James Vos replies to tourism budget vote 2016

Tourism Budget Vote 3 May 2016: speach by James Vos MP, South Africa’s shadow minister of tourism

See Minister Derek Hanekom’s National Department of Tourism 2016/17 budget vote speach here

Acknowledging SMMEs in tourism

Before I get into the substance of my speech, I am delighted to welcome and congratulate all of the winners of the Cape Town Tourism Development Fund – they are seated in the gallery.

These awards reflect commitment to sustainability and the work undertaken to place tourism development at the heart of your business. The aim of the program is to assist emerging SMME’s with support to develop their businesses.

The winners are Maboneng Township Arts Experience in Langa (Siphiwe Ngwenya), Turning Point B & B (Doris & Isaac Manini) and Lungi’s B & B (Lungi Sotyingwa-Pango).

Unpacking tourism trends

Madam Chair, I am pleased to join in this budget debate. It is an important annual opportunity to take stock of trends and developments in our tourism industry, as we look ahead to new opportunities and seek to implement new initiatives.

Many of the statements delivered here today are most certainly well received. Notwithstanding this fact, it remains my responsibility to give some perspective on the state of tourism and by doing so providing feasible alternatives based on best practices.

We gather here today against the background of very strong tourism data. We heard many numbers that reflect arrival figures over certain periods.

These somewhat contrasting numbers offer important insights into the nature of the operating environment of our tourism industry. On the one hand, there is the promise of significant long-term opportunities. These are underpinned by strong fundamentals such as the economic rise of Asia, as well as the announcements relating to the visa concessions.

On the other hand, we must contend with periodic fluctuations caused by uncertainties in the global economy, adverse developments in key source markets, growing competition in the region, and domestic resource constraints. I will focus on the latter in more detail later on during my speech.

Against this backdrop, we need two types of responses – strategies that will best position us to benefit from long term growth opportunities – and tactical measures to deal with instability and challenges in the short term.

Essential to the usefulness of both these responses is the need for all stakeholders in the tourism sector to come together to coordinate efforts and resources.

Making tourism sustainable

Since my motions and budget speaches over the last two years, I am pleased to report some significant policy developments.

These speak to issues such as a switch in focus from visitor numbers to visitor revenue, the development of increased community engagement with tourism, and to ensure that the tourism sector has the appropriate skills to meet the needs of future visitors.

I should also highlight that the Policy Statement is very strong in terms of needing to ensure that our tourism development is done in a sustainable manner.

Indeed as our economy and the tourism sector continues to grow and we see an upturn in construction activity it is more important than ever that development of public infrastructure and private construction activity should be carried out with as much sympathy as possible for the natural landscape and our built heritage.

For tourism to have lasting socio economic benefits, it must be sustainable. So while our focus is globally, we must also focus locally.

Driving tourism demand

Moving onto the subject of transformation of the tourism sector, the DA submits that government support for tourism should focus on three areas: (1) product development to ensure that South Africa remains a destination-of-choice for visitors; (2) technology adoption and innovation to improve productivity; and (3) enhancing workforce capabilities to ensure that our people have the right skills to benefit from industry growth.

First, we must continue to invest in products and infrastructure that will ensure our country’s tourism landscape remains innovative and attractive to visitors. Some of these investments will be directed to niche sectors with high growth potential, like the cruise industry, which also generates significant spillover economic benefits for ground handling services, bunkering, and ship repair. It is also an example of public-private partnership to diversify product offerings and pursue new avenues of growth.

The cruise ship industry has been the fastest growing segment in the travel industry around the world.

1. The economic benefits of cruise tourism at each destination arise from three principal sources:
   Onshore expenditures by passengers that are concentrated in shore excursions and retail purchases of clothing and jewelery;
2. ​Onshore spending by crew which are concentrated in purchases of food and beverages, local transportation and retail purchases of clothing and electronics; and
3. ​Expenditures by the cruise lines for supplies, such as food and beverages, port services, such as navigation and utility services, and port fees and taxes, such as dockage fees.

I am pleased to announce that the Transnet National Ports Authority awarded the V&A Waterfront as the preferred bidder for an estimated R179 million investments that will cover the construction and operation of a dedicated cruise terminal. The V&A Waterfront’s vision for the cruise terminal is to scale the retail offering up or down in response to demand, in addition to baggage handling services, immigration desks and infrastructure and customs facilities. Plans for upgrades to the existing facility are currently being finalised.

The cruise industry is big business with conservative estimates set at about 10 000 visitors to the province each year, generating around R200m for the local economy. (Traveller24: Red flags raised for new cruise terminal)

Dedicated cruise liner infrastructure could also serve as a platform upon which further port facilities can be developed and built. This could have a beneficial impact, not only on the port city, but the national economy, through an increase in maritime trade and cruise tourism.

Secondly, we must use the many technologies available to market destinations, connect stakeholders, and promote products and the provision of services. In fact the recently hosted Africa World Travel Market in Cape Town selected the use of technology in tourism as its theme.

While on the subject of technological innovation in the tourism industry, the application of electronic visas as a means to streamline tourist facilitation to your country must stand out as the best possible measure available.

E-visas

The DA’s policy on this issue has been in favour of e-visas for visitors to South Africa for these simple facts: The introduction of electronic visas will not only provide a real means for protecting jobs in tourism but present significant advantages by cutting turnaround times for the issuing of travel documentation, and are in fact more secure than existing permits.

Electronic visas have also proven to be highly effective in comparable countries such as Turkey, which is widely regarded to have the best international practice when it comes to visa applications.

In terms of the concessions announced by the Inter-Ministerial Committee, I am delighted to say that many of the proposals submitted by both the industry and ourselves through motions and petitions are now included.

For example in China, the need for in-person application is no longer a challenge as all tour operators are accredited. People wanting to travel to South Africa as leisure tourists can now apply for their Visas through the accredited tour operators.
It is noted that the same applies in India, but the outstanding issue in India is the capacity of Home Affairs to process Visa applications. This needs to be resolved.

We also welcome the Cabinet announcement that Home Affairs will be exempting travellers from the BRICS countries who hold Visas from countries such as US, UK, Schengen and all other countries who apply stringent visa application processes. These tourists will be issued a Visa on arrival.

However these are only policy statements not a decision yet. The other outstanding matters from the IMC recommendations are the amendment to the Immigration Regulations that deals with the requirement of the unabridged birth certificates and the announcement on Visa exemptions for BRICS countries, to ease travel and increase tourist arrivals to the country.

Skills and training

Thirdly, we need to prepare our workforce for the tourism industry by providing the right skills and training. But before we do this, transformation of the industry also needs to take place. This must be done in a way that ensures inclusive growth and equal opportunities. Furthermore the private sector often raises concerns about the quality of tourism graduates and their readiness for the job market. I am pleased to announce that the Committee has resolved to engage the training authorities on improving quality of tourism education geared towards providing well-equipped workforce to the sector.

We know that tourism is closely connected with transportation. Having said this, I am pleased to announce that improving airlift and air access to many destinations throughout the country is now receiving priority. In fact this strategy is already yielding positive results with additional international flights to Durban and Cape Town. For example in the Western Cape an airlift strategy implementation plan focusing on the development of direct routes to key source markets was recently introduced.

To expand on this, the NDT agreed to my proposal presented to the Committee that collaboration with the relevant government departments and authorities needs to take place in order to develop similar airlift strategies for the other regions. I am informed that that an airlift strategy is being developed for Durban and KZN. I have motivated for this based on the research that shows that there is a clear link between improved air access and economic growth.

International tourism offices

I previously pointed that that the model of operating international country offices has proven to be expensive and not cost-effective for various reasons such as foreign currency exposure and overhead costs.

I can report that SAT is currently implementing a hub strategy, which will use virtual offices and ensure that one office in the region services a number of markets andcountries. The hub strategy will lead to closure of some country offices and release the money for the marketing mandate.

Municipalities’ role in tourism

Now if one considers the period during which these budget debates are taking place, it makes sense to link our input to the fundamental role of local government in tourism development and destination marketing.

It is repeatedly suggested that tourism creates employment and economic opportunities for host communities. But what does this really mean and who should be the initiators?

The truth of the matter is that we are faced with a situation where many municipalities have allowed for the decay of numerous tourism sites and related infrastructure.

This is deplorable because if these attractions were properly managed, they could have ultimately led to more visitations, and with more visitors to your town, more small businesses will prosper, and with more small businesses growing, more employment opportunities are created.

During my recent oversight visit to the Mtubatuba Municipality in Kwazulu-Natal it revealed the many municipal shortcomings that affects this region’s travel and trade prospects which includes the high levels of crime, no water in certain parts and poor water quality, worsening state of camping and holiday resorts, and the illegal and poorly managed waste and landfill sites.

These conditions are not unique to this municipality. We see this happening all over the country. The same horrible conditions apply to a number of other municipalities that have suffered similar deterioration due to neglect and inaction.

Taking into account the current economic situation, there are several measures required if we are to rejuvenate many small town economies. In order to achieve this, I will now present some practical solutions.

Product development

The answer lies in product development followed by the formation of tourism routes. This will actively promote economic opportunities and geographic spread within the rural regions while also entrenching a culture of tourism among all South Africans.

South Africa is a kaleidoscope of culture where at every corner there is a new and intriguing tourism offering. This is even true for more remote parts of the country, particularly small towns – which rely on tourism and agriculture to survive.

It is without a doubt that tourism products and new routes can lead to the development of local enterprises, increasing the demand for goods and services, and contribute to much needed employment.

It is for these reasons that I have actively participated in this scheme by working with various product owners, community stakeholders, local authorities to develop tourism products and establish tourism routes along the Cape West Coast.

The fundamental concept sustaining the establishment of tourism routes is based on the notion of linking together a series of tourism attractions in order to promote the local economy by encouraging visitors to travel from one location to another.

I believe that this initiative will bring together a variety of activities and attractions under a unified theme and as a result stimulate entrepreneurial opportunity through the development of additional products and services.

The ability of municipalities to deliver on their mandates, ultimately affects the ability of those municipalities to deliver on tourism.

Even more concerning is that the local governments can act in a decisive and effective manner to boost the tourism industry but they chose inaction instead.

They can start by employing a domestic marketing campaign that is not just an advertising campaign, but must include events and activities, recommendations of destinations from South Africans themselves, and affordable holiday packages.

Therefore the strategy must require closer working relationships between SA Tourism and industry stakeholders, including travel agents, airlines and hotel groups.

Government must work with industry to support the development and maintenance of tourism infrastructure that can drive demand. Further to this, the NDT must also consider implementing measures to assist underperforming and failing municipalities that are unable to make any progress on tourism development.

Making tourism affordable

This follows increasing evidence that domestic tourism is coming under pressure, because of a worsening economy and the lack of affordable holiday destinations. This explains the decline of domestic travellers.

The NDT should specifically investigate the growing reality for so many South Africans that tourism is just too expensive. It also needs to look at what can be done to help the tourism sector grow in the light of an economic downturn.

The DA’s policy on tourism sets out a number of steps to improve domestic tourism. This includes:

• Promoting the culture of travel and touring amongst South Africans through effective marketing, information and education;
• Providing tourism operators with information on domestic tourism demand to promote the development of tourism products targeted at diversified domestic market segments;
• Promoting an increased awareness amongst communities and the general public about the importance of and economic potential in tourism and conservation;
• Supporting a greater geographic spread of tourism offerings; and
• Ensuring that the infrastructure created to support domestic tourism is designed to serve as the backbone for international tourism.

Furthermore government must look into the numerous poorly developed and maintained government-funded tourist sites.

Audit of tourism products

In an attempt to make constructive suggestions on how to deal with these obstacles, I submitted Parliamentary questions enquiring about the audit of the current tourism products.

In response to my question submitted, I was informed that an audit has been conducted which identified approximately 700 resorts that are not being optimally utilized.

During my research and oversight visits throughout the country it clearly indicates that many of these resorts that are situated in various small towns have become dysfunctional, dilapidated and poorly managed. This is deplorable given the fact that these resorts that were built with taxpayers’ money are consequently becoming a huge liability for these municipalities.

A problem with local tourism is the numerous poorly developed and maintained government-funded tourist attractions – about 700 identified resorts – that remain sorely underused. A viable solution is to establish partnerships with the private sector to convert these resorts into affordable “budget” holiday destinations.

I have pointed out in previous parliamentary motions that we should consider making use of underutilized municipal resorts for the new domestic market by developing it into tourist attractions and facilities.

Since my appointment to this portfolio more than two years ago, I have pointed that we should consider making use of underutilized municipal resorts for the new domestic market by developing it into tourist attractions and facilities – converting into “budget” holiday destinations, in partnership with the private sector.

It is simply wrong to have these state resources stand vacant and underutilized while there is a demand in certain market segments of our country.

Budget resort concept

Madam Chair, This brings me to an important question. Why did government not implement the budget resort concept since it commissioned a study into this model with outcomes? The government announcement stated that it would in partnership with the Industrial Development Corporation and private sector convert underused state properties into tourist facilities. The plan was to initially run between three to five resorts as a pilot project.

This concept is based on the ‘Butlin’s Resorts’ in the United Kingdom, which converted old army buildings into holiday resorts.

Clearly there is a lackluster approach by government to implement this business model. If implemented it could go a long way to sort out the affordability issue within the domestic tourism market.

The last few years decline in domestic tourism definitely confirms our submission to invest in tourism promotion and campaigns. South Africa’s tourism growth potential rate justifies the need to invest more in tourism infrastructure.

With non-travelling South Africans having indicated that they could not afford to travel or were not aware of accessible offerings, the NDT must do more to address these information and cost barriers.

Discounted tariffs for South African citizens

Madam Chair, another important advancement in our efforts to put proposals forward that deals with the affordability of local travel, is the issue of discounted tariffs for South African citizens visiting government owed resorts parks, nature reserved, museums, etc.

I have previously pointed out that more should be done to make these attractions more affordable and accessible to our citizens. Our proposal would allow for all South Africans to gain free or discounted entry to such facilities on non-religious public holidays in South Africa. 
There are already some great examples of this model – such as the free entry onto the Table Mountain Cable Car on the day of your birthday. We need to expand this further if we are to get South Africans to experience their country and explore each other’s cultures.

I am pleased to announce that our entity South Africa Tourism reported to the Committee on their discussions with SanParks on domestic tourism discounts, such as using the wild card. This will make nature-based tourism, including game reserves, nature reserves, and botanical gardens affordable to citizens. We will closely monitor the rollout of these plans.

Tourism matters

For your Department to reach its goals, Minister, more must be done to hold cross-cutting Ministries to account. We cannot have a situation which recently occurred whereby Home Affairs issues visa regulations without considering the tourism impact, we cannot have tourist facilities closing down because the road access is not properly maintained, we cannot afford to have bad media because of a breakdown in law and order or the safety of our tourist are threatened, nor can we have unscrupulous operators charging what they like at our parks, restaurants and accommodation.

South Africa has a wonderful diversity of people, landscape and wildlife and with many World Heritage Sites to our credit; it has all the opportunities and potential to make this country a sought after and affordable destiny of choice for travel and trade.

Given the job losses in the mining and manufacturing sectors, we need the tourism industry to keep South Africans working.

It is only through job creation and robust economic growth that we will be able to unlock opportunities for all South Africans and give life to the freedoms on which our democracy is based.

JAMES VOS, MP
Member of Parliament
Shadow Minister of Tourism
Parliament of RSA

jvos@da-wc.org.za