Baseline Study on the State of Transformation in the Tourism Sector

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1 T013 Baseline Study on the State of Transformation in the Tourism Sector Presented by: Chanel du Plessis Urban-Econ Development Economists Date: 30 October 2017

2 Overview Study Objective Methodology Description of overall sample Summaries per Code Element BEE certification Perceived benefits of BEE Constraints in the Tourism Sector Opportunities in the Tourism Sector

3 Objective of this study A new baseline study was conducted to establish the current state of transformation in the sector; The research will set a baseline for the amended code; The research provides recommendations to inform the Council s plans to rapidly advance the course of transformation in the tourism sector; The results of the study will be shared once the research is complete; The results of the baseline study will inform the development of the transformation strategy.

4 Methodology

5 Overview of the Sample

6 Sample Frame Design

7 Over-all sample: Sub-sectors & Band Threshold Sample Distribution (1152 (n)) 43% (495(n)) 37% (426(n)) (230(n)) Band 1 EMEs Band 2 QSEs Band 3 LEs

8 Over-all sample: Sub-sectors & Band Sub-Sector Sample Distribution 46% (530 (n)) 27% (311 (n)) 27% (311 (n)) Accommodation Hospitality Travel

9 Threshold per sub-sector Sample Distribution 7% 5% 15% 13% 6% 18% 17% 9% Accommodation Hospitality Travel Band 1 Band 2 Band 3

10 Over-all sample: Province 7% (77(n)) 5% (61(n)) (230 (n)) (115(n)) 7% (77(n)) 6% (69(n)) 15% (177(n)) (115 (n)) (230(n))

11 Study Results per Code Element

12 Tourism B-BBEE Code Elements Code 1: Ownership Code 2: Management Control Code 3: Skills Development Code 4: Enterprise and Supplier Development Code 5: Socio-Economic Development

13 Ownership Ownership Scorecard LE COMPLIANCE TARGETS QSE Black Black People Female Exercisable Voting Rights in the entity in the hands of Black People 15% INDICATOR MEASUREMENT CATEGORY AND CRITERIA Voting Rights Economic Interest in the entity to which Black People are entitled 15% Economic Interest Economic Interest of any of the following Black Natural Persons in the measured entity: Black Designated Groups; Black Participants in Employee Share Ownership Programmes; Black People in Broad-Based Ownership Schemes; Black Participants in Co-operatives. Black New Entrants 3%

14 Ownership Ownership Targets Achieved by Sub-sector Black Ownership 43% 39% 33% 32% 27% 27% 16% 12% 13% Voting rights () Economic Interest () Black New Entrants () Accommodation Hospitality Travel

15 Ownership Advancement of Black Women in Ownership by Sub-sector Black Female Ownership 32% 23% 16% 14% 11% 13% 2% 5% 5% Voting rights (15%) Economic Interest (15%) Black New Entrants () Accommodation Hospitality Travel

16 Ownership Ownership Targets Achieved by Band Black People (BP) & Black Females (BF) % 48% Voting rights BP (+) 15% 22% 34% Voting rights BF (15%+) 26% 41% Economic Interest BP (+) 12% 9% 19% Economic Interest BF (15%+) 4% 3% 7% Black New Entrants () Band 1 Band 2 Band 3 Band 3 is doing best in achieving the ownership targets

17 Ownership Ownership Targets Achieved by Province % 25% 31% 31% 39% 37% 33% 43% 35% 46% 37% 48% 39% 51% 44% 56% 39% 8% 11% 12% 7% 11% 16% 14% 13% WC FS EC NW Gauteng NC KZN MP Lim Voting rights BP (+) Economic Interest BP (+) Black New Entrants ()

18 Management Control Management Control Scorecard INDICATOR MEASUREMENT CATEGORY AND CRITERIA LE COMPLIANCE TARGETS Black People Black Female Exercisable Voting Rights of Black Board Members Board as a percentage of all Board Members 5 Participation Black Executive Directors as a percentage of all Executive Director 5 Other Executive Black Executive Management as a percentage of all Management other Executive Management 6 Senior Black Employees in Senior Management as a Management percentage of all Senior Management 6 Middle Black Employees in Middle Management as a Management percentage of all Middle Management 75% 38% Junior Black Employees in Junior Management as a Management percentage of all Junior Management 8 Black Employees with Disabilities as a percentage of 1% Employees with all Employees 2% Bonus Disabilities Point QSE

19 Management Control Management Control Targets Achieved by Sub-sector % 29% 21% Board Members (5+) 38% 37% 32% 26% 28% 25% 24% 21% 15% 16% 17% 13% 14% 9% 11% 7% 3% ExecDir (5+) ExecMan (5+) SnrMan (6+) MidMan (75%+) JnrMan (8+) Disabled (2%+) Accommodation Hospitality Travel

20 Management Control Advancement of Black Women in Management Control by Sub-sector % 15% 16% 17% 8% 8% 11% 6% 6% 7% 8% 8% 9% 11% 6% 7% 8% Board Members (+) ExecDir (+) ExecMan (+) SnrMan (+) MidMan (38%+) Accommodation Hospitality Travel JnrMan (8+) 1% 1% 1% Disabled (2%+) The Hospitality Sector is out-performing all other sub-sectors in promoting management control amongst Black women Overall achievement is still lower for females than their male counterparts

21 Management Control Management Control Targets Achieved by Band 9 Black Management Control % 29% 25% Board Members (5+) 22% 18% 18% 13% ExecDir (5+) ExecMan (5+) 24% 24% 27% 26% 15% 17% SnrMan (6+) MidMan (75%+) 17% 15% 11% JnrMan (8+) 4% 3% 22% Disabled (2%+) Band 1 Band 2 Band 3

22 Management Control Advancement of Black Women in Management Control by Band Black Female Management Control % 11% 9% 11% 7% 7% 5% 7% 5% 7% Board Members (+) ExecDir (+) ExecMan (+) SnrMan (+) 16% 12% 14% MidMan (38+) 12% 9% 9% 1% 2% JnrMan (+) Disabled (2%+) Band 1 Band 2 Band 3

23 Skills Development Skills Development Scorecard INDICATOR MEASUREMENT CATEGORY AND CRITERIA LE COMPLIANCE TARGETS QSE Skills Development Expenditure on any programme specified in the Learning Programme Matrix for Black People as a percentage of the Leviable Amount Learnerships, Apprenticeships, and Internships Skills Development Expenditure on Learning Programmes specified in the Learning Programme Matrix for Black People in any of the following three tourism sub-sectors as a percentage of Leviable Amount: Accommodation; Hospitality and related services; Travel and related services. Skills Development Expenditure on Learning Programmes specified in the Learning Programme Matrix for Black People with Disabilities in any of the above three tourism sub-sectors as a percentage of Leviable Amount. Number of Black Employees participating in Learnerships, Apprenticeships and Internships paid for by the measured entity as a percentage of total Employees. Number of Black Unemployed Learners participating in Learnerships, Apprenticeships and Internships paid for by the measured entity as a percentage of number of total Employees. Number of Black People absorbed by the measured entity and industry at the end of the Learnerships Programme. 6% 3% 0.3% 3.5% 2.5% 3%

24 Skills Development Large Enterprises targets reached for Skills Development % 13% 9% 8% 9% 11% 6% 7% Skills Dev Exp BP(6%) Skills Dev Exp Disabled (0.3%) Learnership Exp Black Empl (3.5%) 3% 5% 6% 1% 1% 3% Learnership Exp Black Unemploued (3%) Accommodation Hospitality Travel Learnership Absorption rate ()

25 Skills Development Qualifying Small Enterprises targets reached for Skills Development % 8% 9% 4% 6% Skills Dev Exp BP(3%) Learnership Exp Black Empl (2.5%) Accommodation Hospitality Travel 2% 3% 2% Learnership Absorption rate () Most QSE (Band 2) enterprises struggle to achieve the targets for skills development Only 2% are able to absorb of their learners into employment

26 Skills Development Skills Development by Band % 44% 22% 21% 11% 11% Skills Dev Exp BP(3%QSE, 6%LE) Learnership Exp Black Empl (2.5%QSE, 3.5%LE) 12% Learnership Exp Black Unemployed (3%) Band 1 Band 2 Band3 7% 5% 5% 9% Abs Band 3 is doing very well in skills development spending on their own employees

27 Enterprise and Supplier Development Enterprise and Supplier Development INDICATOR Preferential Procurement Supplier Development MEASUREMENT CATEGORY AND CRITERIA B-BBEE Procurement Spend from all Empowering Suppliers based on the B- BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend. B-BBEE Procurement Spend from all Empowering Suppliers that are Qualifying Small Enterprises based on the applicable B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend. B-BBEE Procurement Spend from all Exempted Micro Enterprises based on the applicable B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend. B-BBEE Procurement Spend from Empowering Suppliers that are at least 51% Black Owned based on the applicable B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend B-BBEE Procurement Spend from Empowering Suppliers that are Black Women Owned based on the applicable B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend Annual value of all qualifying Supplier Development contributions made by the measured entity as a percentage of the target. LE COMPLIANCE TARGETS QSE % 15% 12% 3% of NPAT 2% of NPAT Enterprise Development Annual value of all qualifying Enterprise Development contributions and Sector Specific Contributions made by the measured entity as a percentage of the target. 0.5% of NPAT 1% of NPAT

28 Enterprise and Supplier Development Enterprise and supplier development targets achieved by Large Enterprises Accommodation sub-sector is the best performer Travel sub-sector is investing in Enterprise Development 12% 13% 6% 6% 6% 8% 3% 1% 1% 1% 3% 4% 1% 1% 1% BEE Proc (8+) Proc Spend on QSE (15%+) Proc Spend on EME (15%+) Proc spend on 51% Black owned (+) Proc spend on BF owned (12%+) Accommodation Hospitality Travel Supplier Dev (3% of NPAT) Ent Dev (0.5% of NPAT)

29 Enterprise and Supplier Development Enterprise and supplier development targets achieved by Qualifying Small Enterprises % 1% 1% 1% BEE proc Spend (6+) Proc spend on 51% Black owned (+) 6% 6% 7% 7% 3% 3% Supplier Dev (2% of NPAT) Accommodation Hospitality Travel Ent Dev (1% of NPAT) A maximum of 7% of enterprises have achieved the targets Enterprises are doing better in Enterprise and Supplier Development than Procuring Black Owned Companies

30 Socio-Economic development Socio-Economic Development Scorecard MEASUREMENT CATEGORY AND CRITERIA Annual value of all Qualifying Socio-Economic Development contributions by the measured entity as a percentage of the target. Status as Tourism Marketing South Africa (TOMSA) levy collector. COMPLIANCE TARGETS 1% of NPAT Yes

31 Socio-Economic development Socio-economic Development Targets Achieved by Sub-sector % 45% 38% 27% 25% TOMSA levy collectors Ann. QSE Dev. Accommodation Hospitality Travel TOMSA levy collector registrations are equitably spread between the subsectors Almost 5 of the Accommodation and Travel sub-sectors have achieved the Annual Value of all Qualifying Socio-Economic Development Expenditure that exceed 1% of NPAT.

32 Socio-Economic development Socio-economic Development Targets Achieved by Band % 21% 22% 66% Band 1 Band 2 Band 3 TOMSA levy collectors Ann. QSE Dev. Band 3 is the main contributor to Socioeconomic Development Targets 56%

33 Socio-Economic development % of total TOMSA Levy Collectors by Province TOMSA Levy collectors percentage Enterprises % 31% 31% 36% 36% 38% 41% 48%

34 Compliance Acceleration

35 BEE Awareness and Certification Levels % 81% 56% 52% 54% Band 1 Band 2 Band 3 Aware Certified In Band 3, more than 8 of surveyed enterprises are both aware of BEE Codes and are BEE Certified Band 2 enterprises tend to be aware of the BEE codes, but not certified

36 % of total Perceived Benefits of BEE % 28% 34% 38% 48% Best benefits of BEE: Improved business image (48%) Attracts new customers (43%) Most do not agree that BEE attracts new Investors (72%)

37 Constraints in the Tourism Sector

38 Opportunities in the Tourism Sector

39 Thank you Presented by Urban-Econ Development Economists Tourism Research and Planning Unit Chanel du Plessis

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