1st Free State SMS Conference

1
1st Free State SMS Conference 12 August,
2005 TOURISM OUR NEW GOLD Standard Bank,
Business Day 2004
2
Decision Points

• Tweaking of business model
• COO Administration, Human Resource, IT, Systems
  Integration
• Domestic/SADC To be together similar segments
• PR and Communication move to COE
• E- business move to COE
• Strategic Relations Stakeholder management
• Guest Relations to become Experience Delivery
  Domestic
• 2. Approval of targets
• Review of 2004/5 targets
• Approval of 2005/6 targets
• Approval of Exhibition Strategy
• Maintain a small presence at WTM, ITB and do
  road-shows with industry.

3
Our Business and Marketing Foundation has
clear lineage from and to A better life for all
South Africans
The Tourism Acts mandate to SA Tourism is ...
Sustainable GDP Growth
Sustainable job creation
Redistribution and transformation
Increase in tourist volume
Increase in tourist spend
Increase length of stay
. . . through six key objectives . . .
Improve geographic spread
Improve seasonality patterns
Promote transformation
Understand the market
Choose the attractive segments
Market the Destination
. . . by acting in a focused way to . . .
Facilitate the removal of obstacles
Monitor and learn from tourist experience
Facilitate the product platform
4
This project is about developing a focused,
customer-facing international marketing strategy
Customers
- Who?
Marketing
Who do we organise against to win, and how?
- Where?
- What?
- When?
- How?
5
which forms part of a broader international
tourism strategy
International Tourism Strategy
Customers
Products
Investment ProductDevelopment
- Who?
Marketing
Who do we organise against to win, and how?
- Where?
- What?
- When?
- How?
Channels
Access - Visas - Flights - Channels
6
in combination with South Africas overall
strategy for tourism
Domestic Tourism
International Tourism Strategy
Domestic Tourism Base-load
Customers
Products
Investment ProductDevelopment
- Who?
Marketing
Who do we organise against to win, and how?
- Where?
- What?
- When?
- How?
Channels
Access - Visas - Flights - Channels
7
This approach means a shift away from the
traditional approach to tourism marketing
From
SAs tourism products
Decide where to sell the products
Sell to the consumer / channel
Product Driven
to
Execute on marketing
Develop the products
Understand the consumer/ channel
Customer-Focused
8
We understand the Global Environment

• 2001-2003 Difficult period for global tourism
• Recession in Germany, Japan, USA
• Terrorism Globally
• War in Afganistan and Iraq
• Epidemics - SARS
• 2001, 2002 Global tourism growth negative
• During this period we have some positives
• Low cost airlines
• Forward integration
• Implementation of new technologies Internet
• Strengthening of partnerships between private and
  public sector
• 2. 2001-2004 Grew by 6.2 above world average
• Benefit from 9/11
• Favourable currency exchange
• USA/UK seasonality campaigns with SAA
• Partnership with Industry all our markets
• The neutral stand of Government during the crisis

9
South Africa has performed well in terms of
continued growth in arrivals especially in the
face of recent macro challenges
Foreign Tourist Arrivals to South Africa (1998 -
2003)
Source SAT Arrival Statistics, 2003
10
Our Marketing Ambition is clearly defined MTSF
2005-2010

• Tourism Growth Strategy (Ambition above business
  plan)
• Ten million arrivals by 2010, fulfilling the
  revenue, seasonality, distribution, length of
  stay and transformation requirements of the South
  African tourism industry
• Visitors strategy amount, visits strategy
  frequency
• Internal Global Competitiveness and Belief
• Build robust domestic travel culture
• Brand (The break that breaks new ground
  Functional / Emotional Matrix)
• The most preferred Tourism Brand 2014, as
  defined by beating all other destinations in its
  proximate competitive set in the statistical view
  of the majority of our chosen target segments in
  each of our chosen target countries
• Proposition Clarity Value vs Price
• Capability (The Best Tourism Marketing
  Organization)- 2010
• The best Tourism Marketing Organization, as
  decided by the Annual Tourism Awards Committee of
  the World Tourism Organization, and as attested
  to by the most credible award committees in our
  chosen target countries
• Operational Effectiveness A bias for
  analytics-driven action

11
SA Tourism portfolio 2005 - 2009
12
New logo here
13
Our commitment in 2004/5

• Increase the arrivals by 1.7
• Increase spent by 10
• Improve geographic spread
• Allocate 40 of our budget to BEE 3 Agencies,
  Kagiso, Monitoring, ETEYA smme 50
• For the first time to shoot audio visual material
  IMAX 3D movie
• Staff Training Learning SA Tourism Way
• World class procedures and systems
  ISO,GMS,DNA,CC,MIS
• Global Competitiveness Study Phase I, Phase II
• Corporate Governance Best Company to work for,
  Clean Audit

14
Year on year arrivals by portfolio Total
arrivals
Arrivals (thousands)
15
Total value captured by portfolio
The loss in value captured was driven off the
Africa Middle East portfolio. All other
portfolios saw an increase in value captured in
Q3 2004 compared to Q3 2003.
16
Total foreign direct spend in SA Q3 2004
The effect of the strengthening of the Rand
against major currencies of the world accounted
for approximately R600 million of the loss in
value captured in Q3 2004.
Note Q3 2004 was corrected to Q3 2003 currency
levels.
17
Length of stay all tourists

• The most common length of stay of all tourists in
  Q3 2004 remained constant.
• The number of nights spent by holiday tourists
  increased
• The number of nights spent by VFR tourists
  decreased

18
Provincial distribution - visitors
There was an increase in the number of visitors
to Gauteng, KwaZulu-Natal and Northern Cape.
of tourists
19
Provincial distribution - bednights
There was a decrease in the number of bednights
spent in all provinces with the exception of
Mpumalanga
Number of bednights
20
By the end of 2004/5 we will have worked our way
through most of the core of the portfolio to
understand consumers we were not seeing
United Kingdom
Germany
Netherlands
France
Italy
China
J
Japan
India
United States
MICE
Nigeria
Australia
Kenya
SADC
Researched Portfolio Market
Un-researched Portfolio Market
21
What does Free State need to do.

• Leadership and champion for tourism development
• Tourism marketing authority that is well
  resourced
• Skilled management to drive this industry
• Product development and re-investment
• Transformation and Empowerment
• Free State needs to do SOMETHING - plan

22
(No Transcript)
23
Cinema60 Second
24
(No Transcript)
25
Our Industry Faces serious Challenges

• Restrictions to travel globally- Immigration,
  educational, visa, Advisories
• Our industry must learn to coexist with crises
  9/11, Tsunami, SARS
• Internet has revolutionize travel Last minute
  booking, price transparency
• Unstable currency exchange
• Transformation and empowerment
• Uncompetitive Firms
• Budget to meet the competition pound for pound
• Our ability to communicate value and not
  price/cost
• Focus on domestic marketing
• OUR BIGGEST CHALLENGE !!!!!!!!!
• IS TO MATCH OUR COMPETITION RAND FOR RAND 1
  BILLION

26
To become globally competitive as a destination,
South Africa would need to forge and manage
strategic alignment in the industry and sector
Global Competitors
Global Demand
Domestic Demand
Consumer Goals
Strategic Context
Supporting Industries
National Goals
Competing Operators
Competing Product Owners
27
Our Business Model is Robust Needs Tweaking to
improve efficiency and effectivenessOverall
Leadership and Accounting Officer - Ceo

• 1. Business Results Delivery
• Portfolio Managers
• General Management
• Marketing Operations
• Africa Air Tumaini Leshoai
• Americas UK Claude Pretorius
• Asia Zolelwa Mukhozho
• Europe Mzwakhe Msimanga
• Domestic and SADC Roshene Singh

• 3. Support Functions
• Company operations day to day COO
• Human resource Development
• Information and technology
• Company Administration
• Systems Integration
• Market Intelligent research Research -CRO
• Company Finance CFO
• 2. Subject-matter Excellence
• Company marketing - CMO
• COE, 5xPortfolios, 10x Country offices
• Global Managers
• Subject-matter Models
• Global Strategy
• Non-Commercial Comms Tholoana Qhobela

28
Capability Model

• Understand Market
• Management
• Research
• Analysis
• Synthesis
• Strat. Dev, Planning and integration
• Choose our segments
• Leadership
• Communication
• Action
• Market Destination
• Relationship management
• Campaign management
• Communication and PR
• E-business/internet

29
Capabilities Cont.

• Unblocking
• Relationship and stakeholder management
• Communication
• Learn and monitor
• Research
• Communication
• Analysis
• Competencies
• Analytical orientation
• Relationship and stakeholder management
• Communication
• Project management
• Action Implementation
• Leadership

30
Proposal Exhibition Strategy
1. We want certain travel agents and tour
operators (i.e. those selling to the segments we
are targeting) in the UK Germany to sell South
Africa.

• We want to expose these selected outbound
  operators to certain product owners in South
  Africa that offers the products that would appeal
  to the segments we are targeting. However, we
  also want to expose them to quality HDI
  operators.
• We also want to expose the selected product
  owners in South Africa to selected outbound
  operators who can give their undivided attention
  to the South African operators (no competition
  with other destinations such as at WTM).

• We want to equip the identified outbound
  operators with the right toolkits to sell South
  Africa easily.
• We want to incentivise the actual sales persons
  in the outbound operators to sell South Africa,
  however we also want the detail of the tourists
  to whom these outbound operators have sold.
• We want the selected South African operators to
  meet the overseas outbound operators in a highly
  slick environment.

31
If we have done WTM 2005 and ITB 2006 with a new
stand?

• We have to pay 50 of the new European stand in
  year 1. Kagisos quote over 3 years amounts to R
  21 million.

• Based on the cost incurred we incurred in the
  2003/4 financial year and assuming that we build
  a new stand and have a 8 currency depreciation
  over the 2003/4 financial year, the total cost
  for WTM 2004 and ITB 2005 will be R 15,6 million.

• However, having the stand wouldnt really meet
  our objectives as
• A stand is not an ideal environment to do
  business
• A lot of WTM is around the strengthening of
  existing relationships between SA inbound and
  overseas outbound operators
• SA Tourisms ROI per se is questionable/low

32
So whats the alternative?

• SA Tourism creates a project where we take, over
  2 identified periods (that fits with the buying
  cycles in markets) say 200 identified SA product
  owners to a venue(s) in the UK and Germany (our 2
  most important markets) to meet selected outbound
  operators in the UK and Germany where they can do
  quality business in a slick environment. At the
  same time,

• We can ensure that we take the SA product owners
  that offers the products that would appeal to the
  segments we are targeting
• We can ensure the participation of identified
  quality HDI operators
• We dont compete with other destinations
• We can equip the identified outbound operators
  with the right toolkits to sell South Africa
  easily
• We can announce a well-thought-out incentive
  scheme for the actual sales persons in the
  outbound operators who sell South Africa
• We can ensure that we obtain the detail of the
  tourists to whom these outbound operators have
  sold (in exchange for our incentives

33
But that is not the best part of it

• If we for example take
• 2 batches of 200 identified South African product
  owners to 2 cities in the UK (London
  Manchester) and 2 cities in Germany respectively
  over periods of 3 days each, and

• we book (and pay for) consultation and meeting
  rooms as well as accommodation in a cutting
  edge hotel, and
• we issue outbound operators with the right
  toolkits during these trips
• we can, through negotiations with the hotels and
  airlines ensure optimum returns for not more than
  R 10 million in total (detail costing has been
  done), which represents a saving of more than R
  5,6 million (or 36) on exhibiting at WTM 2005
  and ITB 2006

34
So what would the typical flow of activities be?
(in chronological order)

• Inform the trade of our new strategy and the
  reasons why (now)
• Identify visiting periods in 4 overseas cities in
  the UK Germany (Feb05 CMO SRU)
• Negotiations with airlines and hotels (Feb05 -
  Fin)

• Identify the overseas outbound operators we want
  there (Feb05 TRMs)
• Do RFP for South African product owners (Feb05
  Admin)
• Selection process of inbound operators to go with
  (by SAT) (Mar05 CMO PMs)
• Set up electronic booking facility for meetings
  (Mar05 MEB)
• Brief agencies, produce ship toolkits (Mar
  Apr05 CMO agencies)
• Finalise incentive scheme (May05 CMO)
• Have the actual sessions in-market (whenever
  selected)
• Post mortem (after event SRU)

35
The Research and E- Business Report

• TARGETS Review and all the reasons for it
• The annual targets for South African Tourism are
  calculated from the latest annual arrival
  statistics to South Africa available. Due to the
  long business planning cycle we have to set
  target more than one year ahead without complete
  sets of the most up-to-date statistics.
• The second annual set of targets (for 2005) are
  based on a complete set of 2003 data and were set
  in early 2004. The targets were calculated using
  a regression model and factors in marketing
  effort in core markets (for example budget,
  accessibility etc). At this stage, data for three
  out of four quarters of 2004 are now available
  and therefore it is necessary to revise the 2005
  targets using the latest available data before
  setting the 2006 targets.
• The 2006 targets are based on a complete set of
  2003 data and an incomplete set of 2004 data. The
  2006 targets will need to be revised at the
  beginning of 2006 using the latest 2005 data
  available. The 2007 targets will then be based on
  a complete set of 2004 data and an incomplete set
  of 2005 data. The 2007 targets will need to be
  revised at the beginning of 2007 using the latest
  2006 data available.
•  
• This process will continue until such time as the
  release of arrivals statistics gets closer to
  real time, as currently there is more than a
  three-month lag on the release of these
  statistics.

36
The Human Resource Report

• High level activity report and key issues
• Key vacancies ( CM UK, Marketing Communications
  Manager UK and USA, MICE Manager USA)
• Key positions filled ( PM Americas UK, CMs
  USA, Australia, India, Communications GM,
  Marketing and advertising Manager)
• 3rd group of the Learning Program (Marketing
  Foundation) completed foundation 2, more roll-
  out in April and the new financial year
• Job Grading,Benchmarking and etc completed for HQ
  and SA based packages, international offices will
  be submitted for Board approval in the next
  meeting
• Moving towards the Best Co. to work for (moved 66
  places to nr 46 from 112)
• Looking into capability alignment to help support
  marketing efforts
• Focusing on Talent Management ( integrated
  process of attraction through to retention)

37
Transformation Empowerment Report

• Designation of TE Manager has now been re-graded
  (maximum package now R 412k per annum)
• Three head-hunting firms are in the process of
  identifying suitable candidates
• Up till end Dec 2004 SA Tourism has procured
  R101,9mil in goods and services from HDI
  suppliers. This means that SA Tourism will for
  the first time meet its 40 HDI procurement
  target ( on expenditure within SA)
• Detailed HDI procurement report for December 2004
  quarter attached

38
The Corporate Governance Report

• From a risk management point of view, there are
  no significant risks for the organisation in
  terms of
• Currency risk (budgeted rates were more liberal
  than actual rates)
• Legal risk (litigation against or by the
  organisation)
• Expenditure risk (indications are that we will
  spend our entire approved budget)
• Operational risk (all major projects executed as
  planned)
• Going-concern risk (sufficient funding is
  available to fund operations)
• From a financial reporting point of view,
• Expenditure is on track (budget for 1st 9 months
  was R 335,5 million actual expenditure was R
  330,4 million)
• Sufficient cash flow will be available to fund
  operations for the last 3 months
• Up till end Dec 2004 SA Tourism has procured
  R101,9mil in goods and services from HDI
  suppliers. This means that SA Tourism will for
  the first time meet its 40 HDI procurement
  target ( on expenditure within SA)

39
Decision Points

• Tweaking of business model
• COO Administration, Human Resource, IT, Systems
  Integration
• Domestic/SADC To be together similar segments
• PR and Communication move to COE
• E- business move to COE
• Strategic Relations Stakeholder management
• Guest Relations to become Experience Delivery
  Domestic
• 2. Approval of targets
• Review of 2004/5 targets
• Approval of 2005/6 targets
• Approval of Exhibition Strategy
• Maintain a small presence at WTM, ITB and do
  road-shows with industry.

40
The Stakeholder Report

• Bi-lateral with DEAT GCP and Transformation
• Bilateral with SAA R30 million
• Bi-lateral with SANParks
• Bilateral with Tourvest
• Bilateral with Virgin and Southern Suns
• Parliament Annual Report, MTSF 2005-2010
• Minister and all other parastatals 2005/6
  planning
• SATSA Transformation
• MINMEC
• IDC GCP
• PIC Transformation and GCP
• Consultations with CHE, Umalusi
• UPCOMING
• Opening of parliament
• Budget Speech
• Heads of Mission

41
We have defined the Fifteen Marketing Levers to
achieve our Marketing Ambition
Recruitment The Target
Experience Delivery The Guest
Leveraging The Ambassador
Phase Audience Value Chain Strategy
Focus

• Create
• Demand
• Sources of volume
• Ensure last yrs base volume
• 2. Deliver
• incremental
• growth volume
• 3. Open future
• Volume market

Fulfill Demand Delivery Mechanics 4. Response
mechanics for information 5. Sales
mechanics for sales conversion 6. Barrier
removal
In- bound
In- market Experience Engineering 7. Product
delivery against Experience Promised in the
Recruitment Phase 8. Developing internal
and external Capability to deliver the experience
Ambassador Relationship Leverage 9.
Leverage Positivity for both base and
incremental volume delivery
Out- bound
Fundamentals that underpin all Marketing Efforts
10. Message Management 11. Brand Consistency
12. Performance Management 13. Forward
Planning 14. Marketing Asset Leveraging 15.
Capability Development
42
We have defined the Marketing Metrics by which
the impact of our marketing will be measured
Recruitment The Target
Experience Delivery The Guest
Leveraging The Ambassador
Phase Audience Value Chain Measurement

• Create
• Demand
• Reach, Frequency
• Creative Impact
• 1. Segments size
• 2. Top of mind
• Awareness
• 3. Response
• seeking info
• conversion
• Hits per info
• bearer

Fulfill Demand Market Share 4. SA Arrivals as
of Total Long Haul Outbound 5. SA
Arrivals as of Seeking Info 6. SA Arrival
as of Segments 7. Target channel
that sell SA
Ambassador Convertible Relationships 11.
Experience Recall 12.Intention to Repeat Visit
13. Will Recommend to a Fresh Friend
In- bound

• In-
• market
• Consumer Satisfaction
• 8. Performance
• 9. Personality
• Top 2 Box
• Pax vs Market Need Audit
• 10. Satisfaction
• 1st Timers
• Repeaters
• Pre, During and Post visit

Out- bound
14. Origination 15. Efficient and
Effective Management Administration Brand
Health Governance and Fiscal Discipline and
Prudence 1. Personality - Calculate
Brand Equity 1. On-schedule Plan Execution
(Projects Planning) 2. Performance -
Calculate Brand Value 2. Unqualified
Audit 3. Satisfaction 3. Revenue
generation from Marketing Assets Employed
43
Fifteen Marketing Prioritiesfor delivery in
Fiscal 2005/6
Recruitment The Target
Experience Delivery The Guest
Leveraging The Ambassador
Phase Audience Value Chain Strategy
Focus
Create Demand Sources of volume 1. Deliver
Country Plans per Board
decision 10/04 2. Increase SADC, Domestic
arrivals by 700 000 3. Open China
viaIndaba_at_Chin
Fulfill Demand Delivery Mechanics 4.
Implement Response CRM Program 5.
Implement Sales Conversion CRM 6.
Implement Opinion Leader WOM campaign

Ambassador Relationship Leverage 9. Recall,
Repeat Purchase and Recommend to a Fresh Friend
CRM Program
In- bound
In- market Experience Engineering 7. Develop
Experience Itineraries for all markets 8. The
South African Experience Training Academy
Out- bound
Fundamentals that underpin all Marketing Efforts
10. Presentation Toolkits 11. 2 x Ads, Imax, FB,
Identity Manual, DnA 12. Performance Man. 13.
2006/7 Planning 14. Footage, Imax 15. Learning
Program
44
We have allocated Budget to each of the Fifteen
Marketing Projects for Fiscal 2005/6
Recruitment The Target
Experience Delivery The Guest
Leveraging The Ambassador
Phase Audience Value Chain Strategy
Focus
Create Demand Sources of volume 1. Country
Plans R350 000 000 2.SADC,Domesti R23
000 000 3.Indaba_at_China R 6 215 000
Fulfill Demand Delivery Mechanics 4. Response
CRM R7 000 000 5. Sales Conversion CRM
R 5 000 000 6. WOM campaign R 1 000 000
Ambassador Relationship Leverage 9. Recall,
Repeat Purchase and Recommend to a Fresh Friend
CRM Program R 3 000 000
Travel in
Visitor Experience Experience Engineering 7.
Experience Itineraries R 500 000 8. The South
African Experience Training Academy R 2 000 000
Travel Out
Fundamentals that underpin all Marketing Efforts
10. Pres. Toolkits R 3 000 000 11. Brand Toolkits
R 10 000 000 12. Performance Management R46
million 13. 2006/7 Planning R 1 000 000 14.
Assets R 6 251 000 15. Learning Program R3 000
000
45
WORLD CLASS TOURISM DESTINATION OF CHOICE 2014