7 March 2018

1. PRESENTATION TO THE PORTFOLIO COMMITTEE ON TOURISMORGANISATIONAL PERFORMANCE RESULTS QUARTER 2 & 3: 2017/18 7 March 2018

2. Table of Contents • Situational Analysis (Slide 2) • Key Focus Areas for SA Tourism in 2017/18 (slides 3 to 5) • Organisational Performance against Annual Performance Plan: (Slides 7 to 25) • Programme 1 - Corporate Support • Programme 2 - Business Enablement • Programme 3 - Leisure Tourism Marketing • Programme 4 - Business Events • Programme 5 - Visitor Experience • Financial Performance (slides 26 to 31) • Human Capital Update (slides 32 to 37) • Governance Information (slides 38 to 41) • Acronyms (slide 42)

3. Situational Analysis (October to December 2017) • July to September 2017: • Gross Domestic Product (GDP) took a positive turn in this period, growing by 2.5% (quarter-on-quarter), primarily driven by 33% growth in the agricultural sector. • Unemployment continued to rise during the same period, growing to 27.7%, leaving consumers cash-strapped with limited/no income in spite of the economic growth experienced. • Spending on non-essentials such as travel continues to be under threat (as seen among VFR tourists). • October to December 2017: • According to the FNB/BER Consumer Confidence Index, consumer confidence remains low at - 8 having improved slightly from April - June 2017 which was - 9. While consumers are slightly more positive on the outlook of the domestic economy, there is a poor outlook on their own financial position. According to FNB/BER, low consumer confidence levels point to a low willingness to spend among consumers. • Unemployment declined slightly in this quarter, from 27.7% to 26.7%. There has been increases in employment in the informal sector (4.4%) and the agricultural sector (4.8%). Despite the improvement, unemployment still remains high. Keeping in mind that one income in SA typically supports four to ten people, job losses have a far reaching effect especially on discretionary items including travel. • The Rand strengthened by 8.3% against the US Dollar in December following the ANC Elective Conference. According to the South African Chamber of Commerce, business confidence also improved steadily from October 2017 to December 2017 due to the political developments. • Article on Fin24: “Rand in for a bumpy ride on key economic events” 16 Jan. 2018

4. Key Focus Areas for SA Tourism in 2017/18

5. Leisure Tourism Marketing: Key Focus Areas for 2017/18 • Drive volume and value through strategic partnerships. • Influence transformation through partnerships agreements by introducing new experiences into the itineraries and showcasing hidden gems and a variety of tourism offerings South Africa has to offer, particularly in emerging markets such the Nordics and Middle East. • During off-peak seasons and in cases of low forward bookings to South Africa, to collaborate with trade to package affordable deals to improve seasonality. • Collaborate with Provincial Tourism Authorities to immerse and educate Trade and Media about new experiences and offerings across different provinces in South Africa using hosting, familiarisation trips and SA Specialist. • Maximise resources and global footprint, South African Tourism by leveraging on DIRCO’s infrastructure to promote tourism. • Partner with trade, media and Team South Africa (SAA, Brand South Africa, etc.) in order to ensure that South Africa is marketed in a manner that enhances the brand and traveller experience. • Promote a unified brand by developing global tool kits, virtual training through SA Specialist, Trip Planners among other things to enable countries to customise for their markets. • Identify barriers to entry and collaborate with NDT to address barrier removal – visa processing, airlift, immigration regulations etc.

6. Business Events: Key Focus Areas for 2017/18 • Develop an aggressive and coordinated approach to developing leads for business events - executed in conjunction with the provincial and city Convention Bureaus and the broader business events industry in South Africa. • Promote and incentivise hosting of conferences and incentives in the secondary cities. • Support and capacitate provincial and city convention bureaus through regular engagements in the business events coordinating forum. • Address geographic spread through the pre and post Meetings Africa and Indaba tours conducted to immerse international, regional and domestic buyers and media into smaller towns and alternative products.

7. Grading Council: Key Focus Areas for 2017/18 • Understand needs around quality assurance in light of a pervasive traveller review landscape and allow consumer needs and insights to drive expansion while considering global best practice. • Improvement of reputation through regular trade engagements and consumer campaigns. • Focus and emphasis on the eradication of the illegal use of stars to drive trade and consumer confidence. • Partnering with members to drive their profitability by growing and sustaining their quality of business, i.e.. our value. • Leverage access and participation to SA Tourism platforms as well as information and market data for our members. • Position the TGSCA brand as a holistic assessment of quality and service offering by graded establishments using Tourism Analytics Programme (TAP).

8. Organisational Performance Overview by Programme

9. 2017/18 Organisational Performance Results – Quarter 2 & 3

10. 2017/18 Organisational Performance Results – Quarter 2 & 3

11. 2017/18 Organisational Performance Results – Quarter 2 & 3

12. 2016/17 Organisational Performance Results – Quarter 2 & 3

13. 2016/17 Organisational Performance Results – Quarter 2 & 3

14. 2016/17 Organisational Performance Results – Quarter 2 & 3

15. 2016/17 Organisational Performance Results – Quarter 2 & 3

16. 2017/18 Organisational Performance Results – Quarter 2 & 3 *Note: Latest international tourist arrivals statistics released by StatsSAon 21 February 2018 has been included in this report.

17. 2017/18 Organisational Performance Results – Quarter 2 & 3

18. 2017/18 Organisational Performance Results – Quarter 2 & 3

19. 2017/18 Organisational Performance Results – Quarter 2 & 3

20. 2017/18 Organisational Performance Results – Quarter 2 & 3

21. 2017/18 Organisational Performance Results – Quarter 2 &3

22. 2017/18 Organisational Performance Results – Quarter 2 & 3

23. 2017/18 Organisational Performance Results – Quarter 2 & 3

24. 2017/18 Organisational Performance Results – Quarter 2 & 3

25. 2017/18 Organisational Performance Results – Quarter 2 & 3

26. 2017/18 Organisational Performance Results – Quarter 2 & 3

27. 2017/18 Organisational Performance Results – Quarter 2 & 3

28. 2017/18 Organisational Performance Results – Quarter 2 & 3

29. 2017/18 Organisational Performance Results – Quarter 2 &3

30. 2017/18 Organisational Performance Results – Quarter 2 & 3

31. 2017/18 Organisational Performance Results – Quarter 2 & 3

32. Finance

33. BUDGETED AND ACTUAL REVENUE REVIEW AS AT 30 SEPTEMBER 2017 PER PROGRAMME

34. BUDGET AND EXPENDITURE REVIEW AS AT 30 SEPTEMBER 2017 PER PROGRAMME Included in programme 4: Leisure Tourism Marketing is investment in domestic marketing with annual budget of R 138 629 200; YTD Budget: R 33 034 494; YTD Actual: R 40 178 614 i.e. 122% of planned year to date budget.

35. BUDGETAND EXPENDITURE REVIEW AS AT 30 SEPTEMBER 2017 PER ECONOMIC CLASSIFICATION * Adjustment due to phased in restructuring costs

36. GRAPHICAL REPRESENTATION OF EXPENDITURE: GOODS AND SERVICES AS AT 30 SEPTEMBER 2017

37. BREAKDOWN OF EXPENDITURE: GOODS AND SERVICES AS AT 30 SEPTEMBER 2017

38. BUDGETED AND ACTUAL REVENUE REVIEW AS AT 31 DECEMBER 2017 PER PROGRAMME

39. BUDGET AND EXPENDITURE REVIEW AS AT 31 DECEMBER 2017 PER PROGRAMME Included in programme 4: Leisure Tourism Marketing is investment in domestic marketing with annual budget of R 138 629 200; YTD Budget: R 98 809 699; YTD Actual: R 94 725 247 i.e. 96% of planned year to date budget.

40. BUDGETAND EXPENDITURE REVIEW AS AT 31 DECEMBER 2017 PER ECONOMIC CLASSIFICATION

41. GRAPHICAL REPRESENTATION OF EXPENDITURE: GOODS AND SERVICES AS AT 31 DECEMBER 2017

42. BREAKDOWN OF EXPENDITURE: GOODS AND SERVICES AS AT 31 DECEMBER 2017

43. Human Capital

44. Workforce Profile SA Tourism’s Workforce Profile at the end of December 2017 was as reflected below, against an approved headcount of 202. SA Tourism has achieved a vacancy rate of 15% due to the organisational redesign process (Project Ignite). Internships and contract employees are used to ensure business continuity. Recruitment for vacancies commenced in June 2017. Permanent and Fixed Term constitutes 85% occupancy and 15% vacancy rate

45. Employment Equity Update

46. Organisational Review Project Update Outcomes of the Ministerial Review in relation to Organisational Structure and HR Development Build and enhance EXCO and leadership team capabilities to carry out their roles and duties as per their KPAs Conduct a review of the role, performance and capabilities of the HR function Create a culture of engagement and empowerment within and across all levels and units of the organisation • Introducing ways for middle management to engage in strategic discussions • Effective Delegations of Authority to devolve decision making to management • Change management process to shift organisational culture • Staff satisfaction surveys and implementation of recommendations Key Priorities Review and redesign the organisation structure taking into account the funding and resource constraints including currency risks and losses Skills Audit to understand the skills gaps

47. Summary of the Key Activities Completed as at end of Q3 May 2016 May-July 2016 January 2017 August- December 2016 Below is a summary of the key activities completed in the project initiation and assessment phases. SAT has completed all the key activities and is currently on a drive to fill vacancies to complete the staff establishment Initiation & kick off Current state Design Implementation planning Change management, programme management Project imitation Conduct current state assessment Develop the high level design Develop the detailed design Plan for implementation Phase 1 Phase 2 Phase 3 Phase 4 • Define scope • Develop project plan and management approach • Align leadership team to drive the case for change • Conduct change readiness survey • Define data requirements • Data collection • Desktop analysis of documents • Conduct interviews with the relevant stakeholders • Understand current business process mapping of the functions • Develop a change management strategy and plan • Develop tailored design principles • Develop organisational process landscape • Define operating model • Develop a proposed optimal high level structure • Design a detailed organisational micro structure based on the agreed high level design • Review and develop job profiles in line with proposed structure • Define head count implications and costs • Develop leadership competency frameworks • Develop people migration plan • Develop an IT strategy to align processes • Develop an Implementation plan. • Placement and recruitment • Conduct skills audit • Develop training plans • Project closure and reporting

48. HUMAN CAPITAL INITIATIVES UPDATES Performance management system signed off and automation process in progress Talent management framework signed off, will be implemented in Q2 of 2018/19 Personal Development Plans put in place, implementation progressing well, ongoing development of initiatives, onboarding, value chain capability build SAT Values reviewed and value-linked behaviours will be introduced to support integration and a high performance culture. Engagement survey to be conducted in March 2018 Remuneration Review currently underway. This will be all encompassing to include recognition initiatives. Recently launched Chairing Disciplinary Hearings for line managers. This will be rolled out to all line managers. Other ER topics to follow. There is an employee wellness programme in place, currently being implemented Recently appointed a mobility advisory agent. Finalising the mobility framework in the background as well. The configuration of the talent management suite underway, all encompassing to cover Human Capital from end to end. Payroll will be configured at a later stage

49. Governance

50. Board Meeting Attendance Q2 2017/18