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PRESENTATION TO THE PORTFOLIO COMMITTEE ON TOURISM ORGANISATIONAL PERFORMANCE RESULTS QUARTER 4: 2016/17. 25 August 2017. Table of Contents. Situational Analysis Organisational Performance Overview Leisure Tourism Overview Business Events Overview Tourism Grading Overview
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PRESENTATION TO THE PORTFOLIO COMMITTEE ON TOURISMORGANISATIONAL PERFORMANCE RESULTS QUARTER 4: 2016/17 25 August 2017
Table of Contents • Situational Analysis • Organisational Performance Overview • Leisure Tourism Overview • Business Events Overview • Tourism Grading Overview • Human Capital Update • Financial Performance Overview • Governance • Acronyms
Situational Analysis • Following the acceleration in the second quarter, South Africa’s GDP growth was recorded at 0.3% in the fourth quarter. • Inflation was considerably above the desired limit at 6.6% in Q4 of 2016. • Unemployment was notably high at 26.5%, up two percentage points from Q4 2015. • Retail spending was also on the downturn in December 2016, further indicating a constrained economy. • Together with the ongoing drought - which impacted food prices and availability as well as water consumption - consumers were generally restrained in their spending in spite of the usual season’s festivities.
Organisational Performance for Q4 • SA Tourism achieved quarterly targets for 5 of its 14 KPIs: • Number of international tourist arrivals achieved; • Reviewed leisure tourism market portfolio; • Stakeholder engagement matrix in consultation with stakeholders; • Unqualified audit; and • Percentage of staff turnover. • SA Tourism did not achieve targets for 9 of its 14 KPIs: • Number of domestic holiday trips; • Number of business events hosted in South Africa; • Number of business delegates hosted in South Africa; • Total tourism revenue; • Percentage of brand positivity achieved; • Stakeholder satisfaction score; • Number of graded accommodation establishments; • Number of graded rooms; and • Staff satisfaction score. • Although the quarter 4 target for Total Tourism Revenue was not achieved, the annual target was exceeded.
International Tourist Arrivals • Foreign arrivals accounted for 2.6 million of total tourism trips an increase of 8.7% compared to 2015. Africa remains SA Tourism’s biggest source region followed by Europe and North America. • The fastest growing regions were Central & South America (73.8%), Indian Ocean Islands (30.6%), Middle East (29.1%) and Europe (15.7%). • The main driver of the increase in foreign trips was tourists visiting for leisure. • MICE tourists and business shopping remained relatively stable compared to 2015 while business travellers (corporate travel) saw a -49.4% decline from last year.
South Africa received 2.6 million tourists with a growth of 8.7% from 2015 and CAGR of 0.8% from 2014 in this quarter. Arrivals from Central & South America led the double-digit growth when compared to last year and CAGR of over 30% with Asia, Indian Ocean Islands and Middle East also growing by CAGR in double digits.
Geographic Spread • The provincial spread in South Africa has improved from an international perspective with the arrivals increasing in 6 of the 9 provinces in this quarter. • The provinces that lead the growth were Northern Cape, Eastern Cape and Free State with the double digit growth over 2015. • Gauteng was the most visited province in this quarter and grew to reach 1.17 million tourist arrivals with a total of 9.22 million bednights generating an estimated R8.12 billion in revenue. On average tourists stayed 8.2 nights. • Western Cape is the 2nd most visited province with 474 462 tourist arrivals generating 4.93 million bednights and R5.10 billion in revenue.
International Tourist Arrivals • This year-on-year growth is on par with Australia and well ahead of Thailand for this quarter but our compound annual growth rate (CAGR(2014-2016)) for 2016 is behind both Australia and Thailand. • Leading our growth are the Central & South American, Middle Eastern & Asian markets each with double digit CAGR and year-on-year growth. • Africa-air also grew by double-digits compared to last year (10.8%), with Africa-land growing below the average for the quarter (6.4%). However in terms if CAGR Africa land saw a -2.4% decline from 2014 levels. • Australasia is the only other major sub-region after Africa-land to not have grown above 2014 levels. % Y-o-Y Growth * CAGR Growth (2014-2016) -0.9% *1.9% 8.8% *9.4% 8.7% *0.8%
The pipeline is looking positive for South Africa as the number of bookings are showing a positive trend, if things remain the same we can expect more tourist arrivals for the beginning half of 2017. Source: Forward Keys
Domestic Tourism Performance Indicators • Domestic tourism generated a total of R7,7 billion in Q4 2016, which is a 10% decrease from the same period in 2015. • The decline in revenue was due to a decline in number of trips taken in this period. Domestic tourists that took trips in this period increased their length of their trips but were budget conscious as they did not increase their average expenditure. • Revenue from visiting friends and relatives (VFR) orientated trips remained the biggest contributor but the share thereof decreased from 46% to 45%. • Holiday trip contribution accounted for about a third of revenue – down from 34% to 32%. • Almost 2 in 5 (38%) South Africans could not afford to take a domestic trip in Q4 2016. A constrained economy alongside high unemployment deterred people from taking a trip. • The decrease in total trips was largely driven by a decrease in leisure related trips (VFR and holiday trips). • Business trips increased in this period • Limpopo continued to receive the most number of trips, followed by KwaZulu-Natal and Gauteng. The number of VFR trips were the cause of increased visits to Limpopo.
Domestic Tourism Performance *Provinces with sample sizes of less than twenty (20) during this period are excluded from the report as they are statistically insignificantly. **Average spend is the average of the tourist's trip spend across the following categories (where applicable): Accommodation, Transport, Food, Shopping, Leisure, Medical, Shopping, Other.
Domestic Tourism Performance: Purpose of Travel SA Tourism currently reports on VFR, Holiday and Business on a quarterly basis however data is also collected on Religious, Medical and Other as per table below. *Though there is growth noted in the medical purpose of travel, the percentage contribution to the total number trips tracked is still insignificant.
Grading of Establishments • The TGCSA quality grades establishments according to eleven categories across all 9 provinces • The categories are as follows: • Backpacker & Hostelling • Bed & Breakfast • Caravan & Camping • Country House • Game Lodge • Nature Reserve • Guest House • Hotel • Lodge • MESE (Meetings, Exhibitions, and Special Events venues) • Self catering • Exclusive Use • Shared vacation
Total Number of Graded Establishments As at 31 March 2017
Total Number of Graded Rooms As at 31 March 2017
Annual Growth/Decline: Graded Establishments/Rooms by Province 2016/2017 Financial Year
Annual Growth/Decline: Graded Establishments/Rooms by Product Type 2016/2017 Financial Year
Workforce Profile SA Tourism’s workforce profile is as follows:
Vacancy and Occupancy Report per Business Area The organisation is operating at 77% (157) capacity against the approved staff establishment of 202. The remaining 23% (45 vacancies) is recorded as vacancies as a percentage of headcount. To ensure business continuity and fulfillment of the vacant roles, SA Tourism has appointed temps and interns as per the last two (2) columns in the table below. A detailed analysis on occupancy and vacancy rate has been provided below:
Employment Equity Update *Interns are part of the temporary staff because they are on fixed term contracts.
Outcomes of the Ministerial Review in relation to Organisational Structure and HR Development Build and enhance EXCO and leadership team capabilities to carry out their roles and duties as per their KPAs Conduct a review of the role, performance and capabilities of the HR function Create a culture of engagement and empowerment within and across all levels and units of the organisation • Introducing ways for middle management to engage in strategic discussions • Effective Delegations of Authority to devolve decision making to management • Change management process to shift organisational culture • Staff satisfaction surveys and implementation of recommendations Key Priorities Review and redesign the organisation structure taking into account the funding and resource constraints including currency risks and losses Skills Audit to understand the skills gaps
Summary of the key activities completed to date May 2016 May-July 2016 January 2017 August- December 2016 Below is a summary of the key activities completed in the project initiation and assessment phases Initiation & kick off Current state Design Implementation planning Change management, programme management Project imitation Conduct current state assessment Develop the high level design Develop the detailed design Plan for implementation Phase 1 Phase 2 Phase 3 Phase 4 • Define scope • Develop project plan and management approach • Align leadership team to drive the case for change • Conduct change readiness survey • Define data requirements • Data collection • Desktop analysis of documents • Conduct interviews with the relevant stakeholders • Understand current business process mapping of the functions • Develop a change management strategy and plan • Develop tailored design principles • Develop organisational process landscape • Define operating model • Develop a proposed optimal high level structure • Design a detailed organisational micro structure based on the agreed high level design • Review and develop job profiles in line with proposed structure • Define head count implications and costs • Develop leadership competency frameworks • Develop people migration plan • Develop an IT strategy to align processes • Develop an Implementation plan. • Placement and recruitment • Conduct skills audit • Develop training plans • Project closure and reporting
Quarterly Revenue Analysis *Other Income = Indaba, Meetings Africa, Interest and Grading.
Statement of Financial Performance-Expenditure by accounting classification. • Marketing expenses of R 929.48 mil makes up 73% of total expenditure whilst remaining 27% is made up of Administration costs. Included in Administration cost is Personnel costs which makes up 14% of the of the total budget. • The administration expense balance of R 352.48 mil comprises of operating expenses. • Marketing expenditure relates to investment in leisure marketing, quality assurance and business events.
