Audited Statement of Financial Performance for 2014/15
Conclusion
Difficult trading conditions globally.
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.
Sluggish South African economic growth impacting on GDP growth.
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.
Late arrival of statistics from Stats SA and their change in methodology impacted on 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.
Vision
Vision
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).
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.
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.
SA Tourism received its 14th unqualified audit report in 2014/15.
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:
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.
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.
According to the UNWTO Report, international tourist arrivals (overnight visitors) grew by 4.7% in 2014, reaching 1.138 billion arrivals worldwide.
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%).
Regional Africa accounted for 76% of total tourist arrivals in 2014 with the Africa-land markets making up the majority of this total.
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.
Fully integrated marketing channels, considered globally implemented locally.
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.
Successful Joint Marketing Agreements (JMAs) to facilitate fulfilment of objectives.
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.
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:
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.
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.
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.
Domestic tourism is a high priority market with a long term objective aimed at encouraging a culture of travel among South Africans.
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.
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.
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.
The Basket of Benefits was launched in September 2014.
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.
The grading categories were expanded in July 2014 from nine to eleven to include the Game Lodge and Game/Nature categories.
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.
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.
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.
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.
Meetings Africa was attended by 178 international hosted buyers, 38 African Association Buyers, 270 exhibitors, 199 media and 1556 local corporate buyers and visitors.
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.
The Board, appointed by the Minister, consisted of nine Non-Executive Directors and included a representative for the National Department of Tourism.
The Board Members fulfil their roles, duties and functions with due regard to the fiduciary responsibilities bestowed on them in line with the Tourism Act and King III Report on Corporate Governance.
The Board meets quarterly or more frequently if circumstance require it. The Members provide oversight to the executive management by ensuring that all material matters are subject to Board approval. The Board meetings were well attended.
A Board effectiveness evaluation is conducted by the Board on an annual basis.
In the period under review the Non-Executive Directors serving on the South African Tourism Board were not remunerated for their service.
In line with the PFMA and King III Report on Corporate Governance Recommendations, the Internal Audit Unit provides the Audit and Risk Committee and Management with the assurance that the internal controls are appropriate and effective.
A formal risk assessment was conducted during the period under review and the top ten strategic risks affecting the business were identified.
There were no matters reported that indicated any material deficiencies in the systems of internal control or any deviations thereof.
In line with the statutory requirements and Audit Standards, the independence of the Internal Audit Unit has been assessed.
The Board approved structure has 202 positions vs the current headcount of 171 positions.
The Board approved structure has 202 positions vs the current headcount of 171 positions.
SA Tourism works towards maintaining a vacancy rate of below 7%.
SA Tourism is well within its Employment Equity (EE) targets based on the employees at Head Office and country managers abroad.
The international offices are not bound by the EE targets and operate under their respective labour laws.
77% of SA Tourism’s expenses were attributable to marketing.
77% of SA Tourism’s expenses were attributable to marketing.
16% of total operating expenses relate to employee costs.
The Amsterdam residential property was correctly converted to an Investment Property as at 31 March 2015.
After 25 years SA Tourism finally terminated the lease contract in London resulting in significant savings.
Leased assets’ net book value as at 31 March 2015 declined from R 9.2 million to
R 741 000 in the current year.
Allowances for bad debts decrease due to the change of the “legal debtor system”.
Provisions declined mainly due to the reversal of unused provisions relating to labour dispute cases which have now been assessed as contingent by SA Tourism’s legal department.
Income received in advance decreased by more than R 20 million as a result once-off additional allocation by NDT which was received in the previous year.
Accumulated Surplus increased due to surplus realised in 2014/15 and amounts recognised directly in equity e.g. reversal of unused provisions.
The format of the Statement of Financial Performance was changed, in line with the Generally Recognised Accounting Practice 1 requirement i.e. user usefulness, to separately show material non-cash item after Operating Surplus or deficit.
SA Tourism shows operating deficit/ surplus before Gain on foreign exchange AND Fair value adjustment of Investment Property i.e. ( non-operating activities which have a material impact on the bottom line.)
The sluggish South African economic growth is still impacting on South Africa, increasing job losses in various industries.
The sluggish South African economic growth is still impacting on South Africa, increasing job losses in various industries.
The tourism sector is still recovering from the effects of the Immigration Regulations.
Global security and health concerns remain topical and continue to influence travellers in their decision-making.
Whilst SA Tourism did not meet all set targets we achieved growth in foreign arrivals and revenue. Domestic travellers remained flat compared to the previous year.
The organisation is embarking on strategies to improve on areas where we did not achieve our targets.
In 2015/16, SA Tourism will continue to intensify its engagement with trade as part of the implementation of the domestic tourism campaign.
We have developed a comprehensive Stakeholder Management Plan to improve collaboration and strengthen relationships with strategic stakeholders, trade, media and government.
We have developed a comprehensive Stakeholder Management Plan to improve collaboration and strengthen relationships with strategic stakeholders, trade, media and government.
SA Tourism and the Board are already hard at work implementing recommendations of the Ministerial Review Panel on SA Tourism.
Thank you to the SA Tourism staff, Board, NDT, the Ministry and the Portfolio and Select Committees for their support.
