South African Tourism 2014/15 Report Summary

1. SA Tourism 2014/15 Annual Report Presentation Select Committee on Trade and International Relations 27 January 2016

2. Contents • Executive Summary • Strategic Overview • Governance and Organisational Structures • Auditor General’s Report • Situational Analysis • South African Tourism Market Portfolio • 2014/15 Audited Performance Information • Governance Information • Human Resource Management • Audited Statement of Financial Performance for 2014/15 • Conclusion

3. Executive Summary - Global • Difficult trading conditions globally. • Global challenges in the economy. • Outbound tourism, whilst good, is largely short-haul. • Global insecurity causing nervousness amongst travellers. • Delays in visa issuance impacting some markets such as China, India and Africa. • Reduction in length of stay. • New immigration regulations and health scares adversely affected our performance.

4. Executive Summary – South Africa • Sluggish South African economic growth impacting on GDP growth. • Job losses and unemployment rate continue to increase. • Though no Ebola cases were reported in South Africa, our country has felt the impact.

5. Executive Summary – South African Tourism • Late arrival of statistics from Stats SA and their change in methodology impacted on South African Tourism. • Continued challenge of currency exposure leading to regular review of SA Tourism’s operating model overseas in response to rising costs: - Hubs - Virtual offices - Global Marketing Agencies • SA Tourism has achieved 6 of the 11 set targets. • Whilst we did not meet all of our targets we achieved growth in foreign arrivals and revenue. • Domestic tourism performance remains a challenge for SA Tourism.

6. Strategic Overview Slide no. 5

7. Vision and Mission Vision Mission To develop and implement a world-class tourism marketing strategy for SA. In pursuance of this, SA Tourism will: Implement domestic, regional and international marketing strategies informed by research; Implement a business events strategy; Implement and maintain a recognisable, credible and globally benchmarked system of quality assurance; Facilitate strategic alignment of Provinces and industry in support of global marketing of tourism; Continuously align efforts to support tourism growth; Ensure the efficient utilisation of resources to deliver the tourism strategy. For South Africa to be one of the most preferred tourist destinations in the world and to maximise the economic potential of the tourism industry for our country and its people. Slide no. 6 Page 24 of the Annual Report

8. Legislative Mandate of SA Tourism The South African Tourism Board is a Schedule 3A Public Entity (PFMA) established in terms of the Tourism Act (Act no. 72 of 1993) and continues to exist in terms of the Tourism Act (Act no. 3 of 2014). Functions of the South African Tourism Board: • Market South Africa as a domestic and international tourist destination; • Market South African products and facilities internationally and domestically; • Develop and implement a marketing strategy for tourism that promotes the objectives of the Act and the NTSS. • Advise the Minister on any other matter relating to tourism marketing; • With the approval of the Minister, establish a National Convention Bureau to market South Africa as business tourism destination. • Provide oversight for the management of the Tourism Grading Council. Page 24 of Annual Report

9. Understand the market Choose the attractive segments Market the Destination Facilitate the removal of identified obstacles Facilitate the product platform Monitor and learn from tourist experience SA Tourism’s Mandate set out in the Tourism Act makes it clear that it needs to make choices that will benefit all South Africans The mandate of the Tourism Sector is ... Redistribution and transformation Sustainable GDP Growth Sustainable job creation Increase in tourist volume Increase in tourist spend Increase length of stay …through six key objectives Improve geographic spread Improve seasonality patterns Promote transformation …by acting in a focused way to

10. Governance and Organisational Structures Slide no. 9

11. Governance Structure Minister of Tourism Minister of Tourism NDT DG South African Tourism Board National Department of Tourism SA Tourism Management QAO Global Manager: Stakeholder/ Global Trade Slide no. 10

12. Organisational Structure Minister of Tourism Minister of Tourism South African Tourism Board NDT DG South African Tourism Board Chief Executive Officer Manager Office of the CEO Company Secretary Internal Auditor Chief Marketing Officer Chief Convention Bureau Officer Chief Quality Assurance Officer Chief Financial Officer Chief Operating Officer Regional Director: Europe QAO Global Manager: Stakeholder/ Global Trade Slide no. 11

13. Auditor General’s Report Slide no. 12

14. Auditor-General’s Report • SA Tourism received its 14th unqualified audit report in 2014/15. • SA Tourism was one of 11 government entities who received a clean audit award from the Auditor General. • The Auditor General certified that the financial statements were free from material misstatements and no findings were raised regarding procurement and contract. • Auditor-General provided the following outcomes on the performance of our organisation: Page 30 – 31 of the Annual Report

15. Situational Analysis Slide no. 14

16. Global Tourism Performance in 2014 • 2014 saw Travel & Tourism GDP (direct) performing better in the modest global economy growing from 3.4% in 2013 to 3.5% in 2014. This was against the global GDP of 2.4% from the 2.3% in 2013. • The economic performance of travel & tourism was weaker than expected due to a few factors: Ukraine-Russia conflict, Ebola in West Africa, political instability in Thailand and the increase in instability in Syria and Libya. • Despite the growth in spending, it was weaker than expected in line with the macroeconomic performance. The exchange rates were volatile and the US dollar appreciated against major currencies. • Global tourism expenditure reached an estimated US$ 1.197 billion in 2014, which is a 3.4% growth. Note: 1 A valid comparison with global tourism arrivals cannot be made. Global performance is on tourist arrivals and SA performance cited here is on foreign arrivals. 2 The markets listed are only those that are within the 5th portfolio.

17. Global Tourism Performance in 2014 • According to the UNWTO Report, international tourist arrivals (overnight visitors) grew by 4.7% in 2014, reaching 1.138 billion arrivals worldwide. • It is estimated that international tourist arrivals will reach 1.6 billion by 2020 – at an annual growth rate of between 4% and 4.5%. • The growth was mainly driven by developed markets where arrivals grew by 5.6% compared to 3.6% growth from emerging markets. • Strongest growth was recorded in the Americas (+7%) followed by Asia and the Pacific (+5%), Europe (+4%), Middle East (+4%) and Africa (+2%). Note: 1 A valid comparison with global tourism arrivals cannot be made. Global performance is on tourist arrivals and SA performance cited here is on foreign arrivals. 2 The markets listed are only those that are within the 5th portfolio.

18. Regional Tourism Performance in 2014 • Regional Africa accounted for 76% of total tourist arrivals in 2014 with the Africa-land markets making up the majority of this total. • Tourist arrivals from land markets grew by 8.8% while the Africa-air markets declined by -4.1% in this period. • SA Tourism portfolio accounted for 97% of the total tourist arrivals to South Africa, with core, investment, tactical and watch-list markets growing at 8%, 6.1%, 4.6% and 7.7% respectively.

19. While Foreign Arrivals grew by 3.7% in 2014, the target was not achieved. Africa-air and Europe were the only regions that exceeded the target Foreign Arrivals to South Africa by Region, 2013 vs 2014 Arrivals (Thousands) Note: Cells shaded green indicate where the target was exceeded

20. Tourist arrivals to South Africa in 2014 grew by 6.6% over 2013 to reach 9 549 236. All regions grew with the exception of Central & South America and Asia Europe • 1,365,472 arrivals • 6.8% up from 2013 North America • 369,801 arrivals • 4.0% up from 2013 Middle East • 52,604 arrivals • 0.1% up from 2013 Asia • 269,634 arrivals • 16.0% down from 2013 Central & South America • 65,118 arrivals • 16.4% down from 2013 Australasia • 132,080 arrivals • 3.2% up from 2013 AFRICA • 7,257,720 arrivals • 8.1% up from 2013 Indian Ocean Islands GRAND TOTAL • 22,094 arrivals • 9.6% up from 2013 • 9 549 236 arrivals • 6.6% up from 2013 Note: *A tourist arrival is defined as a non-resident who stays for more than 24 hours but less than one year in the country and excludes “workers” and “contract workers”. As of 2014, Statistics SA is no longer able to provide statistics on Transit Tourists and therefore a new baseline is now created. Source: Statssa Tourism & Migration release December 2014, SAT analysis

21. South African Tourism Market Portfolio Slide no. 20

22. 5th Market Portfolio - 01/04/2014 – 30/03/2017 Brazil Australia France USA China Germany India UK Nigeria Netherlands Japan Italy Page 36 - 37 of the Annual Report Slide no. 21

23. Hub Approach ASIA & AUSTRALIASIA EUROPE AMERICAS AFRICA AFRICA - HEAD OFFICE HEAD OFFICE - WATCHLIST INDIA ASIA AIRLINK HUB INTERNATIONAL - HEAD OFFICE ASIA AIRLINK HUB

24. Audited Performance Information 2014/15 Slide no. 23

25. Performance Information by Programme Slide no. 24

26. 2014/15 Audited Performance Information Page 38 - 39 of the Annual Report

27. 2014/15 Audited Performance Information Page 38-39 of the Annual Report

28. 2014/15 Audited Performance Information Page 38-39 of the Annual Report

29. 2014/15 Audited Performance Information Page 38-39 of the Annual Report

30. 2014/15 Audited Performance Information Page 38-39 of the Annual Report

31. 2014/15 Audited Performance Information Page 38-39 of the Annual Report

32. Strategy to Overcome Areas of Underperformance Slide no. 31

33. Strategies to Overcome Areas of Underperformance Page 39 of the Annual Report

34. Performance Information by Activity Slide no. 33

35. Key Initiatives: Global • Fully integrated marketing channels, considered globally implemented locally. • Global partners – • National Geographic – 458 million households; 172 Countries; 38 Languages (Dutch, English, Chinese, French, German, Italian, Spanish). • CNN Global distribution – 484 million households, hotel rooms & airports worldwide. • #MeetSouthAfrica campaign rolled out across most Core Markets. • Numerous global awards won for excellent destination marketing execution. Page 41 – 51 of the Annual Report

36. Key Initiatives: Global • Successful Joint Marketing Agreements (JMAs) to facilitate fulfilment of objectives. • The ‘Heartfelt Connections’ campaign has worked well to address the decline in awareness and positivity. • Participation in international trade shows to improve market access for South African tourism products. • Use of integrated marketing approach – traditional and digital marketing. Page 41 – 51 of the Annual Report

37. Key Initiatives: Africa • SA Tourism exhibited in a number of travel shows to build brand awareness, create market access and to increase strategic support for our events. These include: - Swahili Tanzania - Magical Kenya - BITUR in Angola - AKWAABA in Nigeria • SA Tourism partnered with Association of Travel Agencies and Tour Operators in Nigeria, Kenya, Ghana, Angola and Tanzania to increase tourism growth from those regions. Page 41 - 51 of the Annual Report

38. Key Initiatives: Africa • Trade and media from different markets were hosted throughout the year to showcase leisure and business experiences leveraging on: Vodacom Durban July, Standard Bank Joy of Jazz, the Cape Town Jazz Festival, Indaba and Meetings Africa. • SA Tourism also partnered DSTV lifestyle channels such as Africa Magic, Africa Magic Entertainment, VUZU, Mzansi Magic , MTV Base and Africa Magic World. • A partnership with Intercape and Flight Connect was entered into for the distribution of brochures that profiled 52 getaway itineraries in South Africa on board the busses and flights. More than 7 000 travellers from Mozambique and Botswana were reached through this initiative. Page 41 - 51 of the Annual Report

39. Key Initiatives: Domestic • Domestic tourism is a high priority market with a long term objective aimed at encouraging a culture of travel among South Africans. • Integrated “Sho’t Left” campaign has gained traction to encourage South African travellers to take short breaks. • Sho’t Left website, a portal for better engagement with our trade partners. • Trade engagements have encouraged packaging of affordable tailored experience packages featured on the Sho’t Left Deals Page. • Secured Provincial and industry buy-in and alignment in implementing the Domestic campaign and SA Specialist programme. • Various Joint Marketing Agreements were signed with airlines, associations, travel agents, product and on-line agents to fulfil objectives. Page 41 - 51 of the Annual Report

40. Tourism Grading Council of South Africa (TGCSA) Slide no. 39

41. Tourism Grading Council of South Africa (TGCSA) • The focus of TGCSA is to implement a recognisable and credible globally bench-marked system of quality assurance for tourism experiences which can be relied upon. • TGCSA developed a strategy aimed at achieving the following: • Engagement with partners to deliver quality visitor experience that reaffirms brand promise. • Increasing value for graded establishments through the introduction of the Basket of Benefits. • Partner with NDT for SMME support. • Integration of online reviews in the grading system. Page 51 - 52 of the Annual Report

42. Key Initiatives: TGCSA • The Basket of Benefits was launched in September 2014. • It is a comprehensive offering to graded establishments that provides various value-added benefits tailor-made to their specific needs. • Power of One Country-wide Roadshows are conducted annually as part of the Stakeholder Management Plan to build strong relationships with business and the provincial and local tourism authorities. Page 51 – 52 of the Annual Report

43. Key Initiatives: TGCSA • The grading categories were expanded in July 2014 from nine to eleven to include the Game Lodge and Game/Nature categories. • In 2014 the Universal Accessibility (UA) minimum entry requirements and grading criteria were revised to consider mobility, communication and visual impairment. • Review of the TGCSA business model to increase the base of graded establishments as well as renewals. • 2016 TGCSA will be reviewing the Grading Criteria for all Categories • 2016 will see TGCSA including Online User Generated Guest Reviews into the grading process to encapsulate service into the process. Page 51 – 52 of the Annual Report

44. South African National Convention Bureau (SANCB) Slide no. 43

45. South African National Convention Bureau (SANCB) • SANCB focuses its efforts on attracting events in economic sectors that have been identified by the government as priorities for future development. • Hosting major events in these sectors can contribute significantly in accelerating macro-economic benefits for the country. Page 52 of the Annual Report

46. Market Priorities: Key Industries/Sectors – Provinces Mining and agriculture are major sectors across provinces; while manufacturing industries are mainly located in Eastern Cape, KwaZulu-Natal and Free State, the financial services sector is mainly concentrated in Gauteng • South Africa – Key Industries/Sectors by Provinces 1 9 • Limpopo • Key Industries:Mining, tourism (game reserves), agriculture and hunting industry / game farming • Gauteng • Key Industries: Financial and business services, logistics and communications, mining, agriculture (food processing and beverages), medical1, automotive2 manufacturing, R&D3 and telecommunications and technology 9 8 • Mpumalanga • Key Industries: Mining (Coal), agriculture (citrus fruit production, agri-processing and sheep farming), tourism (eco-tourism), game farms and manufacturing 1 8 2 7 2 • North West • Key Industries: Mining (mainly Platinum), tourism (game reserve, nature reserve, etc.) and agriculture 3 6 7 • Free State • Key Industries: Mining (Gold, Coal and Diamond), agriculture, petrochemicals and manufacturing (high-tech industries) 3 • Northern Cape • Key Industries: Mining (mainly Diamonds, Iron-ore), tourism, game-farming, astronomy and agriculture 5 4 5 6 KwaZulu-Natal • Key Industries: Mining (Aluminum, Steam Coal, Minerals), manufacturing (petro-chemicals, automotive), tourism, ports, leather industry and agriculture, real estate, medical1 Eastern Cape • Key Industries: Automotive manufacturing, finance, real estate, agriculture (sheep farming and fishing), wholesale and retail trade, tourism, ports5 and hotels and restaurants 4 • Western Cape • Key Industries: Finance, printing and publishing, real estate, ICT, oil and gas, retail, engineering, R&D4, clothing and textile, agriculture, ship building / ports, tourism and medical1

47. Key initiatives: SANCB • 52 event bids were submitted with a potential to attract 119 477 business delegates to South Africa over the next 5 years, an estimated economic impact of R1.6 billion, and a total of 230 estimated conference. • 177 business events were secured around the country for the next 5 years, which will attract 253 128 delegates, creating 753 event days and generating an estimated R3.5 billion for the economy. • Five tradeshow platforms were created for the industry which generated 75 leads with a combined estimated economic impact of R490 million, a potential to attract 53 795 delegates and generate 451 event days. Page 52 of the Annual Report

48. Key initiatives: SANCB • Meetings Africa was attended by 178 international hosted buyers, 38 African Association Buyers, 270 exhibitors, 199 media and 1556 local corporate buyers and visitors. • SANCB launched 30 delegate boosting activations and 30 local on-site events in more than 20 cities around the world to promote South Africa as a host country and to encourage return visits to the country. • South Africa improved its global International Congress and Convention Association (ICCA) Ranking position from 37th to 34th. • South Africa maintained its top position as a convention destination in Africa and the Middle East. Page 52 of the Annual Report

49. Impact of our Initiatives

50. Impact of our Initiatives