Transformation of Tourism Industry: public hearing

ENVIRONMENTAL AFFAIRS AND TOURISM PORTFOLIO COMMITTEE
15 May 2007
TRANSFORMATION OF TOURISM INDUSTRY: PUBLIC HEARINGS

Chairperson: Mr Langa Zita (ANC)

Related documents :
Written Submission
Department of Environmental Affairs and Tourism: Policy Context and Overview of Transformation of the Tourism Industry
Mr E Manhemene: Morningside Cottage
Ms S Mthungwa: Maloti Drakensberg Transfrontier Project
Ms M Majoromia Maile: Majoros Bed and Breakfast
Ms T Lekau: Kopanong Bed and Breakfast
Ms M Peter: MaNeo’s Bed and Breakfast
Ms E Fester: Fester’s Bed and Breakfast
Oral submission
Morningside Cottage submission
Maloti Drakensberg Transfrontier Project (MDTP) submission
SACAWU
Island Touch Tours submission
Malebo’s Bed and Breakfast submission
Study Abroad Educational Services submission
Sam’s Cultural Tours submission
Zibonele Tours submission

Audio Recording of the Meeting Part1 & Part2

SUMMARY
The public hearings were held with a view to increasing public participation and executive accountability. The Department of Environmental Affairs and Tourism and the Tourism BEE Charter Council briefed the Committee on the current status of transformation of the tourism industry. A number of small private operators made submissions on their challenges and achievements in the tourism sector and highlighted the need for assistance with training, support and funding.

Committee members asked a number of questions to the delegates and made suggestions for the development of the sector. Several members expressed concern that the Tourism, Hospitality and Sport Education and Training Authority (THETA) was not addressing the need for training and skills development at the SMME level.

The hearings revealed broad consensus on the following issues. First it was noted that black economic empowerment in the tourism industry is poorly understood and remains an ambiguous concept. Workshops needed to be held in order to engage previously disadvantaged stakeholders and to make the notion of black economic empowerment more accessible. Second, it was agreed that while government transformation policies are sound, the implementation of these policies needed to be better monitored. A third concern was the access to funding for the purposes of expansion. The Department of Trade and Industry grant application forms were inaccessible due to their complexity and this needed to be remedied. Fourth, small tourism businesses needed to organise into an association to allow for greater leverage in government negotiations. The Portfolio Committee committed to include all these recommendations in a report which would be taken to the House, and if adopted, would be referred to the Minister.

MINUTES
Department of Environmental Affairs and Tourism (DEAT) presentation
Dr Patrick Matlou (Deputy Director-General: Tourism) gave a general overview of Broad Based Black Economic Empowerment (BBBEE) in the tourism sector, the development of codes of good practice, the tourism charter, scorecard and the formation of the Tourism BEE Charter Council.

Dr Matlou reported a 14% increase in foreign tourist arrivals in 2006 – from 7.3 million visitors in 2005 to 8.4 million in 2006. Compared to a global increase of 4% during the same period, the results indicated that South Africa was being successfully marketed as a tourist destination. He added that transformation was however given the lowest priority in the ranking of government interventions identified by the tourism industry.

Dr Matlou outlined a number of strategic objectives set by the DEAT to bring about change and reported on the results of a baseline study undertaken by the Department to determine the status of transformation in the tourism industry. The results of the study revealed a number of positives as well as the different challenges faced by large and listed enterprises and the small to micro sized enterprises. The study revealed that 20% of the enterprises were classified as large entities and that these controlled 80% of the industry, while 80% were small or micro enterprises that received just 20% of revenue generated by tourism.

Solutions proposed by the DEAT included the development and implementation of codes of good practice as well as a number of required interventions from government, the private sector and individuals, in particular black persons operating in the tourism industry. Dr Matlou summarised the programmes underway from both the Tourism BEE Charter Council and the Tourism Branch.

Discussion
Mr M Swart (DA) asked if statistics were available on the employment opportunities generated by the 80% and 20% of enterprises respectively that were mentioned in the DEAT’s presentation.

Mr Swart commented that finance and training were the most important issues affecting the transformation of the industry and noted that the DEAT planned to meet with the banks on the issue of providing start-up funds to prospective black entrepreneurs. He wondered if government could assist with obtaining finance.

Ms Sindiswa Nhlumayo (Head: Tourism BEE Charter Council) explained that the challenges identified under the seven indicators of the Charter, were being addressed by the Council. She said that the funding issue was not just a matter of demand for funds but also one of supply. The Department was therefore involved in discussions with not only the banks but also other financial institutions and black persons in the industry in order to develop solutions. She reported that the feedback that was received from the financial institutions was very constructive and that it was important that the solution did not just come from Government but from other institutions relevant to the sector as well.

Mr Swart was concerned that THETA was not providing training to black entrepreneurs to start their own businesses in spite of having millions of Rands available.

Dr Matlou explained that THETA itself does not do the training but rather acts as a quality assurer that works with the training service providers operating in the sector. THETA was driven by the Department of Labour and with the assistance of the SARS, collected levies from companies who can reclaim 50% of the cost of training done in terms of their skills development plans. He suggested that the Committee invite THETA to clarify the role it plays.

Mr R Shah (DA) commented that it was apparent that the skills shortage and the lack of finance were major challenges in the tourism sector. He noted that although there were more black people enrolling for training courses, the numbers were still relatively low and said that the focus should be on providing assistance and incentives to trainees and students in the sector. The targets set in terms of the scorecard would not be reached unless progress was made in this regard. He added that 90% of the scarce skills identified were at the high skills level and wondered if THETA was up to the challenge. He felt that a goal score could not be imposed if skilled people cannot be provided to work in the tourism sector.

Mr Shah asked how effective the relationship was between DEAT and the local authorities. He wondered if enough was being invested in providing the infrastructure in the black areas that was necessary for tourism.

Mr Matlou replied that the DEAT had extensive working relationships with Local Government and that a number of structures were in place in addition to South African Local Government Association (SALGA) and the ASGISA programme. He added that the alignment of the three spheres of government was a challenge. Tourism was not afforded the same high priority by Local Government as, for example, housing. Nonetheless, the DEAT requested that service issues such as waste management and roads be taken care of. He added that the number of local authorities do make co-ordination difficult.

Mr A Mokoena (ANC) shared Mr Shah and Mr Swart’s concerns regarding THETA and recalled that he attended a very eloquent presentation three years ago but the achievements that were related then appeared now not to be true.

Mr Mokoena asked why the Committee was not invited by DEAT to attend the Tourism Indaba held in Durban. He said that the Indaba was part of the Committee’s oversight obligation and the members should have been there.

Mr Matlou replied that the Committee had a standing invitation to attend the annual Tourism Indaba. Mr Zita agreed that this was indeed the case. Mr Matlou remarked that the timing was unfortunate as both the Indaba in Durban and the hearing in Cape Town were held on the same day.

Mr Mokoena stated that DEAT’s budget included funds for transformation and asked what DEAT was doing with the money allocated to achieve this objective.

Mr Mokoena commented that Local Government was hardly mentioned in DEAT’s presentation yet it was at the coalface and played a major role in helping the Department achieve its objectives.

Dr Matlou reported that DEAT was actively involved with Local Government in a number of projects related to the development of tourism enterprises, training of tourism officials and the empowerment of women and the youth.

Ms Nhlumayo replied that the council operated on a national level but business functioned at the ground level. The approach was to go beyond the metropolitan areas and to develop the tourism officials at the local authority level. She felt that it was important to encourage black persons to take advantage of opportunities that existed in their own communities.

Mr Mokoena referred to the Sho’t Left campaign for the taxi industry which was intended to activate domestic travel. He asked why the taxi industry was not buying into it in spite of claims that the campaign was a success.

Dr Matlou admitted that there were difficulties with the programme. He said the challenge was the ability to create and give the incentives that were promised by big business. He suggested that the model developed by the Cape Town-based Dreamcatcher company be used that insisted that certain black SMME products formed part of the packages that were put together by tour operators. This condition was not part of the first programme but will be included in the second. New contracts were being developed with the lower end of the accommodation suppliers, whereby the supplier would receive 100% of the fee charged to accommodation. He mentioned that there were legal issues affecting taxi operators and transport providers related to licences and that these matters have to be resolved.

Mr Mokoena asked why DEAT used the Cape Town International Conference Centre (CTICC) for conferences rather than involving the smaller black-owned Bed and Breakfasts (B&Bs) establishments when arranging events. He wanted to know why the DEAT used a huge glamorous place that had itself not been transformed into black ownership.

Dr Matlou admitted that by using venues such as the CTICC, the DEAT might well be strengthening already strong parts of the sector. He regretted that there were currently no venues located in townships that could accommodate large conferences of over 500 delegates. He added that the DEAT encouraged the use of the venues located in the townships for smaller meetings and needed more information on the facilities available.

Mr D Maluleke (ANC) shared the other members’ concerns regarding THETA.

Ms J Chalmers (ANC) asked if there was anything in the Charter that encouraged mentorship by successful operators of new entrants to the industry.

Ms Nhlumayo replied that mentors play an important role in the Charter enterprise development programmes. She added that mentors needed to perceive a benefit to them before they were willing to participate and that mentorship programmes were applicable to both large and small enterprises.

Ms Chalmers asked what DEAT was doing to assist emerging operators to understand and cater for the needs of tourists and to assist them in dealing with problems they may experience while visiting the country.

Dr Matlou replied that DEAT was not directly responsible for training in the tourism industry although it was also a line department. He felt that the Department could however be more involved.

Ms Chalmers asked how many students actually enter the industry after graduation. She wanted to know if the content of training courses on offer were assessed to determine if the curricula were appropriate and whether DEAT had any input into the course content. She wondered if there were any bridging courses available to students to improve the skills they have.

Dr Matlou replied that the number of students was not immediately at hand and he would have to check. He commented that there were many unemployed graduates across all industries and that the reason was often given that they lack experience. He felt that it would be a waste of resources if people were double-trained and that it was expected that adequate training was provided at source. He regretted the discontinuance of the apprenticeship system that provided a valuable practical element to training. He added that a skills audit was undertaken by the Department and it was involved in forming a national skills development forum to determine the skills needs of the Small, Medium and Micro Enterprises (SMMEs). A sub-committee was looking at the curriculum and was engaged in determining the scarce and critical skills in the industry.

Mr Zita asked what additional resources could be deployed and what measures could be taken to expand the small enterprise segment that comprised 80% of the market. He wondered what scope there was for growth and what assistance was required from the Committee.

Dr Matlou replied that DEAT’s flagship project was the tourism enterprise development programme. He explained that this project was aimed at bringing about transformation by developing the SMMEs in particular and listed the efforts that were made in the areas of training, linking small and larger enterprises in the procurement chain, forming associations and obtaining the support of the provinces and government.

He said that DEAT assisted SMMEs in a number of ways and listed holding indabas to determine what challenges were faced by the SMMEs, providing networking opportunities, the development of toolkits and developing the how-to manuals in four languages. He added however that it must be recognised that funds were limited.

Dr Matlou said that the National Skills Fund was available to fund the training required by SMMEs. The Minister of Labour had recently announced a R1 billion injection into the fund and had invited provinces to put forward their training needs. Only three did not include tourism training in their list of needs. He added that there were opportunities for training in the townships and that small township operators could apply for funds for training purposes.

Mr Zita asked whether a programme could be developed to support the second economy so that the smaller operators benefit more from the money spent by tourists. He also referred to local government.

Dr Matlou said that smaller operators also have to realise that they were running businesses and needed to put in the necessary effort to improve their skills and knowledge. He acknowledged that people were not armed sufficiently in order to operate at a global level but that this was achievable. The Department encouraged government, provinces, local authorities and public entities to make use of graded operators and service providers in the tourism industry. The development of procurement policies and an increase in the target of the level of use made of graded operators were also encouraged.

Ms Nhlumayo felt that transformation would not proceed at the desired pace without government taking the lead. She said that the Council had developed a public sector procurement tool to measure the extent at which transformation was being achieved. She added that transformation was applicable to the organs of state as well as in the private sector.

She reported that the baseline study indicated that the sector was responding to the transformation objectives. She felt that it was necessary to continue to aggressively promote transformation in order to keep the momentum going. It was also necessary to recognize those that achieve their transformation targets and reported that an emblem had been developed to distinguish empowered enterprises.

Ms Nhlumayo concluded that not only the Council was involved in bringing about BEE transformation, but government, the private sector and individuals as well. The DEAT and the Council were able to put forward the business case but the innovative support of the whole tourism industry was required.

Morningside Cottage submission
Mr Erick Mahemene (General Manager, Morningside Cottage) had been employed by the owners of an up-market four star guesthouse in Constantia, Cape Town, since 2003. He told the Committee that, when the owners had wanted to sell the guesthouse two years ago because of a low 40% occupancy rate, he had asked them for an opportunity to implement his ideas for turning the business around. They agreed and today the guesthouse was operating at an occupancy rate of 80% and Mr Mahamene was planning to open his own guesthouse in Constantia.

Mr Mahemene said that transformation was not just about giving black people employment or a share in the business. He felt that the transformation partner must also know what they were doing. He suggested that more should be done to encourage black ownership of guesthouses located in up-market, ‘white’ areas. There were many examples of black-owned guesthouses in the townships and he felt that black ownership should extend across all areas.

Mr Mahemene related his own reluctance to visit a restaurant in Khayelitsha, Cape Town – the owner of the restaurant had asked him to telephone ahead, he made the assumption that it was unsafe to enter the township and so he did not go.

Mr Mahemene said that he received many queries from people who doubted that the black owner of a guesthouse in a ‘white’ suburb could be successful. He pointed out that he had been managing the Morningside Cottage successfully for the past two years, was often assumed by visitors to be the owner and up to 50% of guests were repeat visitors. He felt that black entrepreneurs must provide competition for the white-owned businesses in ‘white’ areas as well.

Mr Mahemene suggested that it be determined how many black persons were already involved in the industry and how they can be helped to become successful. He added that a lot of hard work was required and it cannot be expected to receive money while doing nothing to earn it.

Mr Mahemene pointed out that soccer was the most popular game in Africa and that many visitors from Africa can be expected to visit South Africa for the 2010 Soccer World Cup. He felt that more should be done to provide accommodation for visitors from the rest of Africa and not just build stadiums.

Discussion
Mr Shah asked what Mr Mahemene did differently and what initiatives he had put in place to increase the occupancy rate from 40% to 80%.

Mr Mahemene replied that the guesthouse had a four-star rating and charged quite high prices. He suggested that the prices be lowered to attract more visitors. He had also developed a corporate trade and built co-operative relationships with other guesthouses whereby he sent overflow of visitors to them. He extended the guesthouse’s exposure and attended all the meetings of organizations relevant to the guesthouse and tourism industry.

Mr Mokoena congratulated Mr Mahenene on his achievements and said that he was a role model for black entrepreneurs in the industry. He asked if the model was not distorted by leaving the business he had built up to start his own guesthouse.

Mr Mahemene replied that by opening his own business, he was progressing in his development as a black entrepreneur. He was leaving his current position with the encouragement of the owners and in a spirit of goodwill.

Mr Maluleke asked if Mr Mahenene’s relationship with the owner of Morningside Cottage was that of an employee or of a partner with a financial stake in the business.

Mr Mahemene replied that an offer of partnership had been made but that the matter was for private discussion.

Maloti Drakensberg Transfrontier Project (MDTP) submission
Ms Sibongile Mtungwa, MDTP Regional Community Facilitator, explained the objectives and challenges of the MDTP to the Committee and attendees at the hearing.

Ms Mtungwa said that tourism was the only viable economic option for the inhabitants of the area. There was no other source of employment and the people had very little land on which to grow food. The beauty of the area and its many attractions lent itself to cultural and eco-tourism. However, the development of a sustainable tourism industry in the area faced many challenges.

She reported that out of 3000 available beds in the area, only 15 were owned by black people and therefore few benefited from tourism. The current focus was on developing a marketing strategy and exploring ways of diversifying the product but there were many opportunities that were not being exploited. The lack of roads and infrastructure was a major constraint in the development of the area.

Ms Mtungwa cited the Reichenau project as an example of the efforts being made by the MDTP in developing the tourism industry in the area. Reichenau was built in the 1880s by Trappist monks and the local chiefs as a self-sustainable community. Today, the community was struggling to maintain the buildings and put their heritage to use. Crafts, catering and tourism groups have been working since 2001 to make a success of the project.

In spite of the low level of success, Ms Mtungwa and the MDTP continued to see a lot of opportunity for tourism in the area. The lack of skills, knowledge and experience was a major stumbling block as the people have little concept of how tourism worked and how to communicate and interact with visitors. In spite of the good will prevailing, much still needed to be done to develop an understanding of the industry and the people’s ability to provide what visitors needed. Often people underestimated their talents and the value of cultural exchanges with tourists. Sadly, opportunities were lost when people did not realize that they were able to offer visitors an unique experience.

Ms Mtungwa explained that most people in the area lived at the subsistence level and it was very difficult for them to appreciate the long term investment that had to be made to develop tourism potential. Established enterprises in the area were looking for partnerships but were reluctant to take inexperienced people on board. Nevertheless, there were a few people who have some skills and training and who were keen to start their own enterprises but lacked the funds to do so.

She suggested that a training and skills development programme be implemented over at least a five year period in order to retain the knowledge and skills in the community and to change the outlook that tourism was not to be taken seriously. She concluded by pointing out that tourists wanted to see and experience how people really lived and the development of cultural and eco-tourism was therefore important.

Majoro’s Bed and Breakfast submission
Ms Maria Maile (Owner – Majoro’s B&B) started her B&B in Khayelitsha in November 1998. Previously, she had worked in hotels, as a chef at the University of Cape Town for ten years and was the supervisor of a residence at the university. She decided to start her own business to provide for herself and to create jobs for other people in her community.

Ms Maile was concerned that the people entering the industry had no idea what was involved in tourism. She knew from her own experience how sensitive the tourism sector was and tried to expand her skills and knowledge by attending as many workshops as she could. She tried to get exposure for her business and attended the tourism indabas. Her ambition was to grow her business from a small B&B into a large business.

Ms Maile was often approached by people planning to enter the industry and asked for her advice on how to start their businesses. She offered to address students attending training courses and talked to them about the challenges they could expect to encounter in the industry. She said that a number of B&Bs in the township were forced to close down because they were not sustainable and recommended that those planning to open one do their homework very well. She offered to provide work experience to students in her establishment, even though she could not afford to pay them wages.

Ms Maile worked with a group of five other B&B owners in Khayelitsha. They had heard of the opportunity to form partnerships with hotels and wanted to make use of it. She had also formed associations with white-owned B&Bs and catered for meals for their visitors. The B&B owners in the townships however found it very difficult to make a living and needed assistance in ensuring that they received a steady stream of visitors.

Ms Maile felt that the small business owners in the townships did not receive enough assistance from the local tourism offices. Although she participated in a mentorship program in 2006, she felt that she did not benefit from it. It would have been more beneficial if the mentor came to her place of business but instead she had to travel some distance to visit him in his office at the airport. She added that the tourism offices were unable to advise her of which support structures existed and said that the onus was on her to approach them and supply them with brochures.

Ms Maile said that her purpose was not to cry to the government for help but she wanted to ensure that her business progressed so that she was able to provide jobs and thereby reduce the crime rate. She requested assistance for the small operators in the townships to achieve that goal and to build sustainable businesses. She thanked the Committee for the opportunity to express her views, frustrations and feelings.

Ms Maile explained to Mr Mahenene (the delegate from Morningside Cottage) that the reason the restaurateur asked him to phone ahead before arriving for a meal was not because it was unsafe in the township but that he could not risk wasting the food that was prepared for a visitor who failed to arrive. She added that the community was teaching people the importance of protecting the tourists who visited the townships.

Ms Maile concluded by relating how the exposure to township life added to the pleasurable experience of local visitors as well as tourists from all over the world. She was somewhat bemused by the fact that the fame of her stew and chakalaka had spread as far afield as Sweden.

Ms Maile was applauded by the members and delegates and Mr Zita thanked her for her submission.

Discussion
Mr Shah remarked that there were many political and economic refugees from other countries in Africa who speak a variety of languages. He suggested that DEAT engage with the Department of Home Affairs to establish what language and other skills the refugees brought with them. He added that the ability to communicate with visitors was critical to the industry and he felt that the refugees could make a significant contribution in this regard.

Mr Shah asked what role the traditional leaders played in developing tourism in the rural areas. He asked if workshops were held to make them aware of the potential and benefits to the community. He suggested that students in the local schools be trained and used as tourist guides, which would also provide useful experience to them. It was necessary to develop tourism campaigns in rural areas to develop the latent potential that was there.

Mr Shah asked Ms Maile to explain what she meant by the lack of assistance that she had experienced and to name who was at fault. He suggested that DEAT take her on as a case study to determine what challenges were faced by operators in the tourism industry at that level. He added that there was no doubt that Ms Maile had what it took to succeed but it was clear that she was not getting the support she needed.

In reply to a question from Mr Zita, Ms Mtungwa said that she was not a business person but she worked with the community and had observed that although assistance was offered from time to time, it was not for a long enough period of time to make any difference. Programmes presented over a longer period would be more beneficial.

She said that the lack of funding for the development of tourist facilities was the most important issue. People needed to upgrade their homes, especially toilet and ablution facilities, in order to provide accommodation of the standard expected by tourists.

Ms Mtungwa explained that people in her community needed to have the vision of tourism. The problem was not that they were unable to do what was required of them but they needed to be given the necessary insight and understanding of the concepts of tourism.

She added that although learnerships were helpful, people needed to be mentored to integrate the theory of the training into practice.

In reply to Mr Shah’s question, Ms Maile said that government had assisted with promoting the smaller operators through the tourism indabas but growth was now needed. People were using their homes as their businesses but needed funding to expand their facilities. She was unable to accommodate larger groups of tourists and the overflow was shared amongst the other small enterprises in the community.

She said that mentors who appear not to care were a problem and a source of frustration. She and her colleagues were a group of women who were actively involved in their community but they needed more exposure and were willing to act as mentors to other persons entering the industry. More use could be made of their knowledge and experience, especially to assist with developing the youth in the community.

Ms Maile said that any help received would be shared with others in the community, for instance visitors were also shown the food garden projects underway in the township.

Mr Shah asked Ms Maile what were her understanding and expectations of a mentor.

Ms Maile replied that the mentor she was given in 2004 was a tour guide from Grass Roots Tours. She felt that it would have been more beneficial if he had come to her place of business rather than her seeing him in his office. She added that a mentor from a hotel or an established guesthouse, who was involved in the same kind of operation as she was, would be more beneficial than a tour guide.

Afternoon session
South African Commercial and Catering Allied Workers Union (SACCAWU) submission
Mr C Booi highlighted various challenges facing the hospitality industry, primarily the lack of transformation within the sector. SACAWU identified a lack of Black Economic Empowerment (BEE) in the Tourism Industry suggesting that ownership remained in the hands of a small group of white males. Mr Booi argued that legislation interventions have failed to address these ownership patterns. SACAWU also noted a deficit in terms of both skills training and development with inadequate focus on transferral of skills for sustained growth in the industry. Mr Booi used the example of the restaurants at the Victoria and Alfred Waterfront in Cape Town to illustrate the tendency to have white waitrons and black kitchen hands and cleaning staff.

Further challenges concerned the dominance of part-time contracts in lieu of permanent employment and the use of illegal migrant labour as a means of cost-cutting. SACAWU was working with the Department of Labour to address this problem. As regards the practice of out-sourcing for non-core business, Mr Booi raised concern that many players in the industry were in fact confusing core versus non-core business. Mr Booi suggested that a hotel’s housekeeping formed part of its core business and should therefore not be out-sourced. Another unsavoury cost-cutting measure concerned the practice of using in-service training as a means of cheap labour, SACAWU found this unacceptable. Mr Booi voiced his concurrence with the previous submissions’ focus on training and concluded by voicing his concern that the industry be sustained well beyond 2010.

Kopanong Bed and Breakfast (B&B) submission
Ms T Lekau began her submission by affirming the importance of participatory democracy and the role that public hearings play in this regard. Sufficient notice was requested for future submissions as the short notice did not allow for adequate preparation.

Ms Lekau placed special emphasis on the need for better monitoring of the implementation of government’s transformation policies. The policies were sound, however a lack of monitoring meant that these policies were futile due to inadequate implementation. She cited the example of tenders being awarded to companies that lack a vested interest in the communities in question. These companies had little knowledge of the communities they are working in and hence fail to affect any sustained community input and transformation remains a distant goal. This could be remedied through consultation with community members and if need be, through intervention measures.

Ms Lekau requested more user-friendly documents to explain how BEE works as the concept remains very unclear and the current documentation is inaccessible. A major hurdle to transformation lies in the attitude of white players within the industry. She reported how white tourism practitioners would discourage tourists from visiting the townships due to high levels of crime. She regarded this as unethical business practice.

A major challenge facing B&B owners was a lack of funding, expansion and growth of one’s business was hindered by lack of capital. She appealed to the Committee to suggest a way forward in this regard.

Ms Lekau made two recommendations to the Committee with a view to increasing transformation within the industry. First, she suggested that a survey be done to ascertain how many previously disadvantaged stakeholders are currently active within the industry and how they are faring. Second, a workshop be held for government representatives and previously disadvantaged stakeholders so that together they can brainstorm a more effective transformation strategy.

Island Touch Tours submission
Mr L Ithier mentioned three areas of concern that impede transformation of the industry. He suggested that BEE would become a stagnant policy initiative if it were not converted into action, less talk and more action. The second point concerned the issue of security and how the high levels of crime need to be addressed not only for 2010 but for everyday business to be successful. Third, he noted the lack of business ethic within the industry and called for a re-emphasis on the service dimension of tourism.

MaNeo’s Bed and Breakfast submission
Mr L Kebeni identified some substantial challenges facing the transformation of the tourism industry. He noted the misguided perception that B&Bs are not run according to best practice standards, greater monitoring by the Department could curb this false perception by adding credibility to B&Bs. Furthermore B&B owners themselves need to take advantage of marketing opportunities on offer for example through various diplomatic offices. On the matter of safety and security, he suggested that all stakeholders play their part in combating crime in both townships and cities. He also urged B&B owners from previously disadvantaged areas to liaise with one another and share experiences with a view to mutual benefit. He suggested that B&B owners think beyond only providing accommodation and explore other avenues of service, particularly as 2010 drew near.

Fester’s Bed and Breakfast (previously Wheat Bix B&B) submission
Ms E Fester expressed her disillusionment with government and spoke of the lack of support from the Department of Trade and Industry (DTI) in particular. Poor correspondence from government had meant that any potential business opportunities have passed by unannounced or after the fact. A similar lack of correspondence had occurred with workshops in the Western Cape of which Ms Fester was not notified. The DTI official responsible for visiting the RED Door (Real Enterprise Development Initiative) in Atlantis had frequently missed appointments. Ms Fester applied for a grant from the DTI two years ago and at this stage had not yet received any form of correspondence, not even confirmation of receipt of the application. Furthermore both Minister Erwin and MEC Brown had been unresponsive to Ms Fester’s inquiries regarding possible accommodation for employees of the Koeberg expansion project.

Ms Fester recalled that when she registered her business five years ago she was promised support from tourism officials. Other than printing business cards this support had never materialised. Ms Fester requested funding so that she could purchase cutlery and towels for the B&B. She explained that if she approaches a bank for a loan, then she will have to use her house as collateral. This was a risk she was unwilling to take. It was her hope that she would be able to upgrade her B&B to meet international standards for 2010.

Vuyo’s Jazz Café submission
Mr L Marubelela expressed his motivation for a land management programme to be established by DEAT. He explained that he had converted his garage into a Jazz Café, and since this fell in a residential area he needed to relocate. He informed the Committee of the difficulties he had encountered in gaining access to land.

Mr Marubelela echoed the other presenters’ confusion with the BEE Charter and scorecard. He stated that the aims of the BEE Charter had not yet filtered to the grass roots level. He suggested workshops and meetings to inform previously disadvantaged operators of the available opportunities. He was concerned that the current tourism routes did not benefit people from local communities. He argued that BEE should involve putting money back into the communities. He also noted the lengthy intervals between applications and receipt of permits and licences.

Malebo’s Bed and Breakfast submission
Ms Malebo stated her willingness to expand her B&B and hence her need for funding. She noted the community benefits in the event of such expansion, not least of which, could be employment opportunities for matriculants. She voiced her concern that BEE remained shrouded in confusion and that all the presenters were unanimous on this point.

Study Abroad Educational Services submission
Mr Micheal Ng’etich informed the Committee of the untapped market of educational tourism. He explained that the Study Abroad service aimed to provide a fully comprehensive package for students. Certain obstacles are presented through the failure of higher education institutions to recognise the value of educational tourism. This lack of recognition made it very difficult for the Study Abroad consultants to attain the necessary course information, and this in turn made it difficult to structure packages that could cater for student’s needs. Mr Ng’etich suggested that DEAT consider a possible collaborative effort in this regard.

Sam’s Cultural Tours submission
Sam from Sam’s Cultural Tours suggested that finance and qualifications were not the biggest obstacles to transformation, rather the market monopoly. International operators held the monopoly and local operators struggled to compete on this level. He noted the tendency for hotels to allocate black tour operators to township tours. While this was fine in the short term, the long term implication could be career limiting. He also noted the difficulty of attaining a permit from the Department of Transport. In order to meet the Department’s requirements one had to give a detailed route plan. Due to the spontaneity that besets the tourism industry, this was not always possible. In terms of BEE, he recalled a meeting convened by the BEE Council regarding scorecards in the hospitality sector. The convenors had the incorrect information on the day and hence the meeting amounted to a missed opportunity. Finally he referred to the government institutions that offer financial assistance such as Kula Development Facilitators. The application forms were extremely complex, to the extent that the institutions suggest the help of a consultant at a fee of R6000. This high consultancy fee runs counter to the purpose of these institutions.

Zibonele Tours submission
Thabiso from Zibonele Tours explained that he had just returned from the Tourism Indaba currently underway in Durban. He noted that the BEE Act of 2003 has not yet been revised with an accompanying scorecard. Ownership benefits were limited to big business; a greater focus needed to be placed on Small Medium and Micro Enterprises.

He referred to the value of government support initiatives such as the Tourism Enterprise Programme, RED Doors and Construction Education and Training Authority (CETA). However, the process of applying for funding involved faxing all the relevant documentation (at times in excess of twenty pages) to Johannesburg. This was cumbersome and inefficient.

He identified the need for government to engage SMMEs in preferential procurement.

Discussion
Mr M Shah (DA) affirmed Mr Ithier’s call for ethical as well as racial transformation of the industry. He then addressed Ms Lekau’s concerns and reiterated the importance of monitoring the implementation of policies. Mr Shah noted the lack of clarity regarding BEE scorecards and suggested that the Department would have to exercise creativity to make the scorecards more accessible. DEAT would also have to investigate small businesses and offer solutions for their lack of capacity.

Mr D Maluleke (ANC) noted Ms Lekau’s point regarding the importance of tenders being awarded to consultants who are aware of the community’s needs. He also referred to the security concerns raised by Mr Ithier and stated that DEAT was working in collaboration with the Airport Company of South Africa (ACSA).

Ms J Chalmers (ANC) thanked the presenters and noted the value of having hard copy submissions as these serve as helpful points of reference for the committee members. The value of monitoring was reaffirmed. Ms Chalmers questioned the impact of existing training programmes and cited the need to assess the successes and failures of these programmes across the board, looking at both established operators and previously disadvantaged newcomers. She inquired whether there was a helpline available to offer advice on technical matters of the industry.

Dr Matlou responded that DEAT did have a call centre with fully trained assistants.

Mr I Cachalia (ANC) suggested the possibility of using constituency offices as a vehicle for disseminating relevant information to the stakeholders.

Dr Matlou referred to the possibility of using constituency offices to disseminate information and noted that the logistics of this arrangement would need to be evaluated. It may be possible to enlist the help of community centres and schools.

The Chairperson asked Ms Lekau to clarify what she envisaged in terms of consultation.

Ms Lekau replied that a workshop format would be appropriate so that government could provide clarity on unclear policy matters and for operators to voice the community’s concerns to government.

Dr Matlou said that DEAT had forged a relationship with ACSA to address the problem of pilfering through bags. In terms of general issues of safety and security, DEAT had also been working with the Department of Safety and Security and a Safety and Awareness plan was currently being drafted. This plan would need to be implemented at a grass roots community level.

Dr Matlou noted the problem of funding the expansion of B&Bs and referred to First National Bank (FNB) and ABSA. FNB had complied a booklet detailing the loan options on offer for this purpose. ABSA had established the Emerging Entrepreneur of the Year award with a view to encouraging newcomers to the small business domain. He acknowledged the difficulties facing SMMEs and affirmed the importance of public hearings as an opportunity to network with one’s fellow colleagues and for the Department to gauge the pulse of the sector. The Tourism Business Council of South Africa (TBCSA) did offer support to SMMEs and the operators should not hesitate to use their services. He suggested that the SMMEs form an association so that DEAT can offer greater assistance in terms of funding.

The Chairperson relayed the relevant details of the lending institutions: FNB 0824545723, ABSA 0824105260, Standard Bank 0829283722. The relevant contact person from DEAT could be reached at 0836547706.

Dr Matlou called for greater interaction at local, provincial and national levels. Only through increased consultation would DEAT be in a position to offer tailored training programmes to operators. He stressed the need for greater professionalism within the industry; incidents of late pick-ups from the airport et cetera were unacceptable.

Mr Shah inquired whether DEAT had done an audit of SMMEs in the hospitality sector. He responded to Ms Fester’s request for cutlery and towels and directed her to seek advice and training that would assist her in acquiring the necessary funding, as the Committee did not have the mandate to provide for such requests.

Mr Shah asked what the criteria were for grading B&Bs.

Ms Lekau responded to Mr Shah’s query explaining that she had spent time on a grading team. The process of grading needed to be initiated by the respective B&B owner who invited the grading team to assess the B&B. Ms Lekau offered her help to any interested parties.

Mr Shah referred to Mr Marubelela (Vuyo’s Jazz Café) submission and asked for clarity regarding his request for access to land and which licences and permits he had had difficulty getting.

Mr Marubelela explained that he needed to relocate to a non-residential area.

Mr Maluleke informed him that this form of land acquisition was beyond the mandate of the Committee. He suggested that Mr Marubelela put aside money and seek out property advice.

Mr Maluleke responded to Ms Fester’s submission and stated that small businesses needed to benefit from government contracts such as the Koeberg expansion project. He noted that the DTI application forms need to be made more user-friendly.

Ms Chalmers referred to the struggle of small businesses to keep pace with bigger, more established businesses, noting that this dilemma was not unique to the tourism industry. While DEAT could commit to offer greater support to small businesses, the challenge of big versus small business could not be eradicated.

Thabiso (Zibonele Tours) agreed and suggested that SMMEs needed assistance in generating capacity.

Sam (Sam’s Cultural Tours) suggested that SMMEs were affected by certain corrupt practices exercised by hotels and operators that amounted to a disproportionate amount of business going to operators who could afford to pay a ‘levy’ to hotels in exchange for the business. He cited one example whereby twelve coaches of German tourists were placed with one white-owned tour company. This deal was brokered by government, which runs contrary to BEE.

The Chairperson noted the disadvantage of such a big ruling party in that it is not possible to attend to all interest groups. The SMMEs were encouraged to organise themselves into an association which could approach government as a united front that could not be ignored. The Chair emphasised that as Parliament the aim was to encourage shared growth.

Mr Shah suggested that South Africans needed to have confidence in their own product before expecting foreigners to exercise product loyalty. He suggested that government help SMMEs establish a strategic partnership with big business.

The Chairperson expressed his gratitude to all those who had made submissions and assured them that their concerns have been heard. In summary the following matters would be included in the Committee’s report:
- Monitoring of implementation needs to be improved
- State procurement contracts need to consider SMMEs
- There is a need for workshops to facilitate candid interaction between all stakeholders
- Government has a role in helping SMMEs expand
- Opportunities for interaction with diplomatic offices need to be accessed
- Problems with DTI need to be addressed
- Further reflection is needed as regards the challenge of breaking into the market
- Problems of bureaucracy need to be addressed, forms are too cumbersome and complicated.

These concerns would be detailed in a Committee report which would then be taken to the House. Once adopted by the House it would be referred to the Minister. The Minister would then engage with the recommendations in the report. The Chairperson assured the presenters that their time and effort had not been in vain.

The meeting was adjourned.