sms conference

Slide1 : 1st Free State SMS Conference 12 August, 2005 “TOURISM OUR NEW GOLD” Standard Bank, Business Day 2004


Decision Points: : 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.


Slide3 : Our Business and Marketing Foundation has clear lineage from and to ‘A better life for all South Africans’ The Tourism Act’s mandate to SA Tourism is ... . . . through six key objectives . . . . . . by acting in a focused way to . . .


This project is about developing a focused, customer-facing international marketing strategy… : This project is about developing a focused, customer-facing international marketing strategy… Customers Who do we organise against to win, and how? - Who? - Where? - What? - When? - How? Marketing


… which forms part of a broader international tourism strategy… : … which forms part of a broader international tourism strategy… Investment Product Development Products Customers Who do we organise against to win, and how? - Who? - Where? - What? - When? - How? Access - Visas - Flights - Channels Marketing Channels


… in combination with South Africa’s overall strategy for tourism : … in combination with South Africa’s overall strategy for tourism Investment Product Development Products Customers Domestic Tourism Base-load Who do we organise against to win, and how? - Who? - Where? - What? - When? - How? Access - Visas - Flights - Channels Marketing Channels


This approach means a shift away from the traditional approach to tourism marketing : This approach means a shift away from the traditional approach to tourism marketing Product Driven Customer-Focused to From


We understand the Global Environment : 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 The change in the perception of crime worldwide More focused SA Tourism


South Africa has performed well in terms of continued growth in arrivals – especially in the face of recent macro challenges : 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


Our Marketing Ambition is clearly defined MTSF 2005-2010 : 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


SA Tourism portfolio 2005 - 2009 : SA Tourism portfolio 2005 - 2009


Slide12 : New logo here


Our commitment in 2004/5 : 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,DN’A,CC,MIS Global Competitiveness Study – Phase I, Phase II Corporate Governance – Best Company to work for, Clean Audit


Year on year arrivals by portfolio – Total arrivals : Year on year arrivals by portfolio – Total arrivals Arrivals (thousands)


Total value captured by portfolio : 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.


Total foreign direct spend in SA – Q3 2004 : 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.


Length of stay – all tourists : 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


Provincial distribution - visitors : Provincial distribution - visitors There was an increase in the number of visitors to Gauteng, KwaZulu-Natal and Northern Cape. % of tourists


Provincial distribution - bednights : Provincial distribution - bednights There was a decrease in the number of bednights spent in all provinces with the exception of Mpumalanga Number of bednights


Slide20 : 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 Researched Portfolio Market Un-researched Portfolio Market United States United Kingdom Germany Netherlands France Italy China J India Australia Kenya SADC Nigeria MICE Japan


What does Free State need to do. : 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


Cinema60 Second : Cinema 60 Second


Our Industry Faces serious Challenges : 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


To become globally competitive as a destination, South Africa would need to forge and manage strategic alignment in the industry and sector : Strategic Context To become globally competitive as a destination, South Africa would need to forge and manage strategic alignment in the industry and sector


Our Business Model is Robust – Needs Tweaking to improve efficiency and effectivenessOverall Leadership and Accounting Officer - Ceo : Our Business Model is Robust – Needs Tweaking to improve efficiency and effectiveness Overall 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 Commercial Comms Jerry Mpufane Channel Management Evy Mahlaba CRM and E-Business Fiona Buchner Business Tourism Rick Taylor


Capability Model : 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


Capabilities Cont……. : 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 Negotiation RECRUIT RETRAIN INTERNSHIP PROGRAMME


Slide30 : 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.


Slide31 : 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. Kagiso’s 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 wouldn’t 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 Tourism’s ROI per se is questionable/low


Slide32 : So what’s 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 don’t 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


Slide33 : 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


Slide34 : 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 (Feb’05 – CMO & SRU) Negotiations with airlines and hotels (Feb’05 - Fin) Identify the overseas outbound operators we want there (Feb’05 – TRM’s) Do RFP for South African product owners (Feb’05 – Admin) Selection process of inbound operators to go with (by SAT) (Mar’05 – CMO & PM’s) Set up electronic booking facility for meetings (Mar’05 – MEB) Brief agencies, produce & ship toolkits (Mar – Apr’05 – CMO & agencies) Finalise incentive scheme (May’05 – CMO) Have the actual sessions in-market (whenever selected) Post mortem (after event – SRU)


The Research and E- Business Report : 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.


The Human Resource Report : 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)


Transformation & Empowerment Report : Transformation & Empowerment Report Designation of T&E 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


The Corporate Governance Report : 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)


Decision Points: : 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.


The Stakeholder Report : 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 Australia AIME


Slide41 : We have defined the Fifteen Marketing Levers to achieve our Marketing Ambition Phase Audience Value Chain Strategy Focus Fundamentals that underpin all Marketing Efforts Recruitment The Target Experience Delivery The Guest Leveraging The Ambassador 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 Out- bound ‘Ambassador’ Relationship Leverage 9. Leverage Positivity for both base and incremental volume delivery 10. Message Management 11. Brand Consistency 12. Performance Management 13. Forward Planning 14. Marketing Asset Leveraging 15. Capability Development


Slide42 : We have defined the Marketing Metrics by which the impact of our marketing will be measured Phase Audience Value Chain Measurement 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 Recruitment The Target Experience Delivery The Guest Leveraging The Ambassador 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 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 ‘Ambassador’ Convertible Relationships 11. Experience Recall 12.Intention to Repeat Visit 13. Will Recommend to a Fresh Friend


Slide43 : Fifteen Marketing Priorities for delivery in Fiscal 2005/6 Phase Audience Value Chain Strategy Focus Fundamentals that underpin all Marketing Efforts Recruitment The Target Experience Delivery The Guest Leveraging The Ambassador 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@Chin Fulfill Demand Delivery Mechanics 4. Implement Response CRM Program 5. Implement Sales Conversion CRM 6. Implement Opinion Leader WOM campaign In- bound In- market Experience Engineering 7. Develop Experience Itineraries for all markets 8. The South African Experience Training Academy Out- bound ‘Ambassador’ Relationship Leverage 9. Recall, Repeat Purchase and Recommend to a Fresh Friend CRM Program 10. Presentation Toolkits 11. 2 x Ads, Imax, F&B, Identity Manual, DnA 12. Performance Man. 13. 2006/7 Planning 14. Footage, Imax 15. Learning Program


Slide44 : We have allocated Budget to each of the Fifteen Marketing Projects for Fiscal 2005/6 Phase Audience Value Chain Strategy Focus Fundamentals that underpin all Marketing Efforts Recruitment The Target Experience Delivery The Guest Leveraging The Ambassador Create Demand Sources of volume 1. Country Plans R350 000 000 2.SADC,Domesti R23 000 000 3.Indaba@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 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 ‘Ambassador’ Relationship Leverage 9. Recall, Repeat Purchase and Recommend to a Fresh Friend CRM Program R 3 000 000 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


Slide45 : WORLD CLASS TOURISM DESTINATION OF CHOICE 2014