Parliamentary Portfolio Committee’s Tourism SummitMs Mmatšatši Marobe

Old Assembly Chamber, Parliament28th February 2011

Working Together for Tourism Growth and Development

A Private Sector Perspective

Table of ContentsTable of ContentsIntroductions & InsightsAbout the Tourism Business Council of SAThe Cinderella Industry & Past AchievementsThe State of the IndustryOur Priorities as a sectorApproach to Development, Growth & TransformationThe ChallengesPossible SolutionsConclusions

Overview of Travel & Tourism Overview of Travel & Tourism Travel & tourism is a sector encompassing transport, accommodation, catering, recreation and services for visitors One of the world’s highest priority industries and employers, and the world’s leading growth sectors.One of the fastest growing economic sectors globallyA sector whose business volume equals or even surpasses oil exports, food products and or automobilesA sector that has become a major player in international commerceA sector that has become a main source of income for many developing countriesLast four years have seen T&T Economy GDP increase at an

average annual rate of 4.0% in real terms, faster than the overall global economy. And over the same period, T&T has created more than 34 million new jobs.

PRIVATE SECTOR LANDSCAPE PRIVATE SECTOR LANDSCAPE South Africa’s Travel and Tourism industry is made up of

a combination of large corporations and SMMEs. These businesses operate in different facets of the

industry, which can be broadly divided into:

1. Transport – Land, Air and Sea2. Hospitality – Accommodation and Food & Beverages3. MICE – Meetings, Incentives, Conferences and Events 4. Tourist Attractions – attractive destinations which

tourist visit for business and leisure

These key industry players, all play an important role in the delivery of a ‘unique South African experience’ to local and international tourists.

ABOUT THE TBCSAABOUT THE TBCSA TBCSA is the umbrella organisation for the private sector in the

travel and tourism industry Mandate of been the VOICE of private sector within the industry

and be a conduit with the public sector Formed in 1996 to form a unified platform for the private sector

to engage with the public sector and other stakeholders to develop and grow the industry

Managed by a Management Board with automatic seats for all key tourism associations and elected business representatives

Over the years, TBCSA has played a pivotal role in tackling macro-economic issues faced by the Sector, which include:– Transformation in Tourism– Tourism Marketing– Skills Development and– Quality Assurance

WHERE DO WE FIT IN? WHERE DO WE FIT IN? GOVERNMENT

PRESS

INDUSTRY

VOASA FEDHASA ASATA SATSA BIG MEMBERS TEPTOMSA

Collector of funds for marketing

SAACI AHI SAVRLA SAYTC NAA RASA

TBCSA MEMBERSHIP TBCSA MEMBERSHIP TBCSA is made up of fee paying members from key Travel and

Tourism sectoral associations and leading businesses.

The Key sectoral associations are al lmembers of the TBCSA and form the backbone of the Management Board

Individual leading businesses have the option of joining the directly or through their sector Association

Members also comes from non-tourism businesses operating within the sector such as research agencies and financial institutions

Membership support also from Corporates operating outside the sector as they recognise the value of tourism to the economy - Crown Members:

ASSOCIATION MEMBERS ASSOCIATION MEMBERS

KEY MILESTONES KEY MILESTONES TOMSA Levy for funding for SA Tourism marketing efforts Tourism BEE Scorecard - transforming the to be inclusive Public Private Partnerships establishing key organisations:

Tourism Enterprise Programme – SMME development Tourism Grading Council of South Africa for quality

assurance TECSA – Transformation and Employment Equity

Tourism Safety Initiative (SATSA) Hospitality Investment Conference Africa (HICA) Invelo Tourism Awards (Fedhasa)

ABOUT TOMSA ABOUT TOMSA TOMSA (Tourism Marketing Levy South Africa) is a

Section21 entity established in 1998 to provide additional marketing funding to SA Tourism to promote destination South Africa

The funds are obtained through a voluntary levy on tourism services rendered to the tourist, and are collected monthly

The agreed levy is charged onto the visitor and not taken from the tourism business unless specified

TOMSA has grown from collecting R11.4 million in 1999 with 50 collectors, to collecting in excess of R 80 million in 2009.

In 2010, TOMSA transferred approximately R 93 million to SA Tourism between January and December

Relationship is regulated through a signed MOU and quarterly meetings

The State of the Industry The State of the Industry The Effect of the FIFA Soccer World Cup:- 2002 the accommodation sector began preparations to host the FIFA

Soccer World Cup on the belief that SA will win the 2006 bid SA lost the 2006 bid to Germany; FIFA award SA with the rights to host the 2010 SWC in May 2004; Between 2004 and 2010, more hotels built with more rooms including

guest houses and B&Bs; Capacity added in the transport sector – rental vehicles& coaches; Tour operator block bookings & forward bookings with prepayments; Unrealised uptake of packages and occupancy levels for some; Bumper 2010 due to SCW for some – B&Bs and major hotel chains;

State of the IndustryState of the Industry The Effect of the Global Economic recession:-Economic recession affecting worldwide travel in 2008;Recession hits SA towards end 2008 initially excluding travel;International arrivals slows down mid 2009 lead by EU,UK & USA;Domestic travel slowing down late 2009 with corporate travel leading;Local leisure travel slowing during the SWC – no effective strategy by industry to respond;Corporate travel shuts down during the SWC and struggles to recover afterwards, with government leadingSA consumer shelving their travel plans & bankrupt;

The State of the Industry The State of the Industry Local Business Developments:-

Slow reaction to the global economic recession – adjusting rates;

Strength of the local currency;Airline prices unusually high leading to Soccer World Cup;Cost pressure – electricity tariffs, labour, rates & taxes, fuel

costs;New regulations such as AARTO, bad road conditions, VISA

regime, ...; Perception of inflated accommodation prices leading to

Soccer World Cup.

Some Home Truths – lets face the facts

Missed opportunities during 2010 FIFA Soccer Cup;Inflexibility of some establishments, e.g. unable to get a sandwich @ 11pm during 2010 Soccer Cup; Failure to learn lessons from competitors and newer hotels and other operators; Rigid adherence to set rates and tariffs in the sector;How does SA pricing compare with competitors in Africa and elsewhere

In Africa, e.g. Kenya, Morocco and Egypt.Long haul competitors, further from Europe, e.g. Australia and Thailand;

Is SA getting ROI on marketing spend?

Approach to DevelopmentApproach to DevelopmentPublic Private Partnership in developing and

growing the sectorWhat can be Achieved”

Job Creation – travel and tourism remain one of key sectors for job creation

Little education required to be employed in the sector

Key sector for skills transfer and on-the-job training

Entrepreneurship Development

Approach to Growth Approach to Growth Committed focus from top government

leadershipIncentives and special dispensations to

promote growth in the sector such asInvestment Promotion incentivesMarketing and Channel Access

packagesYouth Employment Subsidies

Approach to Approach to Transformation Transformation

Committed to BBBE policy and programme Broader view of Transformation:

Human Resources Development – training & skills transfer Enterprise Development & Support Social Investment Job Creation & Poverty Alleviation

Mainstreaming travel and tourism as a sector: Statistics and data Registration Leadership

Changing the Way Business is done:- Innovating the SA offering – packaging & value for money Growing Domestic travel New Markets regionally & internationally

CHALLENGES FACING THE SECTOR

Challenges Facing the Sector Challenges Facing the Sector Airlift and Air Access into South AfricaSkills Development – the role of SETAsSafety and Security – of tourists and our peopleLocal Government Role in Tourism – service deliveryService Excellence – grading & culture of customer focusMarketing & PromotionCost of doing business

Challenges Facing the Sector Challenges Facing the Sector Infrastructure Support e.g. roads, signage, water & electricity supplyResponsible Tourism - integrity of our biodiversityLand Claims and their speedy resolutionTransformation – role of TECSA and relationship with private sector Prioritisation of Tourism within Government/CabinetKnowledge and Information – mainstreaming tourism

Possible SolutionsPossible Solutions Air Access – tough decisions on State Airline; linked tourism and aviation policy; and YD implementationPeople Movement – SADC visa regime; flexible VISA requirements in key source marketsInvestment Promotion – incentives for hotels in small scale segments & rural areas/towns; subsidies in transport & marketing spendSkills Development – responsive SETA; incentives; Cost of Doing Business – legislative harmonisation between National, Reginal and Local governmentsIntegrated planning btw Public and Private sectorSkills Transfer & Leadership Development – creating jobs

THANK YOU