1. Briefing to the Portfolio Committee on Tourism South African Tourism 2013/14 Annual Report Presentation Date: 24 October 2014

2. Slide no. 1 Contents Purpose Mission and Vision Corporate Governance 2013/14 Audited Performance Information Executive Summary Environmental Scan Global Tourism Performance Budget Allocation Key Initiatives People and Values Conclusion

3. Slide no. 2 © South African Tourism 2012 Purpose The purpose of this presentation is to present before the Portfolio Committee SA Tourism’s 2013/14 Annual Report.

4. Slide no. 3 Contents Purpose Mission and Vision Corporate Governance 2013/14 Audited Performance Information Executive Summary Environmental Scan Global Tourism Performance Budget Allocation Key Initiatives People and Values Conclusion

5. Vision and Mission Vision For South Africa (SA) to be the preferred tourist destination in the world, in order to maximise the economic potential of tourism for our country and its people. Mission To develop and implement a world-class tourism marketing strategy for SA. In pursuance of this, SA Tourism will: Implement domestic, regional and international marketing strategies informed by research Implement a business events strategy Implement and maintain a recognisable, credible and globally benchmarked system of quality assurance Facilitate strategic alignment of Provinces and industry in support of global marketing of tourism. Facilitate the removal of identified obstacles to tourism growth. Ensure the efficient utilisation of resources to deliver the tourism strategy Slide no. 4 Page 3 of the Annual Report

6. Convince consumers that SA can be trusted to deliver memorable experiences Engage Stakeholders to deliver quality visitor experience that re- affirm the brand promise Work the distribution channel to promote SA Energise and empower the organisation to innovate and achieve excellence Invest only in selected markets to deliver volume and value SA Tourism refined its current objectives and strategies for the period until 2014/15 - in line with Government’s Performance Information Management Policy Create a thriving tourism sector by making South Africa a tourism and business events destination of choice Possible Tourism sector outcome which SA Tourism will need to deliver against SA Tourism outcome Strategies to deliver outcome Make the SA brand a Global Player in portfolio markets, hubs and decision making centres which will grow tourism’s trended revenue to the economy by 1.5% p.a. (excluding inflation) Slide no. 5 Page 3 of the Annual Report

7. Slide no. 6 SA Tourism’s Mandate set out in the Tourism Act makes it clear that it needs to make choices that will benefit all South Africans Sustainable GDP Growth Sustainable job creation Redistribution and transformation The mandate to SA Tourism is... … through six key objectives … by acting in a focused way to Understand the market Choose the attractive segments Market the Destination Facilitate the removal of identified obstacles Monitor and learn from tourist experience Facilitate the product platform Increase in tourist volume Increase in tourist spend Increase length of stay Improve geographic spread Improve seasonality patterns Promote transformation Page 3 of the Annual Report

8. Slide no. 7 Contents Purpose Mission and Vision Corporate Governance 2013/14 Audited Performance Information Executive Summary Environmental Scan Global Tourism Performance Budget Allocation Key Initiatives People and Values Conclusion

9. Slide no. 8 © South African Tourism 2012 Corporate Governance SA Tourism has received its 13 th unqualified audit report in 2013/14. The Audited Financial Statements of SA Tourism were found to be fairly representative of the financial position of the organisation attested by the Auditor- General’s report. Audit findings raised by the External Auditors are addressed promptly and the number of audit queries raised has declined. Internal controls are reviewed and enhanced on an on-going basis. Risk and fraud management initiatives are implemented effectively. The improvement in internal controls can be attributed to an independent Internal Audit function and the oversight role of the Audit and Risk Committee of the Board. Page 52 & 89 of the Annual Report

10. Slide no. 9 Contents Purpose Mission and Vision Corporate Governance 2013/14 Audited Performance Information Executive Summary Environmental Scan Global Tourism Performance Budget Allocation Key Initiatives People and Values Conclusion

11. Slide no. 10 Strategic Objectives Performance Indicator Actual Achievement 2012/2013: Planned Target: 2013/2014 Actual Achievement: 2013/2014 Deviation from Planned Target to Actual Achievement: 2013/2014 Comment on Deviations Increase foreign visitor arrivals coming to South Africa Number of foreign visitor arrivals 13 451 56513 021 97914 860 216+14.12% Target achieved. South African Tourism capitalised on the strength of its partnerships, enhanced strategies and plans implemented in the markets in which we operate. This resulted in a 10.5% growth from 2012. Increase domestic tourism in South Africa Number of domestic travellers 12,5 million15,0 million12,0 million-20%Target not achieved. These adverse results were anticipated given the unattainable NTSS target which was set under different economic conditions. Revision of targets will be considered during the NTSS Review planned for 2015. The new domestic campaign, however, launched in August 2013 has started to show increased performance in terms of spend and number of trips in Quarter 4. This resulted in 80% achievement of the set target. 2013/14 Audited Performance Information Page 57-58 of the Annual Report

12. Slide no. 11 2013/14 Audited Performance Information Strategic Objectives Performance Indicator Actual Achievement 2012/2013 Planned Target 2013/2014 Actual Achievement 2013/2014 Deviation from Planned target to Actual Achievement for 2013/2014 Comment on Deviations Increase tourism trended revenue contribution to the economy Amount of trended revenue R 12 800 (in 2012) NITS R 8 200 (TFDS excluding capital) R 105,4 billion TFDS revenue, excluding Capital expenditure R 115.4 billion R90 billion (Jan – Sep 2013) -22% Given that annual figures are not available, audited performance information in this regard is reported only for the period January to September 2013. Upon reporting at year end, there were anomalies in the spend data that was produced by the service provider and as a result a review of the methodology was required to determine the reasons for the anomalies in the data produced. Increase SA brand awareness Brand awareness percentage 81%79% - Target achieved Page 57-58 of the Annual Report

13. Slide no. 12 Strategic ObjectivesPerformance Indicator Actual Achievement 2012/2013 Planned Target 2013/2014 Actual Achievement 2013/2014 Deviation from Planned target to Actual Achievement for 2013/2014 Comment on Deviations Provide quality assurance for tourism products Number of graded establishments 6 0226 789 5 587 -18% This shortfall was due to an increase in non- renewal of graded establishments, payment default and cancellations. This resulted in 82.3% achievement. Increase business events Number of delegates 52 58756 00094 893+69%Target achieved. Due to lack of sufficient base line to set target, we have set our target based on ICCA’s average 600 delegates. However, in 2013 South Africa attracted more than the global average resulting in outstanding performance. 2013/14 Audited Performance Information Page 57-58 of the Annual Report

14. Slide no. 13 Contents Purpose Mission and Vision Corporate Governance 2013/14 Audited Performance Information Executive Summary Environmental Scan Global Tourism Performance Budget Allocation Key Initiatives People and Values Conclusion

15. Slide no. 14 © South African Tourism 2012 Environmental Scan Fragile economic recovery and expected economic recession Promising outbound tourism growth but short –haul travel Shrinking disposable income due to austerity measures - foreign markets Exchange currency weaknesses Unemployment dampening domestic tourism

16. Slide no. 15 Contents Purpose Mission and Vision Corporate Governance 2013/14 Audited Performance Information Executive Summary Environmental Scan Global Tourism Performance Budget Allocation Key Initiatives People and Values Conclusion

17. Slide no. 16 © South African Tourism 2012 Global Tourism Performance According to the UNWTO Report, international tourist arrivals (overnight visitors) grew by 5% in 2013, reaching a record 1 087 million arrivals worldwide, up from 1 035 million in 2012. The growth was mainly driven by developed markets where arrivals grew by 5.4% compared to 4% growth from emerging markets. This growth in international arrivals is slightly higher than the UNWTO forecast of 4% to 4.5% in 2014. Despite a global economy in ‘low gear’, demand for international tourism exceeded expectations, with an additional 52 million international tourists travelling internationally in 2013. Europe led the growth in absolute terms, welcoming 29 million more international tourists in 2013, and raising the total to 563 million. The growth of +5% was double the region’s average of +2.5% a year for the period 2005-2012. Asia and the Pacific recorded the fastest relative growth across all regions, with a 6% increase in international arrivals, or 14 million more than in 2012.

18. Slide no. 17 © South African Tourism 2012 Global Tourism Performance South Africa’s tourist arrivals tracked closer to global growth trends at 4.7% at the end of 2013. While the world celebrated 1.087 billion tourist arrivals, Africa as a whole only welcomed 55.6 million arrivals on its shores, representing a mere 5% share of global tourism potential. Total foreign direct spend of all tourists declined from R74.2 billion in 2012 to R70.3 billion in 2013 i.e. a 5.3% decrease globally. In South Africa, the decrease was only 4% from R76.2 billion to R73.2 billion.

19. Slide no. 18 Contents Purpose Mission and Vision Corporate Governance 2013/14 Audited Performance Information Executive Summary Environmental Scan Global Tourism Performance Budget Allocation Key Initiatives People and Values Conclusion

20. Slide no. 19 © South African Tourism 2012 Revenue and Government Grant SA Tourism received R 866.9 million, in the form of Government grants from the National Department of Tourism. R20 million of which was recognised as income received in advance for Indaba rebranding. In addition to the above, SA Tourism also received R 131.3 million from TOMSA through its tourism levies. This amount was R44 million more than budgeted, contributing to the significant surplus recognised during the 2013/14 financial year. Sundry Income, accounted for in the Income Statement relates to funds received from exhibitors at trade shows such as Indaba and Meetings Africa, amounted to R 80.5 million. Foreign currency gains, which is the result of unrealised foreign exchange gains, increased from R 11.5 million in the previous year to R 27.99 million in the 2013/14 financial gain. Page 107 of the Annual Report

21. Revenue and Expenditure Name of the Objective2013/14 ENE EstimateAdjustmentApprovedAudited Expenditure in RandBudget ( R’000) Actual ( R’000) Major Objectives992 31236 3601 028 6721 056 620 1 Increase annual foreign visitor arrivals to South Africa 336 9525 000341 952347 609 2 Increase the number of Domestic Travellers 42 400 26 36068 76046 372 3 Increase tourism trended revenue contribution to the economy 336 952 5 000 341 952 347 609 4 Marketing South Africa to become the preferred Tourism Brand* 206 828 225 158 5 To provide quality assurance by having graded accommodation establishments 37 115 37 889 6 To increase the number of international Business Events delegates in South Africa 32 065 51 982 Total992 312 36 3601 028 6721 056 620 Slide no. 20

22. SA Tourism 2013/14 Budget Breakdown Per Country Country OfficeCurrency2013/14 Budget 1.USA ZAR 65 323 340 2. UK ZAR 49 726 166 3. Germany ZAR 51 454 384 4. FranceZAR 35 867 812 5. NetherlandsZAR 27 495 314 6. ItalyZAR 14 756 427 7. IndiaZAR 27 691 388 8. ChinaZAR 23 816 692 9. JapanZAR 12 639 571 10. AustraliaZAR 32 683 923 11. AngolaZAR 14 251 649 12. NigeriaZAR 25 035 247 13. Brazil (Am)ZAR 21 377 815 14. KenyaZAR 16 922 417

23. Slide no. 22 Contents Purpose Mission and Vision Corporate Governance 2013/14 Audited Performance Information Executive Summary Environmental Scan Global Tourism Performance Budget Allocation Key Initiatives People and Values Conclusion

24. Slide no. 23 © South African Tourism 2012 Key Initiatives: Global Fully integrated marketing channels, considered globally implemented locally Global partners – o National Geographic – 458 million households; 172 Countries; 38 Languages (Dutch, English, Chinese, French, German, Italian, Spanish) o CNN Global distribution – 484 million households, hotel rooms & airports worldwide #MeetSouthAfrica campaign rolled out across most Core Markets Numerous global awards won for excellent destination marketing execution Successful Joint Marketing Agreements (JMAs to facilitate fulfilment of ob jectives) The ‘heartfelt connections’ campaign has worked well to address the decline in awareness and positivity. Page 22 of the Annual Report

25. Slide no. 24 © South African Tourism 2012 Key Initiatives: Global Participation in international trade shows to improve market access for South African tourism products. Use of integrated marketing approach – traditional and digital marketing Page 22 of the Annual Report

26. Slide no. 25 © South African Tourism 2012 Key Initiatives: Africa Ring fenced budget of R50 million, R84 million and R84 million allocated over 3 years ending 2015/16 to increase arrivals and spend from Africa to contribute to GDP and job creation. Dedicated Regional Director to manage ring-fenced budget. SA Tourism Nigeria office opened and resourced to service the West Africa hub. Participation in in-country Travel Expo in Nigeria. SA Tourism also participated for the first time at the Magical Kenya Expo. In Angola, SA Tourism partnered with the Association of Travel Agencies and Tour Operators from Angola; AAVOTA which contributed substantially to increased tourism growth. SA Tourism also partnered with Africa Next Top Model (ANTM) which was shot in Cape Town and featured in DSTV lifestyle channels such as Africa Magic, Africa Magic Entertainment, VUZU, Mzansi Magic and Africa Magic World. Spend remains buoyant in most African markets except for Africa Land markets. Page 28 & 29 of the Annual Report

27. Slide no. 26 © South African Tourism 2012 Key Initiatives: Domestic Domestic is a high priority market for SA Tourism with long term objective aimed at encouraging South Africans to create the culture of travel in the domestic market. Integrated new “Sho’t Left” campaign was launched in August 2013 to also encourage South African travellers to take short breaks. Sho’t Left website a portal for better engagement with our trade partners. The Sho’t Left Deals Page boasts 700 strong product database of affordable tailored experience packages. Secured Provincial and industry buy-in and alignment in implementing the Domestic campaign and SA Specialist programme. Various JMAs signed with airlines, associations, travel agents, product and on-line agents to fulfil objectives. Page 35 of the Annual Report

28. Slide no. 27 © South African Tourism 2012 Key Initiatives: South African National Convention Bureau (SANCB) SANCB focus its efforts on attracting events in economic sectors that have been identified by the government as priorities for future development. Hosting major events in these sectors can contribute significantly in accelerating macro-economic benefits for the country Page 47 of the Annual Report

29. SANCB Support Services July 2, 2015© South African Tourism 2014 SANCB SUPPORT SERVICES Bidding Support Bid Strategy Bid Document Lobbying Bid promotion Bid Presentations Site Inspection Support Bidding Site Inspections Convention Planning Site Inspections Convention Planning Support Planning support Venue and supplier recommendations Final decision with client Delegate Boosting Support Marketing support to promote the SA conference Delegate attendance promotion On Site Event Services Support toward on site elements of the event

30. Market Priorities: Key Industries/Sectors – Provinces July 2, 2015© South African Tourism 2014 Mining and agriculture are major sectors across provinces; while manufacturing industries are mainly located in Eastern Cape, KwaZulu-Natal and Free State, the financial services sector is mainly concentrated in Gauteng Western Cape  Key Industries: Finance, printing and publishing, real estate, ICT, oil and gas, retail, engineering, R&D 4, clothing and textile, agriculture, ship building / ports, tourism and medical 1 4 Gauteng  Key Industries: Financial and business services, logistics and communications, mining, agriculture (food processing and beverages), medical 1, automotive 2 manufacturing, R&D 3 and telecommunications and technology 1 North West  Key Industries: Mining (mainly Platinum), tourism (game reserve, nature reserve, etc.) and agriculture 2 Northern Cape  Key Industries: Mining (mainly Diamonds, Iron-ore), tourism, game- farming, astronomy and agriculture 3 Limpopo  Key Industries: Mining, tourism (game reserves), agriculture and hunting industry / game farming 9 Mpumalanga  Key Industries: Mining (Coal), agriculture (citrus fruit production, agri-processing and sheep farming), tourism (eco-tourism), game farms and manufacturing 8 Free State  Key Industries: Mining (Gold, Coal and Diamond), agriculture, petrochemicals and manufacturing (high-tech industries) 7 KwaZulu-Natal  Key Industries: Mining (Aluminum, Steam Coal, Minerals), manufacturing (petro-chemicals, automotive), tourism, ports, leather industry and agriculture, real estate, medical 1 6 Eastern Cape  Key Industries: Automotive manufacturing, finance, real estate, agriculture (sheep farming and fishing), wholesale and retail trade, tourism, ports 5 and hotels and restaurants 5 1 9 2 3 4 7 5 6 8 South Africa – Key Industries/Sectors by Provinces

31. Slide no. 30 © South African Tourism 2012 Key Initiatives: Tourism Grading Council of South Africa (TGCSA) Challenges Lack of credibility and adequate skills for grading assessors. Perceived lack of a credible grading process and grading criteria. Lack of an appealing Basket of Benefits that will increase value to graded establishments. SA Tourism through the TGCSA developed a Strategy aimed at achieving the following: Review of the TGCSA business model to increase the base of graded establishments as well as renewals Increasing value for graded establishments through the introduction of the Basket of Benefits. Review the assessor model from being independent to full time employees. Empower Assessors to be of greater value to the establishments. Offer support to Exempted Micro Enterprises (EMEs) in order to create a more inclusive base of graded establishments. Page 44 of the Annual Report

32. Slide no. 31 © South African Tourism 2012 Key Initiatives: Tourism Grading Council of South Africa (TGCSA) Launched an additional grading category – the new Game Lodge category. Graded targeted establishments for universal accessibility as a special project funded by NDT. Enhanced partnerships with Online Review Platforms. Conducted Route to Market studies to gain deeper insights on consumers of South African Products. Planning and implementation of the Lilizela Awards.

33. Slide no. 32 Contents Purpose Mission and Vision Corporate Governance 2013/14 Audited Performance Information Executive Summary Environmental Scan Global Tourism Performance Budget Allocation Key Initiatives People and Values Conclusion

34. Slide no. 33 © South African Tourism 2012 People and Values The achievements of SA Tourism are made possible through the collective dedication and commitment of its staff (including overseas based personnel). Current staff complement of 206 is not expected to change in the 2014/15 financial year. Through SA Tourism’s recruitment and selection process, SA Tourism attracts qualified and experienced individuals. The adequacy of SA Tourism’s human capital is regularly reviewed and interventions such as succession planning and talent management are implemented. Continuous leadership assessments are conducted to ensure sustainability and business continuity. SA Tourism uses staff feedback mechanisms such as the Best Company to Work for Survey in order to ensure that the values of the organisation are upheld and staff remains motivated. Page 80-83 of the Annual Report

35. Slide no. 34 Contents Purpose Mission and Vision Corporate Governance 2013/14 Audited Performance Information Executive Summary Environmental Scan Global Tourism Performance Budget Allocation Key Initiatives People and Values Conclusion

36. Slide no. 35 © South African Tourism 2012 Conclusion: The poor performance reported on number of domestic travellers for this period were anticipated given the unattainable NTSS target which was set under different economic conditions. Although domestic targets were not achieved, the new domestic campaign launched in August 2013 started to show increased performance in spend and number of trips in Quarter 4 of 2013/14. The revamped TGCSA Strategy will address the challenges encountered during the year under review in relation to the number of graded establishments. Increasing cost of doing business abroad coupled with the shrinking budgets are compelling us to prioritise our markets, hence a shift from country focus to a hub approach in targeted markets.

37. Slide no. 36 © South African Tourism 2012 Conclusion: International offices update: Brazil recently opened. Angola and Kenya offices will be opened in 2014/15 as part of the five marketing offices in key African markets by 2020 including Nigeria that was launched in January 2014. The additional ring fenced budget of R100 million in 2015/16, R105 million in 2016/17 and R110.25 million in 2017/18 will be utilised to create the culture of travel as well as awareness in market segments where travel awareness is limited while growing the number of domestic travellers, trips and spend. In 2014/15, SA Tourism is intensifying its engagement with trade as part of the implementation of the domestic campaign together with industry. Continuously strengthen partnerships with strategic stakeholders, trade, media and government.

38. Thank You Slide no. 37