1 / 38

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 & BUDGET AND 5-YEAR MTEF STRATEGIC PLAN (2009/10 – 2013/14) Approved by SAT’s EXCO on 1 February 2008 Approved by SAT’s Board on 12 February 2008

tristank
Download Presentation

Executive Summary FINAL HIGH-LEVEL 2009/10 BUSINESS PLAN & BUDGET AND 5-YEAR MTEF STRATEGIC PLAN

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Executive Summary FINAL HIGH-LEVEL 2009/10 BUSINESS PLAN & BUDGET AND 5-YEAR MTEF STRATEGIC PLAN (2009/10 – 2013/14) Approved by SAT’s EXCO on 1 February 2008 Approved 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

  2. Background • 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) • 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

  3. What is requested from the Board? • 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 To consider for approval: • 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 • 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 • 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 • 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

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

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

  6. Section A: SA Tourism’s four high-level objectives? 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) 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. 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. 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. 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. Transformation targets will be informed by the BEE scorecard. 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. Objective 1 and 2: Notes on targets

  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!

  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

  9. Projections for arrivals in the next five years The 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 Additional 259k arrivals 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. 8

  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%. 9 Note: This estimate includes the FIFA family

  11. Projections by region

  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.

  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.

  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 business Strategy 3: Grow & nurture our staff Strategy 4: Improve brand traction in markets to increase positive awareness Strategy 5: Develop or fine-tune and integrate yardsticks and systems to obtain operational excellence Strategy 6: Increase value extraction in SA from all tourists *during the 2008/9 until 2010/11 financial years to achieve 4 high-level objectives

  15. Actions & measures for strategy 1 Strategy 1 : Share our company’s vision with key stakeholders and influencers Note: Red text indicates proposed changes to actions and / or measures.

  16. Actions & measures for strategy 2 Strategy 2 : Use the trade* to grow our business * Trade includes product owners and travel operators and agents

  17. Actions & measures for strategy 3 Strategy 3 : Grow & nurture our staff in order to realize our operational goals Note: Red text indicates proposed changes to actions and / or measures.

  18. Actions & measures for strategy 4 Strategy 4 : Improve brand traction in markets to increase positive awareness Note: Red text indicates proposed changes to actions and / or measures.

  19. Actions & measures for strategy 5 Strategy 5 : Develop or fine-tune internal systems and communication for better results (to obtain operational excellence) Note: Red text indicates proposed changes to actions and / or measures.

  20. Actions & measures for strategy 6 Strategy 6 : Increase value extraction in SA of all tourists

  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

  22. Section C: Budget parameters • 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) • 2010: 5,8% (no average 2010/11 forecast available from SARB; best estimate) • 2011: 5,6% (no average 2011/12 forecast available from SARB; best estimate) • 2012: 5,3% (no average 2012/13 forecast available from SARB; best estimate) • 2013: 5,7% (no average 2013/14 forecast available from SARB; best estimate) • Budget for exchange rates as indicated on the next slide

  23. Exchange rates used for budgeting • Notes: • 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)

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

  25. Calculation of 2007/8 overheads* * Based on actual results for Apr – Dec 2007

  26. Section D: Any changes to non-financial resources in order to achieve 4 key objectives over the next 5 years • People 1. Number of employees Given: 1.1.1 the non-approval of SA Tourism’s request for additional MTEF budget allocations, 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 Tourism organizational structure (as previously approved by the Board, except for the absolutely essential appointment of a 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%

  27. Section D: Any changes to non-financial resources in order to achieve 4 key objectives over the next 5 years • Systems No change is foreseen at this stage to SA Tourism’s 2 primary systems (Oracle and EPM Project Management) although SA Tourism has been experiencing immense problems with support and maintenance on its Oracle Financial system (high staff turnover of skilled Oracle staff at companies). SA Tourism will continue to monitor this situation and consider appropriate action only if it materially jeopardizes procurement and monthly management accounts.

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

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

  30. Section D: Calculation of future annual overheads based on changes in non-financial resources as indicated (R’mil)* * Based on actual results for Apr – Dec 2007

  31. Section D: Calculation of future annual overheads based on changes in non-financial resources as indicated (R’mil)* * Based on actual results for Apr – Dec 2007

  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 latest MTEF allocation justifies the excess. Situation will however be closely monitored and SAT will endeavor to get this adjustment at the next MTEF event.

  33. Areas of cooperation with stakeholders in 2009/10

  34. Section E: High-level budget allocations (R’mil) 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 *Excluding TGCSA & TECSA; ** Including CAPEX

  35. Section E: High-level budget allocations (R’mil) (cont.) 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. *Excluding TGCSA & TECSA; ** Including CAPEX

  36. SA Tourism proposed 2009/10 Budget

  37. SA Tourism proposed 2009/10 Budget

  38. Conclusion Thank you Questions/comments?

More Related