 years. As SA Tourism, needs bigger office space, it needs to find alternative office space in Mumbai by 1 February 2009.

3.4 Other overseas offices

No other changes are foreseen to office space over the next 5 years.


Slide no. 29

Section D: Any changes to non-financial resources in order to achieve 4 key objectives over the next 5 years4. Business Units

No changes are necessary iro SAT’s current 17 business units:

• Office of the CEO/COO (including Legal, Internal Audit & Admin)• Human Resources• Africa Portfolio (including Domestic Marketing)• Asia Portfolio• Europe Portfolio• Americas Portfolio (including UK)• Events• Business Tourism• Central Marketing (including Global Brand, Channel & Agency Management)• E-Business• Research• PR & Comms• Product & Itinerary • Finance• TECSA• TGCSA• Business Systems (previously known as IT)


Slide no. 30

Section D: Calculation of future annual overheads based on changes in non-financial resources as indicated (R’mil)*

Detail/Financial year Total budget 2008/9

Total budget 2009/10





Total revenue budget* 679,60 750,06 781,97 815,24 849,98 884,69

Breakdown:

DEAT MTEF allocation (confirmed until 2010/11) 577,14 644,67 670,52 697,34 725,23 754,24

TOMSA levies 60,99 65,26 69,83 74,72 79,95 83,95

Exhibitions 17,31 17,99 18,72 19,47 20,25 21,06

Grading Council fees 12,04 12,52 13,02 13,54 14,08 14,65

Interest 10,07 7,21 7,35 7,51 7,66 7,81

Sundry income 2,05 2,41 2,53 2,66 2,81 2,98

Maximum allowable overheads 67,96 75,01 78,20 81,52 85,00 88,47

Total overheads as a percentage of total budget 10,0% 10,0% 10,0% 10,0% 10,0% 10,0%

* Based on actual results for Apr – Dec 2007


Slide no. 31

Section D: Calculation of future annual overheads based on changes in non-financial resources as indicated (R’mil)*

Detail/Financial year Total budget 2008/9






Total revenue budget* 679,60 750,06 781,97 815,24 849,98 884,69

Applied for:

1. HR cost of Office of CEO Business Unit excl CEO, COO but incl Internal Audit & Legal , IT, Admin and Human Resources Business Unit 12,09 13,05 14,10 15,09 16,14 17,27

2. HR cost of Research Business Unit 4,24 4,58 4,95 5,30 5,67 6,06

3. HR cost of Finance Business Unit 5,02 5,47 5,91 6,32 6,98 7,68

4. HR cost of TECSA 1,98 2,14 2,31 2,47 2,64 2,86

5. HR cost of overseas Finance Managers 3,97 4,29 4,63 4,95 5,30 5,67

6. Total premises & infrastructure cost for all of non-marketing business units (“Net Premises & Equipment” mainline expense item)

32,12 36,09 38,98 41,71 43,79 45,98

7. Sundry operating cost of of Office of CEO Business Unit incl CEO, COO, Internal Audit & Legal, IT, Admin and HR Business Unit

8,18 8,80 9,24 9,70 10,28 10,90

8. Sundry operating cost of Research Business Unit 0,01 0,01 0,02 0,02 0,02 0,03

9. Sundry operating cost of Finance Business Unit 4,61 5,30 5,78 6,30 6,80 7,35

10. Sundry operating cost of non-marketing employees in all business units (TECSA)

0,88 0,95 1,03 1,10 1,18 1,27

Total estimated 2007/8 overheads (“B”) 73,10 80,68 86,95 92,96 98,80 105,07

Total overheads as a percentage of total budget (B as a percentage of A)

10,7% 10,8% 11,1% 11,4% 11,6% 11,8%* Based on actual results for Apr – Dec 2007


Slide no. 32

Conclusion on overheads

South African Tourism has not been granted a CPIX increase following the last MTEF

Process, resulting in total overheads to exceed the 10% guideline set by Treasury

(please note that this is not compulsory).

We however believe that the non-allocation of a CPIX adjustment to SAT’s latestMTEF allocation justifies the excess. Situation will however be closely monitored

andSAT will endeavor to get this adjustment at the next MTEF event.


Slide no. 33

Areas of cooperation with stakeholders in 2009/10Stakeholder Details of cooperation

1. TBCSA & TOMSA 1.1 SAT is co-funded from voluntary tourism levies collected and SAT therefore offers some specific benefits for establishments that collects TOMSA levies1.2 SAT and TBCSA jointly addresses the industry once a year in all provinces and have bilateral meeting quarterly

2. Provincial Tourism Authorities CEO’s Forum meeting quarterly where SAT CEO meets Provincial CEO’s to share Business Plans & Budgets and discuss specific marketing issues including joint marketing projects. SANParks, SANBI and TEP also attend. The CMO convenes the quarterly marketing forum with provincial marketing managers.

3. Fedhasa, ASATA and SATSA Sharing of information

4. DEAT public entities & programmes:4.1 SANPARKS

4.2 SA Weather service4.3 SANBI4.4 TEP

Lobby SANPARKS to also start collecting TOMSA levies. Provide exhibition space at exhibitions at beneficial rates Share informationShare informationJoint funding of ETEYA project

5. IMC and GCIS Sharing of information and joint marketing activities

6. SAPS Quarterly meetings with Provincial SAPS leadership

7. Match & LOC Ongoing liaison on Confederations Cup and 2010 Soccer World Cup

8. Miptech and Minmec Sharing of information on obtaining inputs on high-level marketing issues

9. South African embassies overseas Provide marketing collateral


Slide no. 34

Section E: High-level budget allocations (R’mil)

Detail/Period Forecast2007/8

Total budget 2008/9






Total revenue* 648,76 679,60 750,06 781,97 815,24 849,98 884,69

Less:

TGCSA expenses1

(total incl o/heads)

22,10 14,14 12,52 13,02 13,54 14,08 14,65

TECSA expenses1 (total

incl o/heads)

4,09 6,00 6,30 6,62 7,08 7,58 8,11

HR expenses 82,71 83,40 93,81 104,66 111,98 119,83 128,21

Net premises & equipment cost

27,85 29,82 33,09 38,98 41,71 43,79 45,98

Sundry expenses 22,70 17,96 23,48 28,86 31,74 34,60 37,37

Total budget available for capex, marketing & research

489,31 528,28 580,86 589,83 609,19 630,10 650,37

*Excluding TGCSA & TECSA; ** Including CAPEX

Notes:

1. Including SAT’s contributions of R 2,125 and R 2,1 million in 2007/8 and 2008/9 respectively; thereafter R Nil


Slide no. 35

Section E: High-level budget allocations (R’mil) (cont.)

Detail/Period Forecast2007/8

Total budget 2008/9






Total budget available for capex, marketing & research (c/f)

489,31 528,28 580,86 589,83 609,19 630,10 650,37

Less: CAPEX provision

Building & leasehold improvements1

2,67 3,00 11,10 3,40 3,40 3,40 3,40

Furniture & fixtures1 0,90 0,90 1,90 1,10 1,10 1,10 1,10

IT equipment1 0,98 0,75 1,88 1,18 1,18 1,18 1,18

Motor vehicles 0,00 0,00 0,00 0,49 0,00 0,49 0,49

Total budget available for marketing & research

484,76 523,63 565,98 583,66 603,51 623,93 644,20

*Excluding TGCSA & TECSA; ** Including CAPEX

Notes:

1. 2009/10 includes provision for building & leasehold improvements, Head Office & server room (R 3,1 million), London office (R 3,3 million), Paris office (R 3,3 million) and Mumbai office (R 1,4 million). Furniture and IT also needs to be increased to provide for related expenses. Should actually take place in 2008/9 – will endeavor to fast-track.


Slide no. 36

SA Tourism proposed 2009/10 BudgetDetail (in brackets applies to 2009/10)/Period Proposed

2009/10 R’milApproved

2008/9 R’mil

Total marketing & research budget* 565,98 523,63

Allocated as follows:

Research Business Unit (CEO to finally confirm) 50,8 50,8

E-Business Business Unit (includes Call centre expenses R 9 mil, Website refreshment, content & CC collateral R 3,1 mil, other E-Business projects R 2,2 mil)

14,30 16,3

Africa Portfolio Business Unit (includes Indaba expenses R 16,61 mil, SADC (Botswana, Angola, DRC, Zimbabwe, Lesotho, Swaziland & Mozambique) R 8,04 mil, West Africa (Nigeria & Ghana) R 3,9 mil, East Africa (Kenya & Tanzania) R 4,68 mil, ETEYA R 1,54 mil & Domestic R 15,29 mil)

50,06 51,5

Americas & UK Portfolio Business Unit (includes UK marketing R 44,31 mil including WTM: R 5,6 mil, USA marketing R 45,46 mil, Brazil R 2,69 mil, Canada R 2,9 mil, Ireland marketing R 0,7 mil & Americas H/office R Nil)

101,66 98,09

Europe Portfolio Business Unit (includes Germany marketing R 40,64 mil, France marketing R 31,53 mil, ITB R 4,5 mil, IMEX R 3,6 mil, Netherlands marketing R 27,1 mil, Italy marketing R 8,03 mil, Sweden marketing R 2,2 mil, Switzerland marketing R 1,1 mil & Europe H/office R 0,48 mil)

119,18 115,2

Asia & Australasia Business Unit (includes Australia marketing R 15,33 mil, Japan marketing R 4,72 mil, China marketing R 8,2 mil, India R 8,40 mil, Singapore R 0,7 mil & Asia H/Office R 0,4 mil)

37,75 36,3

Sub total balance to next page 192,23 155,44


Slide no. 37

SA Tourism proposed 2009/10 Budget

Detail (in brackets applies to 2009/10)/Period Proposed 2009/10 R’mil

Approved 2008/9 R’mil

Total approved marketing budget* 192,23 155,44

Allocated as follows:

Office of the CEO/COO Business Unit (includes Admin R 1,2mil, Strategic planning R 2,5 mil, Energizer R 1,0mil, HR R 2,3 mil which includes R 2,0 mil Induction Program that replaced LTB, Office CEO/COO travel incl legal, int audit R 3,0 mil, RECO R 0,3 mil)

10,30 10,30

Central Marketing Business Unit (includes agency retainers R 46,22 mil, Fundi/Trade Projects R 3,78 mil, DNA contractual R 0 Nil, Business Tourism H/Office marketing R 7,15 mil, 2010/Events Marketing (including SAT Indaba stand) R 12,1 mil, Product & Itinerary projects R 2,0 mil, Global Projects including Brand R 0 mil, Global Media: News Corp R 12,74 mil (US$ 1,6 mil @ R 7,96), BBC R 12,74 mil (US$ 1,6 mil @ R 7,96), CNN R 14,16 mil (US$ 1,78 mil @ R 7,96), Eurosport R 8,98 mil (US$ 1,13 mil @ R 7,96), & existing Nageo provision extension R 25,85 mil (current deal finishes in 2008/9: US$ 2,317 mil), Global Cinema R 10,51 mil (US$ 1,32 mil @ R 7,96), 2010 New TVC 3,0 mil, Brand Toolkits (FIFA World Cup Material) R 2 mil, Usage Fees R 2,5 mil and Stock Options contract R 2,5 mil)

166,23 126,94

PR & Comms Business Unit (includes Annual Report R 0,8 mil, Media Monitoring contract R 2,3 mil and other PR & Comms activities R 2,7 mil), Stakeholder Mgmnt: Egypt, Namibia, UAE, Malaysia, South Korea, New Zealand, Austria, Belgium, Denmark, Norway, Spain & SA stakeholders R 5,8 mil)

11,6 14,10

Finance Business Unit (includes DHL contract 2,2 mil & other Finance activities R 1,9 mil)

4,10 4,10

Balance Nil Nil


Slide no. 38

Conclusion

Thank you

Questions/comments?

executive summary final high-level 2009/10 business plan & budget and 5-year mtef strategic plan...

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