sa tourism’s 5-year strategy - tourism business … principles of the sa tourism 5-year strategy...

SA Tourism’s 5-year strategy

February 2016

Progress Report

2 | Copyright © 2016 SA Tourism22

Introduction and context

Objectives of this intervention

Findings from Phase 1

Next steps

TABLE OF CONTENTS:


Background

The Ministerial Review of SA Tourism conducted in 2015 initiated the rethink ofthe strategy of SA Tourism. Initially termed the updating of the “Tourism GrowthStrategy”, a process was introduced to review the strategy of SA Tourism thatconsidered both our performance to date and global trends, as well as inputs fromkey stakeholders to develop a 5-year strategy for SA Tourism that will steer itsagenda to bolster the contribution of the sector to the overall economy


The Tourism Growth Strategy project started in 2001 to develop a data-driven strategy so that SATourism could market South Africa more effectively in the increasingly competitive global tourismand travel market. The strategy was launched at the annual tourism Indaba in Durban in May 2002.

The first phase of the project culminated with the adoption of the strategy by Cabinet in July 2003.As the tourism industry is vulnerable to global events, the Tourism Growth Strategy (TGS) wasmeant, from the outset, to be a ‘living’ document that sets out a vision for tourism, and thenprovides a framework for making the hard on-going choices about marketing investments againstthe best return measured by our mandate in the Tourism Act.

The revisions to the TGS did not change our vision for tourism; but updated and consolidated thestrategy with the growing body of knowledge and experience as we worked through a set of criticalstrategic questions: Where do we play? How will we win? What capabilities do we need? Whatmanagement systems should we put in place?

At the heart of the TGS was the critical choice – about ‘where to play’ i.e. where we must grow ordefend our market share or where we must invest for returns in the future. With more than 200countries in the world and limited resources, effort had to be focused on markets where we weremost likely to earn returns in the short- to medium-term, and not narrow niche opportunitieswhere the risk was higher and the economic impact less. Given the rapidly changing global tourismand travel markets, SA Tourism undertook a rigorous and data-driven assessment of all the globalmarkets with a ‘fresh eye’ every three years - the ‘portfolio review’ which set the marketingportfolio for the next three years.

What is the Tourism Growth Strategy?


In 2010, the newly formed National Department of Tourism tabled and launched the NationalTourism Sector Strategy (NTSS). The NTSS was the first co-ordinated strategic approach for theentire sector that would ensure that tourism, one of the six pillars in country’s growth path, woulddeliver the outcomes as per the National Development Plan.

The NTSS therefore include strategic outcomes and KPIs that covered the mandate of SA Tourismand this meant that SA Tourism no longer produced it’s Tourism Growth Strategy, but continued toreview and update its Portfolio every 3 years to guide its investment in geographies and segmentsthat would maximize its returns.

SA Tourism’s strategy was captured in it’s Strategic Plan which complied to the National Treasury’sframework and standards.

The Tourism Growth Strategy vs The National Tourism Sector Strategy





Next steps

TABLE OF CONTENTS:


Government and Society’s National Development Plans

Department of Tourism and Stakeholders’ National Tourism

Sector Strategy

SA Tourism’s Strategic Plan

SA Tourism’s Position within the Country’s Development Aspirations

Mandate of SA Tourism

SA Tourism postulates its strategic plan based on the objectives of the NationalTourism Sector Strategy (NTSS). This strategy falls under the ambit of the NationalDevelopment Plan, the overall development plan and aspirations set for thecountry.


Responsibilities Entrusted with SA Tourism within The Tourism Act of 2014

Considerations Governing the Mandate of SA Tourism

Promote the practising of responsible tourism for the benefit of the Republic and for the enjoyment of all its residents and foreign visitors

Promote quality tourism products and services

Provide for the effective domestic and international

marketing of South Africa as a tourist destination

Enhance cooperation and coordination between all spheres of government in developing and managing tourism

Promote growth in and development of the tourism

sector

Draft Priorities Pillars for the Revised NTSS

Deliver a world class quality visitor experience

Promote responsible tourism practices within the sector

Effective Branding and Marketing

Achieve transformation in the tourism sector through inclusive growth

Supportive regulatory environment



The Ministerial Review of SA Tourism conducted in 2015 initiated the rethink ofthe strategy of SA Tourism. Initially termed the updating of the “Tourism GrowthStrategy”, a process was introduced to review the strategy of SA Tourism thatconsidered both our performance to date and global trends, as well as inputs fromkey stakeholders to develop a 5-year strategy for SA Tourism that will steer itsagenda to bolster the contribution of the sector to the overall economy

Objectives

The purpose of this exercise is to lead to a restatement of the key marketing

strategies of SA Tourism, as an organisation

The broader objective of the exercise will be to steer the marketing efforts to

achieve higher value (spend) and volume (arrivals), by focusing on international

leisure tourists, business tourists and also the domestic population


What Needs to be Done?

To meet the requirements, at the core of the intervention, we will:

Review the current state of the brand, and tourism, on the whole;

Understand the opportunities that need to be targeted, or determine the gap that needs to be filled; and,

Define key action steps to achieve the desired outcomes

Assess and prioritise the key strategic insights derived from the workshop, through Assessment of old strategic plan, NTSS, and insights from key team members Discussion with SA Tourism executive team to finalise approach Strategic Imperative Workshop, with broader SA Tourism team, to finalise the way ahead

Phase 2: Selection of Key Strategic Thrust

Review and re-alignment of current plans for each business unit/country team, based on the identified strategic imperatives

Phase 3: Action Planning

Approach to the Intervention

Phase 1: Identification of Opportunities/Gaps through Internal and External Scrutiny

Review of South Africa’s tourism performance through: Analyses of international and domestic tourists

data on key performance indicators (Volume, Spend, Length of Stay, Geographical Spread and Seasonality)

Sessions with internal stakeholders from SA Tourism, National Department of Tourism and board members

Gain a view of trends impacting leisure and business tourism at global and regional level, through review of literature and inputs from industry stakeholders

Understand the expectations of the industry through interviews with external stakeholders such as trade partners and product owners

Internal Scrutiny External Scan

A full-day workshop to cluster key opportunities/issues based on the inputs garnered from the internal scrutiny and the external scan, to determine the strategic thrusts that need to be considered


Project status (as of): February 2, 2016

Study Checkpoints / Milestones Description Scheduled Date Status

PHASE I: External Scan and Internal Scrutiny

Preliminary assessment of existing information

Analyses of portfolios, across the five (5) key performance indicators, i.e., volume, value, length of stay, seasonality and geographical spread

Oct 30, 2015Draft

Prepared

Stakeholder interviews Interviews with stakeholders at SAT (Audience: Steering committee of 4–5 members); SA Tourism board; and industry partners

Nov 2, 2015 – Dec 11, 2015 WIP

External scrutiny, and domestic and business segments

Global travel trends on value and volume movement, and developments related to technology, media and trade; KPI assessment on domestic and business segments

Nov 9, 2015 – Nov 27, 2015Draft

Prepared

Workshop: Full-day workshop to cluster key opportunities/issues

Inputs from broader SAT team to determine opportunity and issue clusters (Audience: SAT management team)

Scheduled: Jan 13/14, 2016 TBD

Delivery of workshop synthesisShare essence of workshop output with SAT management team for refinement/agreement/buy-in

Jan 22, 2016Draft

Prepared

PHASE II: Selection of Key Strategic Thrusts

Assess findings from Phase I Inputs from Old Strategic Plan, NTSS, and Insights from key team members Jan 25 – Feb 5, 2016 WIP

Workshop to finalise approach Discussion to finalise approach (Audience: SAT management team) February 15, 2016 WIP

Workshop: Share outcomes with stakeholders

Share essence of workshop output with stakeholders for refinement/agreement/buy-in

To be completed by March 2016

TBD

Phase III: Action Planning

Action planningStrategic imperatives become benchmarks against which each country / planning unit measures its effectiveness. Action planning to develop detailed implementation plan


TBD

Project Plan


5

6

Transparent

Leverage limited human and financial resources efficiently to make effective choices or explicittrade-offs that have a long-term strategic impact on SA Tourism, aimed at making choices anddecisions based on ROI and business objectives

Formulate strategic decisions based on sound data and analysis, and not anecdote. Understandconsumers who are attractive for South Africa in terms of our objectives and develop theimmediate focus on people who are interested in travelling to South Africa

Develop a consultative process, incorporating input from as many stakeholders as possible. Build“co-opetition” in the sector so that we co-operate on building volume and compete on service andmove away from the current destructive competition

Promote GDP growth and job creation and the transformation of our economy through six keyobjectives, as defined in the mandate and the national tourism goals in the Tourism Act

Drive the brand in a holistic manner, and also provide inputs to the overall organisation structurethat needs to be in place to deliver on the defined actions

Focused1

Data Driven and customer focused2

Consultative to buildsector ‘co-opetition1’ 3

Goals are GDP, jobsand transformation4

1 The concept of “Co-opetition” is used here with the same meaning as that described by Adam Brandenburger and Barry Nalebuff in their book of the same title

Guiding Principles of the SA Tourism 5-year strategy

Brand Focus

Ensure transparency in choice-making processes and source of data to build consensus on buildingtourism against the broader nation’s goals while informing business-level decision making within abroader context





Next steps

TABLE OF CONTENTS:


To perform in the next phase, SA Tourism needs to consider the following:

It is alleged that the strategies, measures and knowledge of SA Tourism is internal to the organisation. This creates an environment where it is believed that the organisation does not work in collaboration with the rest of the industry. SA Tourism needs to effectively collaborate with the rest of the industry and inform/empower the stakeholders in the value chain to effectively contribute to the industry

Inputs from the key stakeholders can be summarised as follows:

Flexibility

Corporate Image/Role clarity

Transparency

Value Chain Ownership

Practical Tourism Quotient

The role and mandate of SA Tourism, in the tourism value chain, is not clearly defined and not well understood – both by internal, and especially the external stakeholders. This often leads to dissatisfaction amongst the external stakeholders in terms of SA Tourism's performance on its perceived mandate. To ensure effective performance, SA Tourism needs to ensure its mandate is effectively laid and communicated

SA Tourism’s role in the value chain is well appreciated by the stakeholders. However, it is expected that SA Tourism extends its role in connecting the markets with the trade partners. It needs to work together with the trade partners – from marketing campaigns to product development – to create better offerings for the consumers

It is expected that SA Tourism needs to further its ability to apply its tourism knowledge in practical situations. Moreover, SA Tourism needs to communicate its knowledge of the impact of external factors/scenarios to respective stakeholders in the value chain, enabling them to react appropriately

The tourism landscape evolves rapidly, and agility is the key to stay ahead of the competition. SA Tourism is perceived to be an organisation that is very methodical –which is good. However, going forward, the organisation needs to be flexible and agile to respond to market situations and evolve according to the needs of the industry and consumers

Focus Points


Snapshot: Performance of South Africa in International Markets

…placing South Africa ahead of Australia, Brazil and Kenya, and behind Thailand and India, among key competitors

During 2009–14, South Africa’s international tourist arrivals grew by CAGR 6.4%...

… in 2013, which can be primarily attributed to the drop in spending from Africa Land tourists. The overall growth for the duration 2009–14 was recorded as 1.6%

After growing at a rate of 5.5% between 2009 and 2012, TTFDS witnessed a sharp decline…

… on weekly durations of 7, 14 and 21 days. The average length of stay has increased from ~7 in 2009 to ~8 in 2014

The overall length of stay among tourists visiting South Africa is consolidating…

…whereas, Limpopo saw an impressive growth in tourist arrivals during 2009–14 (>10%), to become the second most visited province in 2014

Gauteng continued to be the most visited province…

…thus, the portrayal of a round-the-year holiday destination. December and January were the peak seasons for arrivals. The annual index improved from 1.7% in 2009 to 1.6% in 2014

South Africa had an improved seasonality index (annual) during 2010–13…


Summary : Leisure Tourists

…to reach 6.7 million in 2014 from 4 million in 2009, primarily driven by a considerable increase in the VFR tourists

The leisure tourist arrivals to South Africa increased at a CAGR of 11%...

… and the TTFDS increased from ZAR 26.9 Bn in 2009 to ZAR 39 Bn in 2014 at a CAGR of 8%. Though the arrivals for holidays tourists has declined, the TTFDS for the segment increased slightly

However, the growth in TTFDS was lower compared to arrivals growth in the same period…

…while the length of stay of VFR tourists increased from 9 to 10 days during the same time period

The average length of stay of holiday and shopping personal tourists remained stagnant…

…from 1.7 in 2009, while it declined from 1.2 to 1 for VFR tourists

The number of provinces visited by holiday tourists has declined slightly to 1.5 in 2014…

…however, the seasonality of VFR tourists deteriorated to 18% in 2013

The seasonality for holiday and shopping personal tourists has improved post 2010…


Summary: Business Tourists1

…from 0.32 million in 2009, registering a CAGR of 16.5%

The business tourist arrivals to South Africa increased to 0.68 million to 2014…

…from ZAR 1.8 Bn in 2009 to ZAR 6 Bn in 2014

During the same period, the TTFDS from business tourists also increased…

…from 4.9 days in 2009

The average length of stay of business tourists improved to 6.4 days in 2014…

…from 1.2 in 2009 to 1.1 2014

The number of provinces visited declined marginally…

…however, in 2013 the seasonality spiked to 25.6%

The seasonality of Business tourist arrivals has improved from 8.5% in 2009 to 1.1% in 2014…

Note: 1In this section Business tourists have been defined as tourists who travelled to South Africa for business-conventions, conferences, exhibitions; business exhibitions and public events. From Q4 2013, individuals who travelled to South Africa for business meetings, incentive trips and to attend a meeting were also recorded, however, for consistency, they have not been considered in this assessment


Summary: Domestic Tourism

…from 30.3 million in 2009, registering a negative CAGR of 1.5%; moreover number of travellers have declined by a CAGR of 3.8%

The total number of domestic trips decreased to 28 million to 2014…

…from ZAR 22 Bn in 2009 to ZAR 27 Bn in 2014 with VFR contributing more than half of the total revenue

During the same period, the TTFDS from domestics tourists increased…

…with number of trips to the province increasing from 1.2 million in 2009 to 7.2 million in 2014; however, tourists tend to spend more when visiting Western Cape

Limpopo has risen in popularity among domestic tourists…

…with December and January being the peak months. Seasonality of domestic trips has deteriorated from 2.5% in 2009 to 10.2% in 2014

The seasonality of domestic travel is consistent with International travel…


Snapshot: Key Drivers of Growth

• First time visitors has recorded a lesser growth rate compared to repeat tourists, subsequently their share in total tourists has declined during 2009–14

• However, they tend to visit more number of provinces and also have the highest average length of stay

Travel Characteristics

• Africa Land market saw the biggest increase in tourist arrivals, at CAGR 7.6%, during 2009–14, however, TTFDS from the region has declined

• TTFDS from Europe and Americas increased by a CAGR greater than 5% during the same period

Market / Regions

• While the share of VFR in tourist arrivals has increased considerably during 2009–14, share of holiday has declined

• However, the share of holiday tourists in total spend is highest and has grown significantly

• Except ‘shopping business’, all tourist categories spend the highest on shopping

Purpose of Travel





Next steps

TABLE OF CONTENTS:


Study Checkpoints / Milestones Description Scheduled Date Status

PHASE I: External Scan and Internal Scrutiny

Preliminary assessment of existing information

Analyses of portfolios, across the five (5) key performance indicators, i.e., volume, value, length of stay, seasonality and geographical spread

Oct 30, 2015Draft

Prepared

Stakeholder interviews Interviews with stakeholders at SAT (Audience: Steering committee of 4–5 members); SA Tourism board; and industry partners

Nov 2, 2015 – Dec 11, 2015 WIP

External scrutiny, and domestic and business segments

Global travel trends on value and volume movement, and developments related to technology, media and trade; KPI assessment on domestic and business segments

Nov 9, 2015 – Nov 27, 2015Draft

Prepared

Workshop: Full-day workshop to cluster key opportunities/issues

Inputs from broader SAT team to determine opportunity and issue clusters (Audience: SAT management team)

Scheduled: Jan 13/14, 2016 TBD

Delivery of workshop synthesisShare essence of workshop output with SAT management team for refinement/agreement/buy-in

Jan 22, 2016Draft

Prepared

PHASE II: Selection of Key Strategic Thrusts

Assess findings from Phase I Inputs from Old Strategic Plan, NTSS, and Insights from key team members Jan 25 – Feb 5, 2016 WIP

Workshop to finalise approach Discussion to finalise approach (Audience: SAT management team) February 15, 2016 WIP

Workshop: Share outcomes with stakeholders

Share essence of workshop output with stakeholders for refinement/agreement/buy-in


TBD

Phase III: Action Planning

Action planningStrategic imperatives become benchmarks against which each country / planning unit measures its effectiveness. Action planning to develop detailed implementation plan


TBD

We are currently in Phase 2 of the project


• 2016/17 – put in place the foundations of the strategy by completing all the actions identifiedin phase 3 of this intervention as this will be the inputs to the 5-year strategy

• 2016/17 – write the strategy clearly articulating the goal, the strategies, the resources and themeasures of success for approval aligned the statutory framework of National Treasury, i.e.deliver a 5-year strategy supported by a 5-year strategic plan

• 2017/18 – year one of the implementation of the strategy as outlined in the format of an APPthat clearly aligns to the Strategic Plan 2017/18 to 2021/22

Towards SAT’s 5-year strategy: 2017/18 to 2021/22

The 2016/17 Strategic Plan is an interim plan that will be tabled as per the

statutory requirements. This plan, where possible, includes the new thinking as

developed through the current intervention. However, the 5-year Strategy that

will be table a year from now will be markedly different from this and previous

years’ plans.

sa tourism’s 5-year strategy - tourism business … principles of the sa tourism 5-year strategy...

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