Presentation to Portfolio Committee SA Tourism Annual Performance Plan 2018 – 19 25 April 2018

CONTENTS Part A: Strategic Overview Setting scene Enviro scan Part B: Programme and Sub-Programme Plans Annual and Quarterly Targets Programme 1: Corporate Support……………………………………………. 23 Programme 2: Business Enablement………………………………………… 24 Programme 3: Leisure Tourism Marketing………………………………. 25 – 26 Programme 4: Business Events…………………………………………………. 27 Programme 5: Tourist Experience……………………………………………. 28 Finance Revenue estimates Budget per Programme Budget per Economic Classification

Part A: Strategic Overview Setting scene

Setting the scene President Cyril Ramaphosa (SONA): “an area (Tourism) which provides the country with incredible opportunities to, quite literally, shine”. The ask: to more than double the 700K people currently employed in tourism Enhance support for destination marketing in key tourism markets Take further measures to remove reduce regulatory barriers Develop emerging tourism businesses 4

Annual Performance Plan: page 6 South African Tourism has set a strategic goal of increasing the base of tourism by five million arrivals / trips during 2017-2021. This will ensure synergised efforts across the tourism sector towards contributing to inclusive economic growth Goal Increase tourism sector’s contribution to inclusive growth by increasing the base of tourism by five million arrivals /trips during 2017-2021 Strategic Objective 1: To contribute to inclusive economic growth by increasing the number of international and domestic tourists Strategic objective 2: To contribute to an enhanced, recognised, appealing, resilient and competitive tourism and business events brand for South Africa across the target markets and segments Strategic Objective 3: To enhance stakeholder and partnership collaboration, both local and international, to improve delivery on South African Tourism’s mandate Strategic Objective 4: To contribute to an improved tourist experience in line with the brand promise Strategic Objective 5: To position South African Tourism’s corporate brand to be recognised as a tourism and business events industry leader in market intelligence, insights and analytics Strategic Objective 6: To achieve operational efficiencies in all activities, including human, marketing and other resources available to South African Tourism Strategic Objectives Annual Performance Plan: page 6

5-in-5 National Tourism Target Drives Resource Allocation The 5-in-5 goal is national goal which is jointly owned by SA Tourism and the Provincial Tourism Authorities. This drives strategic alignment, proportionate resource allocation and coordination of marketing activity Source Markets 5-in-5 National Tourism Target Drives Resource Allocation Distribution Markets Success Factors: Making 5-in-5 come alive and relevant in the provinces. APPs and Strategies need to link up SAT and PTA become jointly accountable for the targets Effort, resources and funding deployed according to targets e.g. hostings, APPs etc. Elevate targets into provincial performance Grading targets included PTA CVP: Strategy formulation and market execution Global and local market support and alignment Ownership of local activities and activations + local capacity and tourist activities India Eastern Cape SAT Australia Western Cape Netherlands Current 10m + 5m in 5yrs Northern Cape United Kingdom Gauteng Germany North West United States Limpopo China Mpumalanga Africa Free State Other KwaZulu-Natal 7% of global target (eg) Key source markets

Part A: Strategic Overview Enviroscan

Preliminary domestic tourism results for 2017 Performance of Year one of 5-in-5: we have achieved our target for domestic holiday trips, but missed our target for international tourist arrivals Estimated Domestic Holiday Trips 2017: 2.9Mn International Tourist Arrivals 2017: 10.3Mn Preliminary domestic tourism results for 2017 2.9Mn 10.9Mn Domestic holiday trips increased in 2017 by approximately 12% which resulted in the domestic holiday target being achieved. Holiday trips in 2017 were higher than 2016 levels in nine of the twelve months, declining in May, August and December. About 13% of total domestic holiday trips were taken in December 2017, a much smaller share compared to December 2016. Despite the increase in domestic holiday trips, total domestic trips amounted to 17.1 million trips. This is a decrease of approximately 29% over 2016, and is driven by an estimated 41% decline in VFR trips. The consumer in SA faced strong head winds in 2017 with a recession early in the year and unemployment remaining high. These conditions had a far reaching effect on consumers and domestic tourism in particular the VFR segment. International tourist arrivals to South grew by 2.4% in 2017 to reach 10.3Mn. This means that we have achieved 94% of our annual target of 10.9Mn for 2017 (which is roughly 614 000 behind the 5-in-5 target for year one). Overall, we saw growth out of Europe, Americas, Australasia and Africa, while we saw declines out of Asia. Air Markets: have grown by 5.9% to record 3.1Mn international tourist arrivals. Land Markets: The land markets which are our biggest source market have grown by just 1.0% to record 7.2Mn international arrivals. Performance in this region improved after a poor start to the year. Global arrivals grew by 7% in 2017 (UNTWO) and South Africa is growing behind both the globe and behind the rest of Sub-Saharan markets. Sub-Saharan Africa grew 5% which is slower compared to 8.9% growth in 2016. 1.45Mn 5.45Mn

International tourist arrivals grew by 2. 4% in 2017 to reach 10 International tourist arrivals grew by 2.4% in 2017 to reach 10.3 million, approximately 600k short of the target for the year % change 16-17 12.6% 3.2% 5.8% 4.2% 6.6% -6.8% 12.8% 2.4% Source: Statssa Tourism & Migration release; SAT analysis

Central & South America Growth was recorded from most regions with the exception of Asia and the Indian Ocean Islands 2017 Europe 1,660,848 arrivals 7.6% up from 2016 CAGR15 to 17 11.7% North America 437,903 arrivals 7.8% up from 2016 CAGR15 to 17 11.3% Middle East 55,906 arrivals 4.4% up from 2016 CAGR15 to 17 19.0% Asia 317,181 arrivals -3.3% down from 2016 CAGR15 to 17 12.3% Central & South America 107,582 arrivals 59.3% up from 2016 CAGR15 to 17 46.2% Australasia 133,713 arrivals 1.4% up from 2016 CAGR15 to 17 6.0% AFRICA INTERNATIONAL 7,559,342 arrivals 0.8% up from 2016 CAGR15 to 17 5.9% Indian Ocean Islands 10,285,197 arrivals 2.4% up from 2016 CAGR15 to 17 7.5% 27,748 arrivals -4.4% down from 2016 CAGR15 to 17 9.1% Source: Statssa Tourism & Migration release; SAT analysis

Too expensive to get to there The major barriers identified by research conducted by SA Tourism are safety concerns and “too expensive to get there” Too expensive to get to there Safety & Security Barriers Airlift Visas Unabridged birth certificate Visa processing Working on route development with relevant provinces, i.e. Western Cape, KZN and Gauteng The Minister and the Department of Tourism has convened a task team that includes the Department, SA Tourism and the industry to develop a workstream that will effectively deal with tourist safety Strategic Projects According to the WTTC report, “The Impact of Visa Facilitation”, ASEAN* markets shows that wavering visas in this region increases the competitiveness score of the destination country and has an impact of increasing tourist arrivals from these markets by between 8.5% - 13.7%. In South Africa, the removal of visas for Russians increased travel to SA by at least 51% in 2017. Introducing visas in New Zealand decreased travel by at least 30%. January 2018 figures shows a continuing upward trend in Russia while New Zealand continues to decline. Source: SAT BrandTracker surveys; “The Impact of Visa Facilitation” - WTTC

Preliminary results for 2017 Total domestic trips declined by 29% in 2017 while domestic holiday trips increased by 12% in the same period Preliminary results for 2017 Source: SA Tourism Domestic Surveys

Revenue from domestic tourism declined at a slower rate of 16% in the same period. The increase in average spend per trip helped stem the losses in revenue caused by the significant decrease in total trips Preliminary results for 2017 TOTAL DOMESTIC TRIPS (MM) TOTAL DOMESTIC REVENUE (R) 24.3 2016 17.2 2017 26.5 Bn 2016 22.1 Bn 2017 -29.3% -16.6% DOMESTIC MARKET PERFORMANCE DOMESTIC MARKET SPEND Domestic tourism declined due to significant declines in VFR trips while the number of holiday trips increased. Total revenue declined by 16.6% YoY in 2017. There was an increase in average spend per trip and spend per day. ~16% Share of Holiday Trips in 2017 ~12% 2017 YoY Increase in Holiday Trips ~3.4 nights Average Length of Stay for Holiday Tourists 2017 SPENDING PATTERNS (R) 6.8 Bn Total Domestic Holiday Spend 1,286.2 Average Spend per Trip 297.0 Average Spend per Day TOP 3 DESTINATION PROVINCES (2017) Limpopo Gauteng KwaZulu Natal Famous for beautiful and contrasting landscapes Economic and business centre of South Africa Popular for sub-tropical climate, beaches and adventure activities YoY Change -4% +18% +16% Source: Domestic Survey 2016-2017

The investment in the marketing campaigns to stimulate holiday travel seems to have yielded positive results Note: 1The budgets include consumer marketing budget, trade budget and other budgets (towards provinces, etc.); The information for 2017 is based on preliminary results Source: Domestic Tourism Analysis; SA Domestic Survey, 2013–2017; Grail Research Analysis

Strategic projects identified to improve Domestic Tourism performance Consumer Behaviour: There is a need to understand domestic tourism consumer behaviour in more detail. The following two areas of investigation are of specific importance: It is important to understand the role that VFR visitors play in conversion to holiday maker and whether it is possible to influence this group to add holiday items to their VFR itineraries (Concept of VFR+). The results of this analysis will also inform the stakeholder messaging below. In addition, the marketing challenge in SA is as much (if not more) about competing for share of wallet with other expenditure items than it is about competing with other destinations. Understanding holiday expenditure as a share of wallet item is therefore essential. This will likely require a deep-dive on existing data sources, but also exploration of new data sources. Bank card issuing data in particular offers interesting opportunities to understand VFR and share of wallet dynamics in a new way. Industry reporting of bednights may also offer opportunities and should be explored further. Targets and Measurement: There is a need to pull the campaign-level data (e.g. clicks, impressions, tweets, PR exposure) into a more coherent picture of the sales funnel and to overlay this with spend in each channel/campaign (e.g. create cost per click and other metrics to enable comparability). This baseline can then be used to optimise campaign activity based on a clearer sense of return on investment. Stakeholder Messaging: There is a need to create clarity amongst the stakeholder/shareholder group over what is achievable and what constitutes delivery against mandate. While total trips are included as a target, the hub’s primary goal is to drive holiday growth. This should therefore be the indicator of delivery against mandate. VFR are a strategic customer segment that will be messaged to take more holidays and to add on holiday items to VFR itineraries (VFR+)

There has been growth in the number of business events and the number of international delegates hosted between 2014 and 2017

Over 2014–2016, typically, meetings and conventions accounted for over 90% of events in most of the provinces Source: SANCB Report on South African International Meetings

There has been a decrease in the number of graded establishments but graded rooms increased since 2015 -1.7% 1.8% AirBnB is growing and this is a threat to increasing the number of graded establishments The process of grading is cumbersome and properties do not see the value in grading and the number of graded establishments are declining The use of the star-grading illegally prevails and we are not able to police this Tourists say grading is important as it gives them an idea of what to expect. Tourists also consider reviews from social networking sites as important in the decision-making process While Provinces say that the only list graded establishments, there is significant potential to increase this through greater collaboration with them TGCSA is working with National Treasury on a project which will see the NT Central Supplier Database updated with Graded Establishments for use of State Officials.

Graded establishments by type of accommodation across the provinces as at 31 March 2018

Graded rooms by type of accommodation across the provinces as at 31 March 2018

Update on implementation of SA Tourism’s Transformation Framework Employment Equity Marketing Activities Key Objective: Build an inclusive, professional skills base with the capacity to lead the sector. SA Tourism must come to be viewed as a ‘Launchpad’ destination for young talent in the tourism and marketing sectors as well as being seen as a attractive destination for experienced professionals. Key Objective: Ensure that all South African Tourism marketing tools and platforms are a true reflection of South Africa’s diverse cultures and reach a wide range of South Africans in all provinces. Recognise and reward businesses and entrepreneurs that promote transformation. Progress update: Implementation of the plan to improve employment equity on track. Progress update: Usage of 100% Black Owned talent: Bheki Campaign – Black director, casting agency, stylist etc #Wedowatertourism: The Media Tacticians 100% Black owned Activations for all SA Tourism events Black Owned companies Enterprise and Supplier Development Market and Entrepreneurial Empowerment Key Objective: To institutionalise supply chain inclusion practices that adopt a value chain approach to supplier identification, development and inclusion. Key Objective: Provide emerging businesses and entrepreneurs with access to promotional platforms and developmental support and information and assist them in utilisation of these opportunities to develop the pipeline of emerging businesses through a coordinated support programmes and befitting policy. Progress update: Supply chain policies institutionalised in line with the Preferential Procurement Policy Framework Act (PPPFA) and Broad Based Black Economic Empowerment Act (B-BBEE). On track to meet set B-BBEE procurement scores Progress update: Hidden Gems programme implemented in 2017. SME participation at SAT trade platforms and roadshows implemented

Part B: Programme and Sub-Programme Plans Annual and Quarterly Targets 2018/19 Programme 1: Corporate Support Programme 2: Business Enablement Programme 3: Leisure Tourism Marketing Programme 4: Business Events Programme 5: Tourist Experience

A summary of the SA Tourism KPIs per programme as per the APP 2018/19 is illustrated below STRATEGIC OBJECTIVE KPI 1. Corporate Support To achieve operational efficiencies in all activities, including human, marketing and other resources available to South African Tourism Staff satisfaction score achieved Percentage vacancy rate maintained Compliance with Employment Equity Act Unqualified audit report achieved B-BBEE-level achieved 2. Business Enablement To enhance stakeholder and partnership collaboration to better deliver on South African Tourism’s mandate To position South African Tourism to be recognised as a tourism and business events industry leader in market intelligence, insights and analytics Stakeholder satisfaction score achieved 3. Leisure Tourism Marketing To contribute to inclusive economic growth by increasing the number of international and domestic tourists To contribute to an enhanced, recognised, appealing, resilient and competitive tourism and business events brand for South Africa across the target markets and segments Tourist arrivals - international Tourist trips - domestic Tourist revenue – international Tourist revenue - domestic Geographic spread Improve seasonality – international Improve seasonality - domestic Brand awareness Brand positivity SME attendance at SA Tourism Tradeshow Platforms SME participation for all SA Tourism hosting activities 4. Business Events Number of business events hosted Number of international delegates hosted Number of bids supported Africa’s Travel Indaba revenue Meetings Africa revenue 5. Tourist Experience To contribute to an improved tourist experience in line with the brand promise Number of graded accommodation establishments Number of graded rooms Revenue collected through Grading

Programme 1: Corporate Support STRATEGIC OBJECTIVE 6: To achieve operational efficiencies in all activities, including human, marketing and other resources available to South African Tourism Key Performance Indicator Reporting Period Annual Target 2018/19 Quarterly Target 2018/19 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Staff satisfaction score achieved Annual 3.4   - Percentage vacancy rate maintained 7% Compliance with Employment Equity Act Compliance with Employment Equity Act Unqualified report achieved Unqualified Audit Submission of AFS, Performance Information Report and Corporate Governance Report for 2015/16 to AGSA, National Treasury and NDT Monitoring compliance with PFMA B-BBEE-level achieved Level 4 Annual Performance Plan: page 30

Programme 2: Business enablement STRATEGIC OBJECTIVE 3: To enhance stakeholder and partnership collaboration to better deliver on South African Tourism’s mandate STRATEGIC OBJECTIVE 5: To position South African Tourism to be recognised as a tourism and business events industry leader in market intelligence, insights and analytics Key Performance Indicator Reporting Period Annual Target 2018/19 Quarterly Target 2018/19 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Stakeholder satisfaction score achieved Annual 4.1 - Annual Performance Plan: page 30

Programme 3: Leisure Tourism Marketing STRATEGIC OBJECTIVE 1: To contribute to inclusive economic growth by increasing the number of international and domestic tourists STRATEGIC OBJECTIVE 2: To contribute to an enhanced, recognised, appealing, resilient and competitive tourism and business events brand for South Africa across the target markets and segments Key Performance Indicator Reporting Period Annual Target 2018/19 Quarterly Target 2018/19 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Number of international tourist arrivals (millions)* Quarterly – financial year 11.2 2.5 2.7 2.9 3.1 Quarterly – calendar year 10.9 2.8 Total tourist foreign direct spend (TTFDS) (billion rand) * R81.3 R18.1 R19.4 R21.3 R22.5 Quarterly – calendar year R79.6 R20.8 Percentage geographic spread of international tourist arrivals achieved Annual 19% - Seasonality index of international tourist arrivals 1.35% Percentage brand positivity achieved (average of Feb and Nov wave) 39%   Percentage brand awareness achieved (average of Feb and Nov wave) 78% *Note: these indicators are reported on a financial year, but tracked on a calendar year Annual Performance Plan: page 31

Programme 3: Leisure Tourism Marketing STRATEGIC OBJECTIVE 1: To contribute to inclusive economic growth by increasing the number of international and domestic tourists STRATEGIC OBJECTIVE 2: To contribute to an enhanced, recognised, appealing, resilient and competitive tourism and business events brand for South Africa across the target markets and segments Key Performance Indicator Reporting Period Annual Target 2018/19 Quarterly Target 2018/19 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Number of total domestic trips (millions) achieved* Quarterly – financial year 25.4 5.3 8.5 5.2 6.4 Quarterly – calendar year 25.5 6.5 Number of domestic holiday trips (millions) achieved* 3.1 0.4 1.0 1.1 0.6 3.2 0.7 Total domestic direct spend1 (TDDS) (billion rand)* R26.7 R5.7 R9.0 R5.6 R6.4 R27.1 R6.8 Domestic holiday revenue (billion rand)* R8.2 R0.9 R3.0 R2.6 R1.7 R8.3 R1.8 Geographic spread of domestic tourists Annual 12% - Seasonality index of domestic tourists 20% *Note: these indicators are reported on a financial year, but tracked on a calendar year Annual Performance Plan: page 32

Programme 3: Leisure Tourism Marketing STRATEGIC OBJECTIVE 1: To contribute to inclusive economic growth by increasing the number of international and domestic tourists STRATEGIC OBJECTIVE 2: To contribute to an enhanced, recognised, appealing, resilient and competitive tourism and business events brand for South Africa across the target markets and segments Key Performance Indicator Reporting Period Annual Target 2018/19 Quarterly Target 2018/19 Quarter 1 Quarter 2 Quarter 3 Quarter 4 SME attendance at SA Tourism Tradeshow Platforms Quarterly 182 127 - 26 29 SME participation for all SA Tourism hosting activities 25 8 4 7 6 Annual Performance Plan: page 32

Programme 4: Business Events STRATEGIC OBJECTIVE 1: To contribute to inclusive economic growth by increasing the number of international and domestic tourists STRATEGIC OBJECTIVE 2: To contribute to an enhanced, recognised, appealing, resilient and competitive tourism and business events brand for South Africa across the target markets and segments Key Performance Indicator Reporting Period Annual Target 2018/19 Quarterly Target 2018/19 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Number of business events hosted in South Africa Annual 153 - Number of international delegates hosted in South Africa 86 006 86 006 Number of bids supported for international and regional business events Quarterly 105 26 24 28 27 Indaba and Meetings Africa revenue (million rand) R67.0 Annual Performance Plan: page 33

Programme 5: Tourist experience STRATEGIC OBJECTIVE 4: To contribute to an improved tourist experience in line with the brand promise Key Performance Indicator Reporting Period Annual Target 2018/19 Quarterly Target 2018/19 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Number of graded accommodation establishments achieved Quarterly 6 229 1 445 1 517 1 593 1 674 Number of graded rooms achieved 135 262 31 383 32 952 34 600 36 327 Grading revenue collected (million rand) Annual R22.6 - Annual Performance Plan: page 33

Finance

Revenue estimates Revenue 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 ENE Estimate Adjustment Approved Rand (thousand) Audited (R’000) Budget Estimate* 1 Government grant 880 009 977 712 1 024 847 1 134 288 - 1 208 048 1 271 539 1 340 491 2 TOMSA levies 111 063 123 203 137 578 124 586 130 815 137 356 144 224 3 Indaba and Meetings Africa* 65 134 81 547 55 431 63 391 57 000 60 192 63 503 4 Grading fees 17 843 18 394 20 569 21,344 21 344 22 561 23 824 25 134 5 Sundry revenue 28 766 12 452 56 123 20,000 99 000 119 000 21 140 22 324 23 552 Total 1 102 815 1 213 308 1 294 548 1 363 609 1 462 609 1 439 564 1 515 235 1 596 903 Annual Performance Plan: page 19

Breakdown of budget per programme Expenditure  2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 ENE Estimate Adjustment Approved Rand (thousand) Audited (R’000) Budget Estimate* 1 Corporate Support 98 695 93 078 102 127 139 991 132 271 136 739 142 456 2 Business Enablement 48 038 63 138 99 907 81 295   85 929 90 741 95 731 3 Leisure Tourism Marketing 837 787 1 001 038 846 955 959 217 86 485 1 045 702 1 026 270 1 078 977 1 142 950 4 Business Events 66 967 57 713 154 552 119 000 129 287 139 286 142 452 5 Visitor Experience 56 529 45 186 54 035 64 106 12 515 76 621 65 807 69 492 73 314 Total 1 108 016 1 260 153 1257 576 1 363 609 99 000 1 462 609 1 439 564 1 515 235 1 596 903 Annual Performance Plan: page 34

EXPENDITURE BY ECONOMIC CLASSIFICATION

Annual Performance Plan: page 35 The exchange rates below are the rates used by SA Tourism to support this APP Financial year USD   EUR   GBP   JPY   AUD   2018/19 12.2590   15.0709   17.1008   9.0069   9.8269   2019/20 12.8220   16.1317   18.1191   8.4273   10.2883   2020/21 Annual Performance Plan: page 35

Thank you