sa tourism presentation to the parliamentary …

© South African Tourism 2009

Slide no. 1

SA TOURISM PRESENTATION TO THE

PARLIAMENTARY PORTFOLIO COMMITTEE

13 October 2009


Slide no. 2

Index

1. Brief recap of SA Tourism (part A: slides 3 - 10)2. 2008/9 results (part B: slides 11 - 18)3. 2008/9 & future objectives (part C: slides 19 - 28)4. Measuring ROI in SA Tourism markets (part D: slides 29 - 33)5. How SA Tourism selects its markets (part E: slides 34 – 36)6. Executive summary of SA Tourism’s Strategic Plan (part F: slides 37 – 46)7. SA Tourism’s performance April – August 2009 (part G: slides 47 – 59)8. Corporate Governance @ SA Tourism (part H: slides 60 – 76)9. Tourism Grading Council statistics (part I: slides 77 – 86)10.Update on transformation in the Tourism sector (part J: slides 87 – 94)


Slide no. 3

Part A

A brief recap of the organization, its

objectives and markets


Slide no. 4

South African Tourism – Vision, Mission and Values

Vision

For South Africa to be the preferred tourist destination in the world, in order to maximize theeconomic potential for tourism for our country and its people.

Mission

To develop and implement a world class international tourism marketing strategy forSouth Africa. In pursance of this, SAT will:

• Facilitate the strategic alignment of the provinces and the industry in support of the global marketing of tourism to SA

• Remove all obstacles to tourism growth• Build a tourist friendly nation• Ensure that tourism benefits all South Africans

Values

We unconditionally respect our organization's people, its purpose and its assets. Living this respectwith integrity translates into an authentic caring for South Africa and each other, a feeling ofresponsibility and the acceptance of accountability for the outcomes of our actions. Our team pushesthe boundary of excellence in everything we do.


Slide no. 5

Share our vision with stakeholders

Share our vision with stakeholders

Use the trade to grow our business

Use the trade to grow our business

Grow & nurture our staff

Grow & nurture our staff

Improve brand traction in markets

Improve brand traction in markets

Increase value- extraction in SA from

all tourists

Increase value- extraction in SA from

all tourists

Fine-tune internal systems and

communication

Fine-tune internal systems and

communication

SA Tourism mandate, key business objectives and strategies

Sustainable GDP Growth

Sustainable GDP Growth

Sustainable job creation

Sustainable job creation

Redistribution and transformation

Redistribution and transformation

The Tourism Act’s mandate to SA Tourism

is ...

. . . through four key targets/objectives . .

.

. . . by focusing on doing only the following

“Big 6 things” very well!

Achieve targeted total arrivals to SA in 2007 - 2010

Achieve targeted total arrivals to SA in 2007 - 2010

Achieve total average tourist spend inside SA in 2007 - 2010

Achieve total average tourist spend inside SA in 2007 - 2010

SA to be the most preferred tourist brand by 2014

SA to be the most preferred tourist brand by 2014

SA Tourism to be the best tourism organisation by 2010

SA Tourism to be the best tourism organisation by 2010


Slide no. 6

South African Tourism has 10 overseas offices in 4 regions

• Africa

This regional office operates from SA Tourism’s Sandton Head Office and coordinates all marketing activities in East Africa, West Africa, SADC countries and domestic marketing inside South Africa

• Asia and Australasia

Australia, Japan, India and China*

• UK and Americas

United States of America and the United Kingdom

• Europe

Germany, France, Netherlands and Italy

* The China office currently operates from the Embassy


Slide no. 7

South African Tourism has 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 & Communications• Product & Itinerary • Finance• TECSA*• TGCSA• Business Systems (previously known as IT)

* TECSA will move back to the Department of Tourism on 1 April 2010.


Slide no. 8

SA Tourism’s methodology for selecting markets and the allocation of resources to such markets:

LESS ATTRACTIVE BUT EASIERTACTICAL MARKETS

Markets where there are particular opportunities, i.e. “low hanging fruit”15% of organisation’s effort deployed against these markets

ATTRACTIVE & EASIERCORE MARKETS

• Markets that deliver the “bread & butter”

• 60% of organisation’s effort deployed against these markets

• Best capabilities allocated to these markets

LESS ATTRACTIVE & DIFFICULTWATCH-LIST MARKETS

Markets that are on the radarActivity in these markets will only occur if there is spare capacity in the organisation5% of organisation’s effort deployed against these markets

ATTRACTIVE BUT DIFFICULTINVESTMENT MARKETS

Invest in these markets ahead of return, i.e. invest for the future20% of organisation’s effort deployed against these markets

Core markets are those which present the greatest opportunity. Tactical markets are those which should be considered for specific, tactical opportunities. Watch-list markets need to be watched for value segments.


Slide no. 9

SA Tourism has selected the following markets until 31/3/2011:• Core markets:

Botswana, Kenya, Nigeria, USA, UK, Australia, India, France,Germany, the Netherlands and the domestic South African market.

• Investment markets:

Angola, Democratic Republic of the Congo, Mozambique,Zimbabwe, Canada, China (including Hong Kong), Japan, Italy andSweden

• Tactical markets:

Ghana, Swaziland, Tanzania, Lesotho, Singapore, Ireland andSwitzerland


Slide no. 10

• Strategic hubs:

Ethiopia, Zambia, Senegal, Argentina, Thailand, Greece, Bahrain,Oman, Qatar and Saudi Arabia

• Watch-list markets:

Egypt, Namibia, United Arab Emirates, Brazil, Malaysia, NewZealand, Republic of Korea, Austria, Belgium, Denmark, Norwayand Spain.

SA Tourism has selected the following markets until 31/3/2011 (cont.):


Slide no. 11

Part B

The organization’s achievements during the

2008/9 financial year


Slide no. 12

Non-financial achievements of SA TourismSociety of Incentive & Travel Executives (SITE)

The Society of Incentive Travel Executives (SITE) has selected to host its International Conference in December 2010. The event will bring the leaders of the design and delivery of motivational experiences and travel rewards, a multi-billion dollar global industry.

S. Pellegrino 100 World’s Best Restaurant Awards

Five South African restaurants in the 2009 top 100 world’s best restaurants:Le Quartier Francais in Franschoek (37th Best restaurant in the Middle East and ); La Colombe in Constantia (38th place); Jardine’s in (79th place); Aubergine in (96th place); Rust en Vrede in Stellenbosch(98th place)

Chinese Tourists Welcoming Award 2009

The Voortrekker Monument won the bronze award in the internet/new media category of the 2009 Chinese Tourists Welcoming Award which were announced in April during China Outbound Tourist and Trade Market in Beijing

Luxury Tourism Awards 2009 Cape Town has been awarded in the Best Entertainment Category of the Luxury Tourism Awards 2009 held at the International Luxury Travel Exhibition held in Lugano, Switzerland

Online poll by Travel + Leisure magazine

Cape Town has been voted second in the world’s top City in the 2009 Travel and Leisure online poll. Bushman’s Kloof was also voted number one hotel in the world by Travel & Leisure magazine.

2009 World Travel Awards. The South African winners

Some of the accolades include: SAT as the best national tourism marketing agency in Africa; International Convention Centre Durban– Leading Conferencing Centre in Africa; Sun City Resort – Leading Resort in Africa; Saxon Boutique Hotel & Spa Africa’s Leading Boutique Hotel; Arabella Western Cape Hotel & Spa Africa’s Leading Luxury Hotel


Slide no. 13

2009 Trip Advisor Travellers’ Choice awards

Some of the top accolades include: •Derwent House Boutique Hotel, Western Cape, (2nd place)– Best World Service, (4th place) in Top World 100 Hidden Gems and( 5th place) Top World 100 Best Bargains• Cape Heritage Hotel, Western Cape (8th place) – Top 100 Best Luxury Hotels

Great Wine Capitals Global Network The Vergelegen wine estate was announced Global winner in The 2009 Best of Wine Tourism award in the Innovative Wine Tourism Experiences category. The awards were awarded by Great Wine Capitals Global Network

International Wine and Spirits Competition

South African brandy, KWV Founders Reserve Brandy, won gold at the International Wine and Spirits Competition hosted July 2009 in London

US Incentive Industry Award South African Tourism’s US operation has been named a 2009 winner of Incentive magazine’s prestigious Platinum Partner Award. More than 65,000 of America’s most qualified travel industry decision-makers selected the people, products and services that helped them most in motivating their employees and customers over the past year.

National Business Awards for Marketing Excellence

Awarded to a company that displays outstanding marketing innovation and creativity in a campaign that effects both turn-over and brand promotion. Won against Vodacom, Volkswagen SA and Cadbury.

SATSA Personality of the Year Hanneli Slabber awarded the SATSA personality of the year 2009 at the annual SATSA conference in Cape Town.

Indaba Daily News – finalist in Best Newspaper competition

Indaba Daily News was a finalist in the Best Newspaper category of the 2009 corporate publication competition of the SA Publication Forum.

Non-financial achievements of SA Tourism (cont.)


Slide no. 14

European CEO Magazine Award European CEO Magazine’s Tourist Board of the Year Award for its outstanding efforts in marketing South Africa as a destination

Hospitality India & Explore the World International Awards Best NTO in India 2008

Best NTO in India 2008

World Travel Awards Africa’s leading travel exhibition (Indaba)

TTG Travel Awards - UK Shortlisted for the Best Tourism Board Award, with Australia, Barbados, Canada, Dubai and Jamaica

Today’s Traveller Magazine (India) Best International Adventure Tourism Destination (India)

Travel Weekly China Awards Best Destination (long haul) Best Eco-tourism Destination

2008 Ethical Traveler Report One of the developing world’s Ten Best Ethical Travel Destinations

Non-financial achievements of SA Tourism (cont.)


Slide no. 15

On the financial side…

South African Tourism achieved its 8th consecutive

unqualified (no emphasis of matter) audit report from theAuditor General and holds the record in Government(including all Departments, Public entities and LocalAuthorities) with the most consecutive unqualified no--emphasis audit reports!

But we realize it’s eventougher to stay Nr. 1!(slide 72 elaborates on the reasonsfor SA Tourism exceptional audit reports)


Slide no. 16

Overview of SAT’s financial position and financial performance for the 2008/09 financial year

• SA Tourism total expenditure increased by 15% (2008/09 R 724.27 million, 2007/8: R 627.75 million) during the 2008/9 financial year leaving a net surplus of R 6.94 million (2007/8: R 23.6 million) thus a total reduction of net surplus by 71%.

• A total increase of 13% over the previous year of SA Tourism’s funding, representing 80% (2007/8: 79%) of R 586.09 million (2007/8: R 517.6 million) of total revenue, came from Government.

• Other revenue of R 154.86 million (2007/8: R 139.25 million), an increase of 11% over 2007/8, was earned from voluntary Tourism levies, interest received, exhibitions, grading activities, sale of marketing items, sale of advertisement space in publications and raising sponsorships.


Slide no. 17

• Total non current assets comprising of PPE and intangible assets increased by 39% (2008/09 R 86.9 million ,2007/8: R 62.6 million).

• Approximately 24% (R 6.03 million ) of total costs on PPE for the year (R 25.29) was spent on renovations.

• Approximately 73% (R 6.49 million ) of total costs on intangible assets for the year (R 8.94) was spent on website costs.

• Cash and cash equivalents deceased by 9% (2008/09 R 162.61 million ,2007/8: R 178.60 million).

• Total current assets decreased by 10% (2008/09 R 199.41 million ,2007/8: R 220.54 million) while overall total assets increased by 1% (2008/09 R 286.32 million ,2007/8: R 283.09 million)

Overview of SAT’s financial position and financial performance for the 2008/09 financial year (cont.)


Slide no. 18

• Trade and other payables (2008/09 R 180.55 million, 2007/8: R 202.33 million) representing approximately 89% (2007/8: 98%) of total current liabilities (2008/09 R 203.09 million, 2007/8: R 205.64 million) decreased by 11% over the previous financial year.

• Total non current liabilities comprising of provisions and finance lease liabilities decreased by 8% (2008/09 R 14.19 million, 2007/8: R 15.36 million) whilst total liabilities decreased by 2% (2008/09 R 217.28 million, 2007/8: R 221 million) over 2007/8 financial year.

• Accumulated surplus increased by 15% (2008/09 R 54.57 million, 2007/8: R 47.37 million) over the previous year. It largely represents tangible and non-tangible assets on SA Tourism’s Balance Sheet.

Overview of SAT’s financial position and financial performance for the 2008/09 financial year (cont.)


Slide no. 19

Part C

SA Tourism’s delivery on its objectives during

2008/9 and objectives going forward


Slide no. 20

SA Tourism’s 4 high-level objectives

Objective 1

Achieve total arrivals to SA

2008 calendar year target: 9 699 365 (6.2% increase over 2007)

2008 actual close: 9 591 828(5.5% increase over 2007)



2011 calendar year target: 10,4 million (0.5% increase over 2010)


Slide no. 21

Arrivals increased by 1.6% for the period Jan to July 2009 compared to 2008. This increase was driven by an increase in Africa land arrivals

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

2008 5,495,904 178,399 4,048,039 532,113 191,456 508,904 36,993

2009 5,585,240 178,166 4,240,625 495,442 179,456 447,563 43,988

Difference 89,336 -233 192,586 -36,671 -12,000 -61,341 6,995

% change 1.6% -0.1% 4.8% -6.9% -6.3% -12.1% 18.9%

Grand Total Africa - Air Africa - Land Americas & UK Asia & Australasia

Europe excl UK Unspecified

Arri

vals

Arrivals to South Africa by region, January to July

2009 Annual Growth target 3.6% 4.8% 4.3% 1.0% 1.2% 1.2% 2.0%

Source: Table A July 2009 & Targets 2010_v7_27012009


Slide no. 22

SA Tourism’s 4 high-level objectives (cont.)

Objective 2

Achieve average spend per tourist inside SA

2008 calendar year target: R 7 300 per person (Total R 70,8 billion)

2008 actual: R 8 100 per person (Total R 83,4 billion)

2009 calendar year target: R 9 900 per person (Total R 97,3 billion)

2010 calendar year target: R10 500 per person (Total R107,5 billion)

2011 calendar year target: R11 100 per person (Total R115,4 billion)


Slide no. 23

Average spend per tourist increased by approximately 13% in Q1 2009 compared to Q1 2008.

R 0

R 2 000

R 4 000

R 6 000

R 8 000

R 10 000

R 12 000

R 14 000

R 16 000

Q1 2008 R 7 700 R 6 100 R 11 900Q1 2009 R 8 700 R 7 100 R 13 900% change 12.9% 16.4% 16.8%

All foreign tourists Land markets Air markets

Ave

rage

spe

nd p

er to

uris

t per

trip

TFDS (excluding capital expenditure) by region, Q1 2009 vs Q1 2008

2009 Growth target (revised) R9,900 R6,900 R14,600

Source: SAT Departure Surveys & Targets 2010_v5_26012009


Slide no. 24

The major currencies have gained against the Rand, thus tourists got more Rands for their currency when visiting SA in Q1 2009 compared to Q1 2008. The Rand strengthened against the British Pound in this period.

US Dollar Pound EuroQ1 2008 7.55 15.18 11.31Q1 2009 9.96 14.32 13.0109 vs 08 32% -6% 15%

-202468

10121416

Exch

ange

rate

Major currency exchange rates


Slide no. 25


Objective 3

South Africa to be a most preferred Tourism Brand by 2014:

South Africa must be a top 3 destination on the consideration list of anytourist planning to travel long-haul from any of our core markets, butpreferably NUMBER 1!

Awareness Positivity Sought Info in the Past

Likely to Visit in Next 18 Months

2007 Baseline 75% 38% 23% 12%

2008 Actual 76% 37% 22% 11%

2009 Feb Actual 78% 38% 21% 10%

Global Target 2010 77% 40% 26% 14%

Global Targets


Slide no. 26

Knowledge of the Brand – Global Target

Memorable (Average)

Nature & Wildlife (Leadership)

Welcoming People (Average )

Adventurous (Leadership)

Value for Money

Table Stakes (Require Improvement)

Variety

Breathtaking

Enriching

Safety & Security

Imm

edia

te F

ocus

2008

to 2

010

Long

Ter

m B

uild

Reinforces Memorable

Performance in 2008 on knowledge of the brand slipped from the 2007 levels on most attributes with the exception of “breathtaking” and “safety & security”

5.65 (2008) 5.68 (2007)5.68 (Feb 09)

6.07 (2008) 6.10 (2007)6.11 (Feb 09)

Note: Core Markets weighted according to relative investment spend – Australia = 6%, France = 17%, Germany = 18%, India = 6%, Netherlands = 18%, UK = 18% & USA = 17%; Investment Markets weighted according to – China = 32%, Italy = 43% and Japan = 25%; Global Average, weighted according to investment spend – Core = 91%, Investment = 9%Source: SAT BrandTracker Feb-07 through Nov-08 (merged for each year) and Feb-09

4.73 (2008) 4.75 (2007)4.72 (Feb 09)

5.69 (2008) 5.70 (2007)5.71 (Feb 09)

5.62 (2008) 5.67 (2007)5.65 (Feb 09)

5.51 (2008) 5.51 (2007)5.56 (Feb 09)

5.49 (2008) 5.51 (2007)5.53 (Feb 09)

4.56 (2008) 4.58 (2007)4.53 (Feb 09)

3.54 (2008) 3.53 (2007)3.44 (Feb 09)


Slide no. 27

Key Brand Journey Metrics (Feb 2009)

Total Awareness Positivity Likely to Visit

in FutureLikely to Seek

Info Sought InfoPlan to Visit in

Next 18 Months

Visited Recently

Australia 81% 29% 26% 10% 13% 6% 4%

France 76% 40% 31% 21% 24% 10% 6%

Germany 69% 35% 28% 16% 17% 9% 8%

India 54% 30% 26% 27% 23% 14% 10%

Netherlands 92% 47% 39% 19% 30% 13% 8%

UK 92% 39% 38% 16% 21% 13% 9%

USA 78% 37% 31% 13% 15% 7% 4%

China 66% 30% 35% 29% 33% 18% 12%

Japan 21% 9% 13% 2% 4% 1% 1%

Italy 72% 42% 31% 23% 25% 10% 7%

Core Markets 80% 39% 33% 17% 21% 10% 7%

Investment Markets 57% 30% 28% 20% 22% 10% 7%

Note: Core Markets weighted according to relative investment spend – Australia = 6%, France = 17%, Germany = 18%, India = 6%, Netherlands = 18%, UK = 18% & USA = 17%; Investment Markets weighted according to – China = 32%, Italy = 43% and Japan = 25%; All rating questions have been analyzed using top 2 box approachSource: SAT BrandTracker Feb-08 and Nov-08 and Feb-09


Slide no. 28

Objective 4

SA Tourism to be the Best Tourism Organization by 2010:

As decided by the Annual Tourism Awards Committee of the WorldTourism Organization, and as attested to by the most credible awardcommittees in our chosen core markets

TGCSA, a business of SA Tourism, is currently busy with theappointment of Provincial Master Assessors in provinces (which willsignificantly improve the quality of assessments). Furthermore, arecommendation is currently been made to the Minister on theappointment of a new TGCSA Awards Sub Committee of SA Tourism’sBoard effective 1/11/09. They will meet monthly to award stars toqualifying establishments.Refer to the slide “Achievements as an organisation” (see slides 12 – 14)



Slide no. 29

Part D

SA Tourism’s methodology for

measuring Return on Investment in markets


Slide no. 30

Marketing investment ROI model Traditionally marketers measure whether they are getting traction in the market by using research studies. In this case, the Brand Tracking study will be used to evaluate traction.

In addition to this two main marketing ROI measures will be calculated i.e. cost per person reached and Return on every Rand / $ / € etc spent on marketing.

Marketing Investment

TV Radio

PROutdoor

Research Measures

Plan to visit

Have visited

Awareness / +ve / Consideration

Arrivals??

PrintCinemaInternet

Brand Tracking Advertising Measures

ROI Measures

Cost per person

reached

Return on every Rand / $ / € etc spent on marketing


Slide no. 31

Marketing investment ROI model Timelines A tracked ROI will be done after the April 09 Brand Review as more data will become available.

J F M A M J J A S O N D

11st Brand reviewApr 08 – Sep 08

2nd Brand reviewOct 08 – Mar 09 2

1 Interim ROI 2 Tracking of ROI

•Feb 08 Brand Tracking•July Arrivals

•Full year of Brand Tracking•Feb 09 Brand Tracking•Annual Arrivals


Slide no. 32

Value / Spend Ratio analysis across countries Ratio definition: Value gained for every Rand / $ / € / £ spent on marketing

4,104

597

Reported in € Reported in £ and $Reported in AUD, $, JPY and INR

Spen

d Valu

e Rati

o


Slide no. 33

Cost per person reached across countries

Reported in € Reported in £ and $Reported in AUD, $, JPY and INR

Country Apr 08 – Sep 08 Oct 08 – Mar 09

Australia AUD 0.08 AUD 0.06

China $0.0006 $0.01

Japan JPY 0.0014 JPY 0.70

India INR 0.29 INR 0.71

France €0.19 €0.04

Germany €0.0097 €0.0003

Netherlands €0.14 €0.07

Italy €0.01 €0.07

UK £0.06 £0.0005

USA $0.03 $0.01


Slide no. 34

Part E

SA Tourism’s methodology for selecting markets (Portfolio Review

process done every 3 years) and outcomes of the 4th Portfolio Review process done during

July/August 2009


Slide no. 35

Exclude markets of less Exclude markets of less than 3 million people or than 3 million people or GDP per capita is less GDP per capita is less

than US$2,000than US$2,000

How attractive are these markets in the short term

and the long term?

Exclude subExclude sub--Saharan Saharan AfricaAfrica

Unattractive markets

Core, tactical, investment and watch-

list markets

Top 50 markets in terms of outbound volume and

value

Exclude markets with less than 4 million

people living in urban areas

Top sub-Saharan Africa markets PLUS Africa

land markets*

2nd filter

Salient set

Key Steps of the Portfolio Review Process

Application of cost- benefit evaluation

1st filter

3rd filter4th filter

*Africa land markets are markets where more than 60% of arrivals to SA arrive by land.

Exclude Africa land markets*


Slide no. 36

Outcomes of the fourth portfolio review process that took place during July/August 2009 and which will be implemented from 1/4/2011 (* indicates business tourism hubs)

AFRICA AMERICAS & the UK

ASIA & AUSTRALASIA EUROPE

CORE MARKETS

AngolaBotswana

Kenya Nigeria

South Africa*

USA*UK*

Australia*India

France*Germany

Netherlands

INVESTMENT MARKETS

DRCMozambique

BrazilCanada

China (including Hong Kong)Japan

ItalySweden

TACTICAL MARKETS

LesothoSwaziland

Ireland New Zealand

WATCH-LIST MARKETS

MalawiNamibiaZambia

Zimbabwe

Argentina Republic of Korea BelgiumSwitzerland

Spain

STRATEGIC IMPORTANCE

Bahrain, Oman, Qatar, Saudi

Arabia

STRATEGIC LINKS/HUBS

Egypt, Ethiopia, Senegal, UAE

MalaysiaSingapore

Portugal

Cou

ntry

Man

ager

Reg

iona

l Dire

ctor

Sta

keho

lder

M

anag

er

Glo

bal

Cha

nnel

M

anag

er

Responsibility

2011 - 2013


Slide no. 37

Part F

Executive summary of SA Tourism’s 5-year Strategic

Plan


Slide no. 38

What will be our “Big 6” strategies to achieve the 4

high-level objectives?

Strong leadership is required from all EXCO,MANCO and Country Managers for the execution ofthese 6 strategies:

*during the 2009/10 until 2010/11 financial years

OBJECTIVE STRATEGY

1. Achieve total arrivals to SA

2. Achieve average spend per tourist inside SA

Strategy 2: Use the trade to grow our business

Strategy 6: Increase value extraction in SA from all tourists

3. South Africa to be a most preferred Tourism Brand by 2014

Strategy 4: Improve brand traction in markets to increase positive awareness

4. SA Tourism to be the Best Tourism Organization by 2010

Strategy 1: Share our company’s vision with key stakeholders and influencers Strategy 3: Grow & nurture our staffStrategy 5: Develop or fine-tune and integrate

yardsticks and systems to obtain operational excellence


Slide no. 39

Approved CPIX parameters for Budgeting Purposes (for the calculation of overhead budgets)

Country/region Average CPIX for 2009/10

Average CPIX for 2010/11





South Africa 8,1%1 6,0% 5,8% 5,1% 4,6% 4,6%

United States (USD) (also used by SAT for Africa, India & China) 1,6%1 2,0% 2.1% 2.1% 2.1% 2.1%

Europe (Euro) 2,6%1 2,0% 2,0% 2,0% 2,0% 2,0%

UK (GBP) 2,0%1 2,0% 2,0% 2,0% 2,0% 2,0%

Australia (AUD) 3,2%1 2,8% 2.8% 2.8% 2.8% 2.8%

Japan (JPY) 0,5%1 1.5% 1.50% 1.50% 1.5% 1,5%

Notes:

1. Calculated taking into consideration latest IMF figures adjusted for:

• SA Reserve Bank expectations that SA’s CPIX will fall within the 3 – 6% bracket from the latter part of 2009;

• Bureau for Economic Research indicators

• The Economist predictions


Slide no. 40

Revised exchange rates approved by the Board on 10 February 2009 (to be used for 2010/11 Business

Planning & Budgeting)

Notes:

1. 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)

Currency Average exchange rate for 2009/10

Average exchange rate for 2010/11

(subject to change – Nov’09 Board

meeting)





USD ($) 1 = R 10,401

(-17%)

R 10.92 R 11,24 R 11,59 R 11,82 R 12,05

Euro (€) 1 = R 13,801

(-19%)

R 14,14 R 14,50 R 14,78 R 15,08 R 15,39

GBP (£) 1 = R 15,501(unchanged)

R 15,97 R 16,28 R 16,61 R 16,94 R 17,28

AUD ($) 1 = R 6,961

(-4%)

R 7,03 R 7,10 R 7,21 R 7,32 R 7,42

ZAR 1 = JPY (¥) ¥ 8,661

(-35%)

¥ 8,57 ¥ 8,44 ¥ 8,31 ¥ 8,19 ¥ 8,06


Slide no. 41

SA Tourism high-level budget summary: 2008/9 – 2014/15 (R’mil)

Detail/Financial year Audited2008/9

Total budget

2009/10

Total budget

2010/11

Total budget

2011/12

Total budget

2012/13

Total budget

2013/14

Total budget

2014/15

Total revenue budget* 740,9 821,0 850,9 901,4 959,4 1 033,9 1 087,7

Breakdown:

Received from Government 586,1 682,5 686,5 729,8 779,6 845,3 889,5

Revenue from other sources 154,8 138,5 164,4 171,6 179,8 188,6 198,2

* Including confirmed MTEF funding until 2011/12

* = excludes a R 4 million and R 5 million allocation respectively in the 2009/10 and 2010/11 financial years which DEAT subsequently agreed to project manage themselves

Detail/Financial year Audited2008/9

Total budget

2009/10

Total budget

2010/11

Total budget

2011/12

Total budget

2012/13

Total budget

2013/14

Total budget

2014/15

Total expense budget 765,2 821,0 866,1 901,4 959,4 1 033,9 1 087,7

Breakdown:

Overheads and capex 227,6 211,6 225,2 TBA TBA TBA TBA

Marketing and research 537,6 609,4 640,9 TBA TBA TBA TBA


Slide no. 42

SAT marketing expenses: 2008/9 – 2010/11



Slide no. 43


• Please note that the 2008/9 Africa figure includes Indaba•2010/11 strategy for Americas & Europe Portfolio’s are to stabilise while we increase funding in Africa and Asia Portfolio’s•Finance’s & Office of the CEO’S 2008/9 audited figures were negative due to exchange profits


Slide no. 44




Slide no. 45

Stakeholder Details of cooperation

1. TBCSA & TOMSA 1.1 SAT is co-funded from voluntary tourism levies collected and SAT therefore offers some specific benefits for establishments that collects TOMSA levies1.2 SAT and TBCSA, which represents all tourism business associations, jointly addresses the industry once a year in all provinces and have bilateral meeting quarterly

2. Provincial Tourism Authorities CEO’s Forum (now called the Marketing Working Group) meeting quarterly where SAT CEO meets Provincial CEO’s to share Business Plans & Budgets and discuss specific marketing issues including joint marketing projects. SANParks, SANBI and TEP also attend. The CMO convenes the quarterly marketing forum with provincial marketing managers.

3. Fedhasa, ASATA and SATSA Sharing of information

4. DEAT public entities & programmes:4.1 SANPARKS

4.2 SA Weather service4.3 SANBI4.4 TEP

Lobby SANPARKS to also start collecting TOMSA levies. Provide exhibition space at exhibitions at beneficial rates Share informationShare informationJoint funding of ETEYA project

Areas of cooperation with stakeholders


Slide no. 46

Stakeholder Details of cooperation

5. IMC, GCIS and the Department of Trade & Investment

2010 Fly-the-flag nation-building projectSharing of information and joint marketing activities

6. SAPS Quarterly meetings with Provincial SAPS leadership

7. Match & LOC Ongoing liaison on Confederations Cup and 2010 Soccer World Cup

8. Miptech and Minmec Sharing of information on obtaining inputs on high-level marketing issues. SAT’s CEO attends both meetings.

9. Departments of International Relations & Cooperation and South African embassies overseas

Provide marketing collateral

Areas of cooperation with stakeholders (cont.)


Slide no. 47

Part G

Executive summary of SA Tourism’s performance

against its 2009/10 Business Plan & Budget

(Apr – Aug’09)


Slide no. 48

Actions & measures for strategy 1 … (1/3)

Strategy 1 : Share our company’s vision with key stakeholders and influencers

Actions (& “owners” in brackets)

How it will be measured?

Progress Gaps/ challenges / comments

1. Increase/improve dialogue with stakeholders as per board document -Look for insights to the needs of key stakeholders so we can service them better-Understand how to win with each key stakeholder (All SAT managers)

• Conduct industry perception baseline study by Apr’07 and measure perceptual shift in Mar’08

(Global Channel Manager)• Number of

meetings/engagements/r oad shows with DFA and embassies globally(Quarterly reports from PR and Comms)

• Trade participation improved, but perception study not done.

• Routine engagements – marketing comms through LRPs in watch-list markets – weekly and or prompted & delivered X 6 media hostings since start of fiscal ( Spain, Argentina TV, Malaysia tv., etc)

• Material left over from last fiscal dispatched through head office and new material briefed in for Sept –March 2010 time-frame

• Monthly meetings with DICO on stakeholder forum chaired by DG:DICO which included IMC & GCIS

• Hosted 50 DFA officials and 3 trade media at INDABA 2009: (LRPs only)

• Held a 2010 briefing workshop on the 3rd day of INDABA

• Bilaterals with officials from watch-list and other markets during INDABA (Portugal/Argentina)

• First quarter: Diplomats designate appointed hosted by MANCO at Bojanala house

• Heads of Missions Aug 13-15• Bilaterals:• Amb John Davies – Saudi Arabia• CG M Basadien – UAE• Amb D Msimang – Denmark • Amb Andries Venter – Russia & Ukraine • Amb B Koloane – Spain

• SA trade study to be included in GCP 3 study in 2009. Tender process completed but has not yet been awarded.

• International trade perception study not done due to problems with the contact management system – unable to access trade contacts in database


Slide no. 49




How it will be measured? Progress Gaps/ challenges / comments

2. Messaging – Align stakeholders and influencers to support vision that we all have a collective responsibility for uplifting SA (GM: PR and Comms)

• Track media to measure message alignment :

80% positive about SAT

20% negative about SAT

(GM: PR and Comms)

• Media monitoring ongoing:Local media:89% positive and neutral vs.

negative.International media:83% positive and neutral vs.

negativeCommunication shared by

stakeholders locally increased from 50% to 77% between Oct 2008 and Jan 2009

(Source: Media Tenor media analysis and Dow Jones media analysis)

• Brand Messaging book launched• Online brand book platform being

designed• Brand book presented to SATSA,

Heads of Missions• Ongoing work with FIFA; LOC and

Host Cities• Industry Cocktail planned for 15

October


Slide no. 50





3. Identify and agree on areas of co-operation with stakeholder organisations(EXCO)

• Documents of understanding with the 3 most critical stakeholders and influencers as identified by EXCO (CEO)

• Agreements/ areas of cooperation:• MOUs with DEAT & TBCSA• CEO participation in Minmec &

Miptech• SAT chairs CEO’s Forum &

Provincial Marketing Managers Forum

• Participate in DoT, BASA negotiations and meetings

• Partnerships with Fifa/LOC• Partnership with IMC/GCIS on

brand alignment• Participate in Fair Trade in

Tourism board

• Not able to participate in all BASA meetings


Slide no. 51


Strategy 2 : Use the trade* to grow our business



1. Trade and business tourism strategies are implemented in full across all focus markets(PMs and CMs)

• As per sales contact management system

(Quarterly reports by PMs)• Number of

meetings/engagements/road shows (Quarterly reports from RDs)

• Leisure trade marketing strategy approved by EXCO

• Business Tourism marketing strategy rolled out globally, and next set of targets to be defined

• 42,257 trade contacts in database at end of Q1 09/10

• 670 products trained (Jan – June 09) (P&I)• Packaging workshops• Product newsletters - monthly• In-country TO itineraries• Indaba hosting• One provincial workshop

• EUROPE Q1 09/10:• Trade trained in country = 2354• RD meetings with local trade = 120

(speed marketing and one on ones)

• AMERICAS Q1 09/10:• Trade trained in country = 778• RD meetings with local trade = 60

(speed marketing and one on ones)

• ASIA & AUSTRALASIA Q1 09/10:• Trade trained in country = 963• RD meetings with local trade = 8

• AFRICA & MIDDLE EAST Q1 09/10:• Trade trained in country = 44• RD meetings with local trade = 5

• No reports available on sales contact management system. Updated review of system and VPN implications occurring in next month

• No integrated trade marketing strategy document as agreed that BT and leisure will be remain separate.

* Trade includes product owners and travel operators and agents


Slide no. 52





2. Educate the trade to sell us better (from both a leisure & Business Tourism point of view including addressing perceptions around safety & security) (TRMs, Fundi and BT managers)

• Increase Trade Extranet Registrations from 2,500 to 5,000

• Increase FUNDI graduates from 1066 to 2000

• Increase Expedia pax sales to SA by 15%

• Increase Trade databases from 20,000 records to 25,000 records

• (GM: BT, Channel and E-Business managers)

• Extranet registrations = 9590• 2,393 FUNDI graduates• Achieved 73% of annual Expedia

target as at 31 Aug 2009. Estimated y-o-y growth of 19% worldwide.

• 42,257 trade contacts in database at end of Q1 09/10



Slide no. 53





3. Build & retain relationships with Leisure & Business Tourism trade (including online submissions of JMA proposals by trade) (TRMs, BT & Channel managers)

• As per sales contact management system

(Quarterly reports by PMs)

• EUROPE Q1 09/10:•Trade trained in country = 2354• JMAs= 23

AMERICAS:•Trade trained in country = 778• JMAs= 12

• AFRICA Q1 09/10:•Trade trained in country = 44• JMAs= 1

• ASIA & AUSTRALASIA Q1 09/10:•Trade trained in country = 963•JMAs= 20

•BUSINESS TOURISM Q1 09/10• Active leads = 48• Leads to convention centre= 5

• Implementation of Sales and Contact Management (training and VPN access issues)



Slide no. 54


Strategy 3 : Grow & nurture our staff in order to realize our operational goals



1. Improve effectiveness and transparency of performance measurement in the organization (aligned to project plans and company goals) and integrate our values into our work and performance contracts

(GM:HR)

• Successful and complete implementation of business plans on budget in achievement of Big 4 company objectives (all SAT staff)

• Performance contracts aligned to new reporting format and templates updated.

• Not all performance contracts for the period 2009/10 have been received as yet.

2. Produce a skills competency database (“dictionary”) for each function and develop & implement job-specific training(GM: HR)

•Do skills audit & measure 12 months later whether skills gap has been narrowed

(GM:HR)

• Job profiles have been audited and validated by 21st Century. 98% of profiles verified were sent to 21st Century

• Remaining budget is R515,973.87 as at December 2008

• Training spent at H/O R440,656.44 (excl. bursaries)

• Training spent in C/O R96,955.47 (excl. bursaries)

• TOTAL SPENT R537,611.91 (excl. bursaries)

• Delayed response in some Business Units to verify the validation of job profiles slowed the process.

• Validation of some EXCO profiles have still not been received.

• Consequently the database compilation is delayed.

• Training Committee to develop a process and criteria to be used in approving training plans.

• Bursaries are on the same budget vote and those are the ones that HR has to closely monitor regarding the pass rate of the people awarded bursaries.


Slide no. 55


Strategy 3 : Grow & nurture our staff in order to realize our operational goals



3. Improve retention of marketing staff(MANCO)

• Reduce staff turnover by 5% over previous year (GM:HR with Manco)

• Reach a 70% participation rate in the Deloitte’s Best Company to Work For Survey (GM:HR with Manco)

• Create a competency database (GM:HR)

• Ensure the roll-out of the induction programme (GM:HR)

HR stats for SAT only (99 marketing and 53 support posts)

• April 2009 to date- 6 exits: 3 marketing and 3

support

• March 2008 – April 2009- 15 new appointments and 18

exits (11,8%)- Marketing 9 (9%) 3 contract

terminations Support 6 (11%)- New hires: 6 marketing and 7

support- Promotions: 5 marketing and 4

support


exits (12,5%)- Marketing 7 (7%) and support 8

(15%)- New hires marketing 20 and

support 12- Promotions: 4 marketing and 2

support


exits (19%)- Marketing 17 and 12 support - New hires: marketing 31 and14

support- Transfers and promotions:

marketing 9

• Skills audit report on complete• Succession planning system

not developed and committee has not met


Slide no. 56

Actions & measures for strategy 4

Strategy 4 : Improve brand traction in markets to increase positive awareness



1. Expand existing successful ways & find additional innovative ways to reach our target audience per market while being true to the brand key (All SAT marketing managers)

• GLOBAL TARGET FOR 2010:• Total awareness = 77%• Positivity = 40%• Sought info in the past = 26%• Likely to seek info in the next 18

months = 14%(SRU manager)

• FEB 2009 ACTUAL• Total awareness = 78% (+2%

over 2008)• Positivity = 38% (+1% over

2008)• Sought info in the past = 21%

(-1% over 2008)• Likely to seek info in the next

18 months = 10% (-1% over 2008)

• UNWTO predicts between 0 and -2% decline in arrivals globally due to economic crisis.

• IMF forecast world GDP to decline by 1.3%.

• Unemployment globally increases.

• No indication yet of when and how the global financial crisis will be addressed.

2. Implement the Brand Key in CI manual for Leisure, Business Tourism & events (CMO)

• CI manual approved and distributed by end April 2007

• Number of exceptions in Brand Review limited to 10%

(CMO)

• CI manual delivered. We are waiting for GCIS/cabinet approval on our new logo.

• Achieved: 2.5% - of the 200 pieces of collateral (print, collateral and in-market brand campaigns), 5 were not approved by Ian.

• The new logo is supported by our existing CI principles and execution.

• We are developing a ‘quick & dirty’ manual to assist application and execution. (The full version will be used by agencies/business partners)

3. Improve staff members’ understanding of the Brand and integrate our values and vision into our daily work(Exco and Manco)

• All staff to have completed LTB training by July 2007

• Implement 2 LTB training sessions per year

• All staff inducted by end of 2009

(Manco and GMHR)

• Induction programme developed and implementation with HO already underway.


Slide no. 57


Strategy 5 : Develop or fine-tune internal systems and communication for better results (to obtain operational excellence)



1. Develop & implement internal communication strategy based on our values and business strategy (COO)

• Improve rankings in Best Company to Work For survey by 5 each year

(all SAT staff)

• BCTWF survey for 2009 completed.• Induction programme developed

and rolled out with HO staff. • Budget for induction for overseas

staff and TGCSA & TECSA allocated.

• SATclimate survey conducted and report sent to committee.

• “Guide to a successful career at SAT” in production

• Intranet review still outstanding• Internal communications strategy

will be drafted now that climate survey results are available.

2. Implement the company- wide Project Management System (Executive Project Manager with EXCO- appointed Project Team)

•Projects executed as planned on time and in compliance with budget

•Budget reallocations are within the agreed parameters

(all business unit managers)

• Projects loaded on EPM• # staff trained:

• 5 Executives• 52 Project managers• 3 EPM administrators

• All users that require Oracle licenses have now been allocated licenses. Review has also been done to determine if there is an opportunity to reduce the number of licenses and no reduction is recommended at this stage.

• VPN problems result in problems connecting to EPM and other systems.

• Training has been put on hold until all technical problems have been resolved.

• Oracle system upgrade to be fast-tracked during this fiscal despite other challenges (new Accounting statements, keeping data real-live, etc.)


Slide no. 58


Strategy 5 : Develop or fine-tune internal systems and communication for better results (to obtain operational excellence)



3. Ongoing refinement of mapped SAT Business Processes to increase alignment, integration and efficiencies (MANCO + ISO Manager)

•ISO compliant of HR, Admin and Finance by 2010(all HR, Admin & Finance managers with ISO Manager)•All other business policies and procedures filed on intranet(all business unit managers with ISO manager)•Code of good governance adopted by Board and all staff (all business unit managers)

• Approved policies & procedures = 69

• External business system review conducted and alignment to the new IT Strategy now being implemented

• Code of Good Conduct signed by Board members. Staff code of good conduct not yet developed.

• Business system review recommendations not yet completed but will align to the IT Strategy, workflow and Management Information Systems


Slide no. 59

Actions & measures for strategy 6

Strategy 6 : Increase value extraction in SA of all tourists



1. Mine country research data to establish clear insights into needs and desired experience of target segments (PMs and SRU)

Achieve spend targets in Targets from 2008 to 2011

(SRU Manager)

• 12.9% increase in spend per person in Q1 2009 compared to Q1 2009.

2. Develop, negotiate & package “products” to upsell tourists and provide them with the right information at the right time and place in SA to maximise their spend(Product & Itinerary Manager & Global Channel Manager)

Achieve spend targets in Targets from 2008 to 2011

(SRU Manager)

• 12.9% increase in spend per person in Q1 2009 compared to Q1 2009.

• Information in SAT tools are no longer highlighted by province rather by experience to showcase the diversity.


Slide no. 60

Part H

Executive summary of Corporate Governance at

SA Tourism


Slide no. 61

Background to Governance/Corp. Governance

1. In latin, “Governance” means “to steer”/Corp Governance

1.1 Steering to protect against the 5 sins: greed (Enron – USD 4 billion off-balance sheet finance over 3 years), fear, sloth, pride and arrogance:

greed (self-interest), fear (self-concern), sloth (imbalance), pride (egg on face) and arrogance (we are right!)

1.3 Guide through uncertain future events

1.2 Disclosure (triple bottom-line: economic, social, environment)/transparency

1.4 Sarbanes Oxley (US), Cadbury & King, but you cannot legislate honesty and competency!


Slide no. 62

Background to Governance (cont.)

2. King 3: Voluntary →

Compulsory (Companies Bill 61/2008)

3. 5 Duties of a Director/Board member (faith, skill, care, best interest, diligence) – now 6 incl good board attendance!

4. Sect 75 (5) : If personal financial interest, must leave room

5. Far more powerful Audit Committee – appointment by shareholders

6. Why relevant? New PFMA end of 2009 incl Comp Bill

7. Secondly, cost of compliance in US > total losses incurred as a result of top 3 multinational failures – compliance with PFMA too onerous!


Slide no. 63

From the PFMA/Treasury Regulations

Means expenditure lost in vain which could have been avoided if reasonable care was exercised.

6. Fruitless and wasteful expenditure?

- Were goals achieved through the expenditure undertaken? - If not …why not?- Could the outcome be predicted ahead through exercising reasonable diligence?- Value for money

Considerations:


Slide no. 64


Means expenditure incurred which is not in accordance with the requirement of any applicable internal or external legislation, including the PFMA, approved budget/business plan, Delegation of Authority & Procurement Policy

7. Unauthorized expenditure?

- Until a budget vote has been approved, you cannot spend/incur liabilities!- Flexibility comes from better planning

Considerations:


Slide no. 65


8. Who is responsible for compliance within SAT?

8.1 Executive Authority (Minister)

8.2 Accounting Authority (Board)

8.3 CEO, CFO and rest of Executive Management


Slide no. 66

Governance @ SAT

3.1 LEGISLATION (Tourism Act, PFMA/Treasury regulations, etc.

3.2 DELEGATION OF AUTHORITY (including Board Terms of Reference)

3.3 CREATE & ENFORCE/MANAGE POLICIES, PROCEDURES & BUSINESS PROCESSES

3.4 ALL THE ABOVE + ORGANIZATIONAL VALUES SAFEGUARD ORGANIZATION AGAINST 5 SINS (GREED, FEAR, SLOTH, PRIDE AND ARROGANCE)


Slide no. 67

DOA & Code of Corporate Governance at SA Tourism

1. DOA – “10 commandments” at SAT

2. Deals extensive with SA Tourism’s structure, all delegations made to different designations within SA Tourism and the TOR and functions of the Board and its Sub Committees

4. Gets updated regularly & together with remuneration and supply chain (procurement) matters, features prominently at all SAT Board & Board Sub Committee meetings

3. In line with King 3, one of the key functions of the Board is to evaluate annually the effectiveness/success of the Board, its Sub Committees, its individual Board members and the Internal Audit Management (at last meeting every calendar year – November)


Slide no. 68

Finances at SA Tourism

1. Budget has grown from R 309,1 million (2001/2) to R 807,9 million (2009/10)

2. Critical to SA Tourism is understanding its Strategic & Business Planning process (which is fully aligned to Government’s Annual Cycle)


Slide no. 69

Annual Planning cycle for government

andMedium Term Strategic

Framework cycle

Cabinet lekgotla to identify overarching priorities and review

progress in past year

(January)Departmental programmes

(Business Plans)(February - March)

DG clusters finalise

Programme of work for clusters for approval by

Cabinet(February – June)

Implementation of programmes and strategies (Feb –

June)

Mid year Cabinet Lekgotla to review

progress(July )

Annual report & Financial Statements

(August)

Implementation and measurement of impact(July – December)

DG cluster priorities identified from departmental plans(Nov – December)

Allocations & ENE document

Departmental annual Progress review report to President’s office and plans for next MTEF years(Nov)

DEAT Lekgotla & Business Plan

Workshop with Parliamentarians (February)

4th Performance Report and Compliance report (April)

Budget Vote

Strategic Plan (May)

1st Performance & Compliance Report (June)

Progress reports to DG clusters MTEF

DEAT Mid-year review and MTSF planning (Sept)

2nd Performance & Compliance Report MTEC

Strategic Plan (Sept)

Budget allocations (Oct/Nov)

3rd Performance & Compliance Report (Dec)

Government’s Annual Cycle


Slide no. 70

Review of SAT Big 4 objectives and 6 strategies

to achieve objectives

Exco/Manco Lekgotla

JANUARY

Update SAT 5-yr Strat Plan and

next yr’s Bus Plan &

Budgets incl:1. Revised arrival & spend targets

2. Budget parameters

3. Bus unit & country budget

allocations

Board approval

FEBRUARY

Board review of annual

performance & approval of Annual Fin Statements

MAY

Board approval of detailed Bus

Plans

OCTOBER

Do Bus. Unit &

Country Detailed Business

Planning & Budgeting

MARCH - JULY

Marketing BUs brief agencies

DECEMBER

Exco approves creative

JANUARY

Board approval of creative to be used

effective 1 April (and next yr’s 5-year Strat Plan)

FEBRUARY

Submission of updated 5-yr

Strategic Plan & High-level Bus

Plan & Budget to DEAT

END JUNE

MTEF submission to Treasury via DEAT

JULY

Finalize Performance contracts with all SAT employees: MARCH

HIGH-LEVEL OVERVIEW OF SAT BUSINESS PLANNING PROCESS

Performance Information

2nd 6 months

APRIL

DEAT

EXCO

BOARD

EXECUTE!

Submission to detailed budgetvotes by all & loading Oracle

DECEMBER

Performance information1st 6 months: NOVEMBER

Approval of detailed Bus

Plan & Budgets by

MancoAUGUST

Approval of detailed Bus

Plan & Budgets by

Exco

SEPTEMBER

Approved by Exco 28 April 2009


Slide no. 71

Financial management at SA Tourism (cont.)

3. Complex – AG (account 8 different currencies, forex mgmt to avoid shortfalls, ERP, real-time & 17 business units incl TGCSA/TECSA & 10 country offices)

2001/2Unpaid creditors, reconstruction accounting

records, unauthorised expenditure,no strat plans/bus plans & budgets,

no DOA policies/procedures/bus processes,no respected,

archaic 1993 DOS version financial system,weak/non-existent internal controls,

5 consecutive qualified audits demotivated & untrained staff

2008/9Pay ahead of time,

leading policies, procedures and business processes,cutting-edge real-time ERP financial system (Oracle),

amongst the first with Strat/Business Planning,ISO-compliant & up-to-date DOA policies/procedures

/bus processes, happy hard-working trained &committed staff members with high morale that goes

the extra mile, pride in their work and adds valuebeyond Finance,

extremely low Finance staff turnover,very strong internal controls,

8 consecutive unqualified no-emphasis-of-matter auditreports (RECORD IN GOVERNMENT!)


Slide no. 72

Reasons for SA Tourism’s Financial & Corporate Governance success

1. Culture of compliance (Board, CEO & management lead by example, enforce compliance)

2. Detailed planning earlier (Strategic Plan/Business Plan & Budget/Calendar/Contracts/Tenders)

3. Sound business processes, policies & procedures that gets updated immediately (audit findings, changing business requirements, Treasury/legislation changes – implement first!)

6. Annual working & formal training session (resolve problems, prep year- end, agree work plan next year/foresee problems/changes & team building)

4. Culture of “immediate decision-making” (resolutions/open-door policy)

5. Culture of non-monetary recognition in Finance

→CULTURE TEAM > INDIVIDUAL!

7. Correct appointments & training

8. Focus on cost & efficiencies (e.g. external checking mark cost APCC)


Slide no. 73

Future Governance at SAT

1. Massively impacted by Performance Management in Government (which is now falling together with Planning as two new key priorities under 2 new Ministers in the Office of the President of South Africa)


Slide no. 74

Table on Government’s approach and thinking

Before Now1. All entities must have a Performance Information system setting KPA’s and targets

The AG expresses an audit opinion on whether the organization has achieved its KPA’s and targets (“What gets measured gets done!”)

2. Variances on expenditure and designation KPA’s not monitored and addressed

The AG expresses an opinion on whether management has taken immediate action as soon as variances are known on quarterly expenditure vs budgets or designation KPA’s

3. Performance Bonus systems varying from one Government entity to another

Entities Performance Bonus policies should be aligned to its Performance Management system

4. Many different reports from entities One set of 3 standard Quarterly Performance Information reports (templates) for all spheres of Government

5. Unrealsitic targets were set by entities Realistic targets should be set and delivered upon to avoid sanctions

6. Treasury guideline that entities should limit their overheads to 10% of total budget

10% guideline replaced by:-compulsory focus by executive management at entities to reduce discretionary expenditure (travel cost, catering during meetings, external consultants, conference attendance, etc.);-work smarter and bring in more technology-time-management important-hire sufficient qualified and experienced staff to deliver on KPA’s and targetsALL THE FOCUS IS NOW ON DELIVERY AND ROI ONLY!

7. MTEF allocations based largely on historic MTEF budget allocations with Government priorities getting bigger increases

7. MTEF allocations based on historic delivery of the entity (from PI) and ROI taking into consideration new Government priorities


Slide no. 75

Treasury Regulations specifies the following around the Performance management cycle

Policy development

Strategic planning

Implementation planning and

budgeting

Implementation

End-year reporting

Oversightby Parliament, provincial legislature or municipal council

INSTITUTIONnational department

provincial departmentmunicipality

state controlled institutionmunicipal entity

Specification of outcomes and outputs

Setting targets and resource allocation

Monitoring and management

Evaluation and adjustment

Identifying desired impacts

Policy development

Strategic planning

Implementation planning and

budgeting

Implementation

End-year reporting

Oversightby Parliament, provincial legislature or municipal council

INSTITUTIONnational department

provincial departmentmunicipality

state controlled institutionmunicipal entity

Specification of outcomes and outputs

Setting targets and resource allocation

Monitoring and management

Evaluation and adjustment

Identifying desired impacts


Slide no. 76

Future Governance at SAT (cont.)

2. Only as good as last success!

3. IFRS/GAAP more complex - audit reports4. Continuous change & being pro-active!

5. Limited funding/forex – working smarter/innovation


Slide no. 77

Part I

TGCSA stats


Slide no. 78

Establishments SummaryEstablishments SummaryAs at end September 2009As at end September 2009

Non‐Hotel Accommodation EC FS GP KZN LP MP NW NC WCGrand

Total

Backpacker & Hostelling 11 ‐ 9 10 5 3 4 4 25 71

Bed & Breakfast 312 76 251 334 19 42 38 58 350 1,480

Caravan & Camping 9 4 5 22 20 25 7 22 10 124

Country House 16 7 17 32 7 18 4 1 74 176

Guest House 308 137 530 201 80 148 129 135 813 2,481

Lodge 63 19 57 84 79 81 54 18 41 496

Self Catering 176 59 143 328 136 135 43 58 975 2,053 Non‐Hotel Accommodation

Total 895 302 1,012 1,011 346 452 279 296 2,288 6,881

Hotel Total 67 25 146 73 36 33 16 26 189 611

Accommodation Grand Total 962 327 1,158 1,084 382 485 295 322 2,477 7,492 MESE Total (Business

Tourism) 6 4 109 15 15 21 26 4 18 218 Grand Total Graded

Properties 968 331 1,267 1,099 397 506 321 326 2,495 7,710

How this information was retrieved:

This information was retrieved from the ‘post meeting’

download on the TGCSA back office.

This information was retrieved using the total of all new and renewal properties from 2008/09 and the sum total of new properties

only for 2009/10 as at the period mentioned in the title of this

document

NB: This data does not

include cancelled and overdue properties


Slide no. 79

Rooms SummaryRooms SummaryAs at end September 2009As at end September 2009

Non‐Hotel Accommodation EC FS GP KZN LP MP NW NC WC Grand Total

Backpacker & Hostelling 472 ‐ 1,451 751 189 174 154 503 1,014 4,708

Bed & Breakfast 1,753 373 1,194 1,892 159 251 255 343 1,557 7,777

Caravan & Camping 393 234 230 1,606 1,243 1,463 824 1,012 586 7,591

Country House 116 75 250 409 110 244 42 4 744 1,994

Guest House 2,646 1,120 4,496 1,707 886 1,451 1,471 1,171 5,523 20,471

Lodge 573 297 1,125 1,200 1,061 1,331 866 218 413 7,084

Self Catering 1,206 426 828 2,014 2,594 2,547 989 467 4,200 15,271 Non‐Hotel Accommodation

Total 7,159 2,525 9,574 9,579 6,242 7,461 4,601 3,718 14,037 64,896

Hotel Total 3,660 1,376 14,005 4,815 1,776 1,625 1,624 932 12,410 42,223 Accommodation Grand

Total 10,819 3,901 23,579 14,394 8,018 9,086 6,225 4,650 26,447 107,119 MESE Total (Business

Tourism) 34 9 676 56 60 77 73 9 69 1,063 Grand Total Graded

Properties 10,853 3,910 24,255 14,450 8,078 9,163 6,298 4,659 26,516 108,182

How this information was retrieved:



This information was retrieved using the total of all new and renewal properties from 2008/09 and the sum total of new properties

only for 2009/10 as at the period mentioned in the title of this

document




Slide no. 80

TGCSA/SAT/MATCH Stats Per Province TGCSA/SAT/MATCH Stats Per Province (accommodation only)(accommodation only)

As at September 2009As at September 2009

Province

TGCSA Graded Stats South African Tourism (NPDB) Stats MATCH Stats

Establishments Rooms EstablishmentsMarket Share

(Graded Vs total

Product) %

2010 Host CityMATCH

Rooms

Eastern Cape 962 10,819 1,983 49%Port Elizabeth 5,199

Free State 327 3,901 760 43%Bloemfontein 1,849

Gauteng 1,158 23,579 2,678 43% Johannesburg 9,692

Pretoria 3,286

Kwazulu Natal 1,084 14,394 3,124 35%Durban 6,252

Limpopo 382 8,018 661 58%Polokwane 1,425

Mpumalanga 485 9,086 1,016 48%Nelspruit 2,162

North West 295 6,225 501 59%Rustenburg 2,528

Northern Cape 322 4,650 541 60%n/a

Western Cape 2,477 26,447 7,590 33%Cape Town 7,020

Grand Total 7,492 107,119 18,854 40% 39,413

-This data does not include cancelled and overdue properties

- These stats do not include SAT reported stats in the accommodation sector for: Resorts, Cultural, Golf Estates, Health & Spa, Romantic & Honeymoon, Spiritual and Unusual - this amounts to 1909 properties

₁

Subject to updates

₂

includes Hotel & Non-Hotel Accommodation (defined as: Timeshare, Apartments, SMME, Team Base Camp and SANParks , and exclude international countries Botswana, Namibia, Swaziland and Zambia

Please see slides 3 & 4 for ‘how this information was retrieved’ for the TGCSA Graded Stats


Slide no. 81

TGCSA/SAT/MATCH Stats Per CategoryTGCSA/SAT/MATCH Stats Per CategoryAs at September 2009As at September 2009

Non Hotel Category

Total Graded

Establishments

Total RoomsSouth African

Tourism (NPDB)

Stats

Current TGCSA Market

Share

(%)TGCSA Target

Market

Signed up with

MATCH

Backpacker &

Hostelling 71 4,708 180 39% 233Bed & Breakfast 1,480 7,777 2,847 52% 2,726

Caravan & Camping 124 7,591 384 32% 429Country House 176 1,994 619 28% 211Guest House 2,481 20,471 9,299 27% 1,585Lodge 496 7,084 952 52% 2,053Self Catering 2,053 15,271 2,268 91% 2,311Non‐Hotel

Accommodation Total 6,881 64,896 16,549 42% 9,324 13,557³Hotel Total 611 42,223 2,158 28% 1,327 25,856

Accommodation

Grand Total 7,492 107,119 18,707 40% 1,327 25,856MESE Total (Business

Tourism) 218 1,063 216 101%Grand Total Graded

Properties 7,710 108,182 18,854 41% 10,651 39,413₂

MATCH Target 55, 000

shortfall 15,587-This data does not include cancelled and overdue properties

- These stats do not include SAT reported stats in the accommodation sector for: Resorts, Cultural, Golf Estates, Health & Spa, Romantic & Honeymoon, Spiritual and Unusual - this amounts to 1909 properties

₁

Subject to updates

₂

includes Hotel & Non-Hotel Accommodation (defined as: Timeshare, Apartments, SMME, Team Base Camp and SANParks , and exclude international countries Botswana, Namibia, Swaziland and Zambia

Please see slides 3 & 4 for ‘how this information was retrieved’ for the TGCSA Graded Stats


Slide no. 82

Growth & Decline by Month Growth & Decline by Month -- per Provinceper Province

Province

As at end August 2009 As at end September 2009 Variance on Establishments Variance on Rooms

Establishments Rooms Establishments Rooms Number % Number %

Eastern Cape 948 10,737 962 10,819 14 1.48% 82 0.76%

Free State 318 3,855 327 3,901 9 2.83% 46 1.19%

Gauteng 1,101 23,217 1,158 23,579 57 5.18% 362 1.56%

Kwazulu Natal 1,053 14,262 1,084 14,394 31 2.94% 132 0.93%

Limpopo 378 7,976 382 8,018 4 1.06% 42 0.53%

Mpumalanga 476 9,038 485 9,086 9 1.89% 48 0.53%

North West 290 6,193 295 6,225 5 1.72% 32 0.52%

Northern Cape 319 4,626 322 4,650 3 0.94% 24 0.52%

Western Cape 2,435 26,241 2,477 26,447 42 1.72% 206 0.79%

Grand Total 7,318 106,145 7,492 107,119 174 2.38% 974 0.92%






Slide no. 83

Growth & Decline by Quarter Growth & Decline by Quarter -- per Provinceper Province

Province

Quarter 1 (April 09 –

June 09) Quarter 2 (July 09 –

September 09) Variance on Establishments Variance on Rooms


Eastern Cape 66 597 54 389 ‐12 ‐18% ‐208 ‐35%

Free State 24 192 25 240 1 4% 48 25%

Gauteng 133 1597 127 1461 ‐6 ‐5% ‐136 ‐9%

Kwazulu Natal 37 314 80 309 43 116% ‐5 ‐2%

Limpopo 12 184 11 156 ‐1 ‐8% ‐28 ‐15%

Mpumalanga 19 141 19 123 0 0% ‐18 ‐13%

North West 25 250 20 229 ‐5 ‐20% ‐21 ‐8%

Northern Cape 17 297 8 50 ‐9 ‐53% ‐247 ‐83%

Western Cape 271 992 102 516 ‐169 ‐62% ‐476 ‐48%

Grand Total 604 4564 446 3473 ‐158 ‐26% ‐1091 ‐24%



This data was taken from the stipulated periods mentioned above

NB: This data could include cancelled and overdue properties


Slide no. 84

Growth & Decline by Month Growth & Decline by Month -- per Categoryper Category

Non Hotel Category

As at end August2009 As at end September 2009 Variance on establishments Variance on rooms

Total Graded

Establishments

Total RoomsTotal Graded

Establishments

Total Rooms Number % Number %

Backpacker and Hostelling 71 4,708 71 4,708 ‐ 0.00% ‐ 0.00%

Bed and Breakfast 1,453 7,664 1,480 7,777 27 1.86% 113 1.47%

Caravan and Camping 123 7,581 124 7,591 1 0.81% 10 0.13%

Country House 173 1,971 176 1,994 3 1.73% 23 1.17%

Guest House 2,423 19,998 2,481 20,471 58 2.39% 473 2.37%

Lodge 484 6,983 496 7,084 12 2.48% 101 1.45%

Self‐Catering 1,983 15,038 2,053 15,271 70 3.53% 233 1.55%

Total Non‐Hotel 6,710 63,943 6,881 64,896 171 2.55% 953 1.49%

Hotel Category 608 42,202 611 42,223 3 0.49% 21 0.05%

Grand Total 7,318 106,145 7,492 107,119 174 2.38% 974 0.92%






Slide no. 85

Growth & Decline by QuarterGrowth & Decline by Quarter-- per Categoryper Category

Non Hotel Category

Quarter 1 (April 09 –

June 09) Quarter 2 (July 09 –

September 09) Variance on Establishments Variance on Rooms


Backpacker and

Hostelling 1 518 ‐1 ‐100% ‐518 ‐100%

Bed and Breakfast 93 481 84 425 ‐9 ‐10% ‐56 ‐12%

Caravan and Camping 6 234 3 95 ‐3 ‐50% ‐139 ‐59%

Country House 4 40 8 74 4 100% 34 85%

Guest House 143 1014 127 1028 ‐16 ‐11% 14 1%

Lodge 28 393 25 247 ‐3 ‐11% ‐146 ‐37%

Self‐Catering 290 974 172 558 ‐118 ‐41% ‐416 ‐43%

Total Non‐Hotel 565 3654 419 2427 ‐146 ‐26% ‐1227 ‐34%

Hotel Category 20 848 15 991 ‐5 ‐25% 143 17%

MESE 19 62 14 70 ‐5 ‐26% 8 13%

Grand Total 604 4564 448 3488 ‐156 ‐26% ‐1076 ‐24%



This data was taken from the stipulated periods mentioned above

NB: This data could include cancelled and overdue properties


Slide no. 86

Total Properties Cancelled Total Properties Cancelled As at end SeptemberAs at end September

Reason EC FS GP KZN LP MP NW NC WC Grand Total

Cannot afford fees 21 11 31 25 3 5 10 10 37 153

Due to current economic

climate 1 3 4 8

Establishment no longer

operating 38 25 51 78 22 28 28 14 182 466

Establishment sold ‐

new

owners 15 11 15 26 8 10 14 12 47 158

Graded just for 2010 1 1 2

Grading expired 4 3 13 7 1 2 11 4 13 58

Grading not seen as beneficial 31 17 43 29 23 23 14 5 77 262

Not yet ready for grading 27 22 133 65 28 38 36 21 93 463 Unsatisfactory service from

TGCSA 3 4 4 4 4 3 9 31

Will Renew another year 21 12 35 35 16 18 11 27 74 249

Grand Total Cancelled 161 105 326 273 101 128 127 93 536 1,850

This information was retrieved from the ‘cancellations’


This data represents ALL

cancellations that have taken place since the TGCSA’s inception.

NB: This data excludes reinstatements that have occurred during the month of August.


Slide no. 87

Part J

Update on transformation in the Tourism sector


Slide no. 88

TECSA’s Goal

Facilitate transformation of the tourism

industry – increase of transformed

businesses, March 2010.


Slide no. 89

Status of Gazetted Tourism Code

Gazetting of the Tourism BB-BEE Code under section 9

Enables:

– Private sector compliance through a standard measurement criteria

– Public sector to implement policy more vigorously


Slide no. 90

Key Projects of TECSA

To date the following key activities have been embarked on in facilitating private sector compliance:

• Information workshops held nationally in partnership with private sector and government stakeholders with approximately 850 participants

• Quarterly BB-BEE reporting by the provincial and metro focal points ongoing

• Training of Verification agencies in partnership with SANAS taking place 20th October 2009


Slide no. 91

State of Transformation

State of Transformation by Sub Sector – Aggregates

Accommodation: 51.9%

Hospitality: 53.5%

Travel: 57.1%


Slide no. 92

Equity Deals

Nr# Target Company Buying Company % Stake Rand Value (in Millions)

1 Imperial Holding Ltd Lereko Mobility 7.25% 1402 Tusk Casino Resorts & Hotels Group Peermont Global Ltd n/a 583

3 Sun International Ltd Dinokana Investments (Pty) Ltd 7% 392

4 Protea Hospitality Corporation BEE Consortium 37.5% 1005 Vaal Mall Igwa Investments 20% 856 IFA Zimbali Lodge (Pty) Ltd Moribo Leisure Limited 100% 85

7 Gatsby International Hotels & Resorts

Community Investment Holdings (CIH)

51% 40

8 Halcyon Hotels Group Akani Hotels 100% 35

9 Wild Coast Sun Mbizana Development Trust 30% 25.5


Slide no. 93

Equity Deals

10 Moribo Leisure Limited (Note 1) DNR Capital 100% 7

11 Mpekweni SunSilvercharm Investments 99 (Pty) Ltd

100% n/a

12 Club Travel UniPalm Investment Holdings 30% n/a

13 Title South Africa Jacob Matlala 24% n/a14 Peermont Global MIC 75% 7000 (R7bn)

15 Hospitality Property Fund Nobuntu Investments II (Pty) Limited n/a n/a

16 City LodgeVuwa InvestmentsStaff trustUniversity of Jhb

15% 485

17 Tourvest Guma Investments and partners 51% 2000 (R2bn)


Slide no. 94

Closing

Thank you/Siyabonga

Questions/comments?