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Tourism Tattler Trade Journal
FEBRUARY 2014
Contents Issue 02 (February) 2014 PUBLISHER Tourism Tattler (Pty) Ltd. PO Box 891, Umhlanga Rocks, 4320 KwaZulu-Natal, South Africa. Company Reg.No.: 2006/015252/07 Website: www.tourismtattler.com EXECUTIVE EDITOR Des Langkilde Tel: +27 (0)32 815 0414 Cell: +27 (0)82 374 7260 Fax: +27 (0)86 651 8080 E-mail: editor@tourismtattler.com Skype: tourismtattler
12
Business: Lions go digital - Unlocking Africa's internet potential
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EDITORIAL Cover Story - Africa's Potential Article Discussions BUSINESS The taxing problem of VAT invoices How to boost hotel room sales SATSA Market Intelligence Report Africa's internet potential for growth The trouble with travel distribution CONSERVATION No trade in rhino horn
Adv. Louis Nel David King
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Disclaimer: The Tourism Tattler is published by Tourism Tattler (Pty) Ltd and is the official trade journal of the Southern Africa Tourism Services Association (SATSA). The Tourism Tattler digital e-zine, is distributed free of charge to bona fide tourism stakeholders. Letters to the Editor are assumed intended for publication in whole or part and may therefore be used for such purpose. The information provided and opinions expressed in this publication are provided in good faith and do not necessarily represent the opinions of Tourism Tattler (Pty) Ltd, SATSA, its staff and its production suppliers. Advice provided herein should not be soley relied upon as each set of circumstances may differ. Professional advice should be sought in each instance. Neither Tourism Tattler (Pty) Ltd, SATSA, its staff and its production suppliers can be held legally liable in any way for damages of any kind whatsoever arising directly or indirectly from any facts or information provided or omitted in these pages or from any statements made or withheld or from supplied photographs or graphic images reproduced by the publication.
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Accreditation Official Travel Trade Journal and Media Partner to: The African Travel & Tourism Association (Atta) Tel: +44 20 7937 4408 • Email: info@atta.travel • Website: www.atta.travel Members in 22 African countries and 37 worldwide use Atta to: Network and collaborate with peers in African tourism; Grow their online presence with a branded profile; Ask and answer specialist questions and give advice; and Attend key industry events.
National Accommodation Association of South Africa (NAA-SA) Tel: +2786 186 2272 • Fax: +2786 225 9858 • Website: www.naa-sa.co.za The NAA-SA is a network of mainly smaller accommodation providers around South Africa – from B&Bs in country towns offering comfortable personal service to luxurious boutique city lodges with those extra special touches – you’re sure to find a suitable place, and at the same time feel confident that your stay at an NAA-SA member’s establishment will meet your requirements.
The Regional Tourism Organisation of Southern Africa (RETOSA) Tel: +2711 315 2420/1 • Fax: +2711 315 2422 • Website: www.retosa.co.za RETOSA is a Southern African Development Community (SADC) institution responsible for tourism growth and development. RETOSA’s aims are to increase tourist arrivals to the region through sustainable development, improved regional competitiveness, and effective destination marketing. RETOSA Member States are Angola, Botswana, DR Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe.
The Southern Africa Tourism Services Association (SATSA) Tel: +2786 127 2872 • Fax: +2711 886 755 • Website: www.satsa.com SATSA is a credibility accreditation body representing the private sector of the inbound tourism industry. SATSA members are Bonded thus providing a financial guarantee against advance deposits held in the event of the involuntary liquidation of a SATSA member. SATSA represents: Transport providers, Tour Operators, Destination Management Companies, Accommodation Suppliers, Tour Brokers, Adventure Tourism Providers, Business Tourism Providers and Allied Tourism Services providers.
Seychelles Hospitality & Tourism Association (SHTA) Tel: +248 432 5560 • Fax: +248 422 5718 • Website: www.shta.sc The Seychelles Hospitality and Tourism Association was created in 2002 when the Seychelles Hotel Association merged with the Seychelles Hotel and Guesthouse Association. SHTA’s primary focus is to unite all Seychelles industry stakeholders under one association in order to be better prepared to defend the interest of the industry and its sustainability as the pillar of the country’s economy.
The Green Expo - Sustain Our Planet. Sandton, Johannesburg - 10 - 12 April 2014 Tel: +27 (0)21 689 3262 • Email: info@thegreenexpo.co.za • Website: www.thegreenexpo.co.za Three City Events, organisers of The Green Expo, have noted the need for a generally accessible exhibition focusing on sustainability issues appealing to the homeowner as well as the business person. It is with this in mind that The first Green Expo was held at the CTICC in November 2011. The success of this expo led to the launch of the Johannesburg Green Expo to be held in September at the Sandton Convention Centre.
International Coalition of Tourism Partners (ICTP) Tel: Haleiwa, USA: +1-808-566-9900 • Cape Town, South Africa: (+27)-21-813-5811 • Rio de Janeiro, Brazil: +5521 40428205 • Germany: +49 2102 1458477 • London, UK: +44 20 3239 3300 • Australia +61 2-8005 1444 • HongKong, China: +852 8120 9450.
Email: member@tourismpartners.org • Website: www.tourismpartners.org
ICTP is a travel and tourism coalition of global destinations committed to Quality Services and Green Growth. ICTP advocates for: sustainable aviation growth; streamlined travel; fair taxation and jobs.
The Safari Awards 2014 Tel: +44 (0)1865 989280 • Website: www.safariawards.com With nominations from over a thousand luxury travel professionals, hundreds of readers of Tourism Tattler, Conde Nast Traveller, Brides and Travel Africa Magazine you can rest assured that any safari business nominated for a Safari Award is amongst the best in its genre. Finalists are amongst the top 3% in Africa and the Safari Award Winners are unquestionably the best, their reputation earned through excellence recognised by people who know what they are talking about.
World Travel Market Africa 2014 Tel: +44 (0)20 8910 7897 • Email: polly.magraw@reedexpo.co.uk • Website: www.wtmafrica.com Set to be the leading B2B exhibition for Africa’s leisure travel industry, WTM Africa will bring the world to Africa and promote Africa to the world. With significant global reach and generation of over £1.859 million (GBP) worth of business during its London event, WTM is the world-leader when it comes to travel exhibitions. WTM Africa will utilise all the knowledge, expertise and experience of RTE and WTM to ensure that all those important to the African travel industry are represented at WTM Africa.
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Tourism Tattler Trade Journal
FEBRUARY 2014
cover story
Such a leap isn’t unprecedented. Neighbouring Ghana’s GDP estimate increased by about 60 percent in 2010 after its figures were rebased. Many other sub-Saharan African countries also think their GDP is underestimated, according to Simon Fraser University professor Morten Jerven, an expert on African development statistics.
Africa's potential for regional and domestic travel is set to boom as foreign investment floods the continent and internet accessibility expands.
Foreign direct investment continentwide is expected to reach $56 billion by 2015, from $38 billion in 2012. The World Bank lists the resource-rich countries of Mozambique, Ghana, and Rwanda among the fastest growing economies of 2013. Many other countries in sub-Saharan Africa are not far behind. Overall economic growth for the region in 2013 is 5.6% with a third of countries achieving 6% growth or more. But African countries are faced with both potential and challenges. According to the International Air Transport Association (IATA), Africa's current scenario compares with that of 1980 China. In the late 1970s, it was hard to see how China would transform into the economic powerhouse it is today, contributing over 15% of global GDP. Connectivity with the world was limited, airline safety was an issue, infrastructure was poor, and airline fleets were in desperate need of renewal. Economic reforms unleashed entrepreneurial innovation. And aviation was a strategic enabler of growth—supported by infrastructure development and global standards, particularly for safety. Africa’s population today is similar to the China of 1980 and contributes only slightly more to global GDP (Africa contributes 3% of global GDP today, China contributed 2% to global GDP in 1980). And like 1980 China, there are changes taking place. For Africa, these center on demilitarization, political reform, and economic liberalization. But while the opportunity for development is there, Africa will need to resolve many of the same issues that China handled so successfully. Bringing 54 countries together will be extremely challenging given the divergent strategies of many of these countries. Nevertheless, the rewards on offer make the effort worthwhile. And it is clear that aviation connectivity will play a role. South African Tourism already considers the regional African tourist as an important inbound market, contributing
EDITORIAL
And so, with investors pouring billions of dollars into Africa as traditional 1st world markets shrink, just how big is Africa's potential for internet and smartphone growth (and hence for online travel bookings)?
more than 73% of total tourist arrivals and more than R50-billion in revenue in 2011. From an economic perspective, Nigeria’s gross domestic product (GDP) was $292 billion last year, compared with $354 billion for South Africa, according to International Monetary Fund figures. But Nigeria’s statistics office is about to change the way various sectors of the economy are weighted when it comes to determining the estimated GDP. Currently, Nigeria’s GDP figure is based on a weighting from 1990. In other words: It is hugely underestimated. Sectors such as IT and telecoms have grown significantly in recent years, and this hasn’t been taken into account. Analysts say that Nigeria’s GDP figure could jump by anywhere between 20 and 65 percent when the new calculations are released. That means Nigeria may see its GDP increase to between $384 billion and $424 billion this year.
To get the answers, we turned to McKinsey & Company − one of the worlds' top market research companies − who estimate that today, more than 720 million Africans have mobile phones, some 167 million already use the Internet, and 52 million are on Facebook. By 2025, these figures are predicted to grow 360 million smartphones, 600 million internet users, and $75 billion in annual e-commerce sales (read more on pages 12 to 14). With the internet being touted as an increasingly essential marketing tool, we also asked McKinsey to share their research on travel distribution with specific emphasis on vertical and lateral distribution partnerships, and authors Robert Carey and David Kang report their view on 'The trouble with travel distribution' which ends with an insightful infographic titled 'Understanding travel's core customers' (see pages 15 to 17). In this edition, we also look at how hotels are boosting their room sales across Africa (page 10), we have advice on the taxing problem of VAT invoices (page 08), the ongoing controversy surrounding rhino conservation (page 18), and we unpack Star Grading in South Africa (page 22). In the March edition, we'll feature a report on Africa's Visa requirements − another area of concern that needs to be streamlined for Africa to leverage her potential from both regional and inbound travel markets. Yours in Tourism. Des Langkilde Executive Editor Tourism Tattler
FEBRUARY 2014
Tourism Tattler Trade Journal
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Article Comments January's article comments received on the Tourism Tattler website. CONSERVATION Winner of black rhino hunting auction: My $350,000 will help save the species www.tourismtattler.com/?p=10286
Submitted on 2014/01/18 at 11:55 am Help save the black rhino species? Knowlton seems more concerned about death threats to his family! Well, if that is the case, he should withdraw from the hunt, that is if he loves his family as much as he is expecting the sympathy of the world’s wildlife conservationists. Sympathy is NOT what he will receive from us. He alone has caused this threat to his family! He bought the “right” to kill a rare, endangered black rhino, and expects us to believe his insane idea that killing one will save them all! In Namibia there are just under 1000 black rhinos left – in South Africa just over 5000, that’s in total all that is left in the world! I recall a previous video aired on CNN where the Namibian authorities confirmed that Knowlton would have a pick out of 4 or 5 mature bull rhinos, so if all of these rhino are no longer of use to contributing to the increase of populations of the black rhino, it implies that ALL 5 must be killed as they all have aggression and attack other younger males?!! See where I’m going with this… If Knowlton gets away with this hunt, where will it end? It will begin a trend – kill the older bulls, but who will be monitoring which are which? NOBODY can justify his actions and Knowlton must not be allowed to continue with his idea of saving other black rhino by killing even one. Why does Knowlton not rather do something really good, like donating the $350,000 to one of the many rhino sanctuaries that do in fact SAVE rhinos. Here is South Africa, Karen Trendler of The Rhino Orphanage is one such NPO (www.fightforrhinos.com/tag/animal-babies/) who would use the funds wisely to PROTECT rhino. By donating the auctioned funds, death threats to Knowlton’s family would stop, and he will even get to be a real hero! Beverley Langkilde - www.tourismtattler.com Submitted on 2014/01/19 at 3:30 am Is this guy serious? He will help save the species? Well he should be sued for plagiarism because in South Park Episode 206 – The Mexican Staring Frog of Southern Sri Lanka, Uncle Jimbo (a hunter) says: “…we only kill animals to, quote, thin out their numbers. If we don’t hunt, then these animals will grow too big in number and they won’t have enough food. So you see, we have to kill animals, or else they’ll DIE!” So it is that type of idiotic philosophy that Knowlton expects us to follow – a cartoon idea. And as for the corrupt Namibia government, they too should hand over ANOTHER $350,000 to the Rhino Orphanage because their action is disgraceful as well. Danny Searle - www.facebook.com/danny.searle
Congratulations to Danny Searle Danny's comment has been chosen as the prize winner for January 2014. His prize of a Two Kikoy Sarongs will be delivered twith the compliments of Livingstones Supply Co. Editor.
Wi n
The winning comment posted on the Tattler website during the month of February 2014 will receive a GOVINO CHAMPAGNE 4 PACK with the compliments of Livingstones Supply Co – Suppliers of the Finest Products to the Hospitality Industry. An alternative to Stainless Steel game drive cups, the very green and award winning Californian designed Govino Champagne glasses allow you to enjoy fine wine in settings where breakable glass is as no-no or fine stemware is not available. Reuse it, abuse it, but eventually recycle it! Govino is equal to the quality of imported German wine glasses and are made from PETg so they’re unbreakable and 100% recyclable. Govino Champagne Glasses are ideal for Game Drives, Beach Weddings, Picnics, Pool Areas and All For more information visit: outdoor events. www.livingstonessupplyco.co.za
FEBRUARY 2014
Tourism Tattler Trade Journal
07
BUSINESS
Is Your Business
Tax Invoice Compliant?
For a South African registered Value Added Tax (VAT) vendor to be able to claim back the input VAT (VAT on purchases of goods and services) a tax invoice that complies with the Act, MUST be obtained. By Thys Buitendag CA (SA)
Invoice. Without a valid Tax Invoice from your supplier you will not be able to claim back the input VAT, neither will your foreign customer be able to claim a refund of the VAT at Customs if you issued a noncompliant tax invoice.
As a Chartered Accountant, I come across a number of instances where the South African Revenue Services (SARS) has rejected input VAT claims as a result of invalid tax invoices issued by suppliers.
To Download the Tax Invoice Requirements, click HERE.
Firstly you must make sure that tax invoices issued by your business complies and secondly, you must check that your suppliers issue tax invoices to you that are also compliant. The VAT Act requires the issue of a Tax Invoice by a vendor (meaning the supplier of the goods and services that is registered for VAT). The Act also prescribes the details that must be contained in a Tax
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Tourism Tattler Trade Journal
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A business that is not registered for VAT may not charge VAT and may not issue a Tax Invoice. These invoices are referred to just as an “invoice�. To Download Examples of VALID tax invoices, click HERE. For advice or assistance telephone +27 (0)11 475 8422 or for more information visit: www.synbs.co.za You can also send an mail to tattler@syncbs.co.za.
We are the only organisation in South Africa that can give your business that competitive advantage. Other benefits include: • Access to millions of global travellers through our strategic online partnerships such as TripAdvisor. • Savings on Search Engine Optimisation. Star Graded establishments get top results on Google Search. • Further access to potential travellers through the global marketing investment made by South African Tourism, worth hundreds of millions of Rands each year. We are a business unit of South African Tourism. • Access to the multi-billion Rand Government business. Only Star Graded establishments can be used by Government Officials. • Exclusive rights to display the globally recognised plaque – giving your establishment an immediate quality identity. • Star Graded establishments have an advantage over ungraded establishments. Visit www.tourismgrading.co.za for more information and apply now. FEBRUARY 2014
Tourism Tattler Trade Journal
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BUSINESS
Boosting Hotel Room Sales Across Africa
Online travel booking agencies are causing waves in South Africa as they help hotels and guesthouses to ride the growing tide of internet use and attract new guests from Africa and beyond, writes Des Langkilde. Shaping the African online culture Africa may have been slow to join the internet boom started in the 1990’s but it’s making up for lost time now. Data speeds rival the best in the world, internet businesses are popping up at an astonishing rate and the number of users are growing exponentially. According to the recent report, Lions Go Digital by the McKinsey Global Institute (see pages 12 14), there are almost 170 million internet users in Africa today. This number is expected to quadruple to 600 million by 2025. Half of the population of this continent will have access to the internet. Combine this with some of the highest GDP growth rates in the world and a rapidly expanding middle class, Africa presents a dizzying potential for businesses prepared to commit themselves to the world of online. Jovago.com is one example, a fast establishing channel for accommodation owners, such as the Taj hotel in Cape Town, South Africa. “We have been working with various OTA’s over the past few years and we have seen tremendous growth from this segment, which has become an integral part of our sales strategy” says Willie Williams, Director of Sales and Marketing at Taj Cape Town.
All segments involved The travel and tourism industry may not be one that springs to mind as a leader in technology, but it is subject to these powerful trends to the same extent as others, arguably more so. The traditional methods of prospecting for business have long been the same for hotels – building relationships with corporate clients, working with Tour Operators to push holiday packages, advertising in trade journals such as the Tourism Tattler and peddling for business at trade shows. However, these tried and tested marketing channels are today being supplemented by Online Travel Agencies (OTAs) as an additional method for accessing new customers. OTAs allow hotels to market themselves to the entire world through the internet without any technical know-how and without spending a cent up-front. The majority work on a commission basis meaning that if they fail to bring new business they don’t make any money, taking the pressure off accommodation managers and owners and putting it squarely on themselves to succeed. There is a consistent formula as to how OTAs work. You give them information and photos of your 10
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establishment, which they turn into a profile accessible on their website. They then draw traffic to the site through their extensive marketing efforts and if a potential customer likes the look of your place, they can book there and then from the comfort of their home. This has the effect of levelling the playing field. Gone are the days when the hotel with the biggest marketing budget won the business. Nowadays it’s all about exposure on as many websites as possible and showing the customer that you are offering a great service at a great price. Customer reviews reward the best performers with trusted recommendations, whereas overpriced and below par hotels are quickly sifted out and fall by the wayside as customers learn to avoid them. South Africa is leading the charge in Africa regarding adoption of OTA technology, with over 1000 hotels shown on two of the largest players, Jovago.com and booking.com. Other countries are quickly catching on however. The fact that Jovago.com is the only OTA with a complete focus on Africa is gaining them a lot of momentum and respect as they help hotels tap into this previously unreachable mass of wealthy, connected travellers in Africa.
The Incubator: Africa Internet Holding Jovago.com is one of eight companies which together form the Africa Internet Holding group cited in McKinsey’s report as a driving force in the growth of Africa’s ecommerce industry. An interesting development is the confirmation that the telecoms giant, MTN has invested heavily in AIH, taking a 33.3% ownership share. Faycal Ihrai, formerly of booking.com, leads the company, and is excited about applying his experience to grow this new, Africacentric company: “The energy in Africa is electric right now. The huge growth in internet and mobile adoption here makes this such a fascinating time to be in ecommerce and I feel privileged to be building a home grown African giant. In Africa, with Africa, for Africa. This local approach is appreciated by travellers and hoteliers alike. For more information visit: www.jovago.com
Market Intelligence Report
BUSINESS
The information below was extracted from data available as at 16 January 2014. By Martin Jansen van Vuuren of Grant Thornton.
ARRIVALS The latest available data from Statistics South Africa is for January to August 2013: Current period
Change over same period last year
UK
280 831
0.7%
Germany
172 497
14.2%
USA
230 866
5%
India
76 116
8.4%
China
100 261
19.8%
Overseas Arrivals (excl same day visitors)
1 668 735
6.3%
African Arrivals
4 578 059
4.1%
Total Foreign Arrivals
6 260 406
4.6%
NB: African Arrivals plus Overseas Arrivals do not add up to Total Foreign Arrivals due to the exclusion of unspecified arrivals, which cannot be allocated to either African or Overseas.
HOTEL STATS The latest available data from STR Global is for January to November 2013: Current period
Average Room Occupancy (ARO)
Average Room Rate (ARR)
Revenue Per Available Room (RevPAR)
All Hotels in SA
62.1%
R 959
R 595
All 5-star hotels in SA
62.5%
R 1 690
R 1 056
All 4-star hotels in SA
61.9%
R 920
R 570
All 3-star hotels in SA
62.2%
R 767
R 477
Change over same period last year All Hotels in SA
3.5%
9.0%
12.8%
All 5-star hotels in SA
7.5%
8.7%
16.8%
All 4-star hotels in SA
2.6%
8.5%
11.3%
All 3-star hotels in SA
3.8%
7.9%
12.0%
Passengers arriving on Regional Flights
Passengers arriving on Domestic Flights
ACSA DATA
The latest available data from ACSA is for January to November 2013: Change over same period last year Passengers arriving on International Flights OR Tambo International
4.5%
7.3%
-3.9%
Cape Town International
-0.7%
-1.8%
-2.5%
King Shaka International
20%
N/A
-6.7%
WHAT THIS MEANS FOR MY BUSINESS The data from Statistics South Africa indicates minimal growth from the UK, while Germany has grown strongly at 14.2% for the January to August 2013 period (compared to the same period in 2012). This growth reflects the current strength of the economy in Germany resulting in a higher level of disposable income. The STR Global data indicates that the recovery of South African hotels is continuing with strong growth in the revenue per available room due to an improvement in both average room occupancies and the average room rate. The growth has however not yet returned the hotels to occupancies, room rates and revpar’s achieved in 2007 and 2008. ACSA data indicates that passengers arriving on domestic flights continues to decline compared to the same period last year. Cape Town International Airport has experienced strong growth in passengers arriving on international flights during September to November, while King Shaka International Airport has experienced strong growth throughout the year. Anecdotal evidence indicates that the main tourism centres experienced a busy festive season but the growth cannot be quantified at this stage. For more information contact Martin at Grant Thornton on +27 (0)21 417 8838 or visit: http://www.gt.co.za FEBRUARY 2014
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BUSINESS
Lions go digital:
12
Tourism Tattler Trade Journal
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The Internet’s transformative potential in Africa
BUSINESS
Following a decade of economic expansion, Africa is going digital. Only 16 percent of the continent’s one billion people are online, but that share is rising rapidly as mobile networks are built out and the cost of Internet-capable devices continues to fall.
Continued on next page ... FEBRUARY 2014
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BUSINESS
Today more than 720 million Africans have mobile phones, some 167 million already use the Internet, and 52 million are on Facebook. Evidence of what is to come can already be seen in Africa’s major cities, where consumers have disposable income, more than half have Internetcapable devices, and 3G networks are up and running. There is a growing wave of innovation as entrepreneurs and large corporations alike launch Web-based ventures, from e-commerce sites and digital entertainment platforms to mobile health technologies and online educational content. Governments have placed Internet-driven growth firmly on the agenda: Rwanda, Morocco, and Nigeria, for example, have ambitious plans to expand high-speed Internet access to most of their populations. Most countries have developed national information and communication technologies (ICT) strategies, but many are still in the early stages of implementation. The Internet’s contribution to Africa’s GDP remains low, at 1.1 percent—just over half the levels seen in other emerging markets and well below the average of 3.7 percent in developed economies. This figure varies widely across individual countries, from 0.6 percent in Ethiopia to 3.3 percent in Senegal. But the Internet is likely to take hold on a much larger scale in the coming decade, and previous research has found that its impact is magnified in emerging countries. Mobile telephony has already had an outsized effect in Africa as it connected people who previously had little or no access to telecommunications due to the scarcity of fixed-line infrastructure. If the Internet matches or exceeds that level of impact, the result could be a leap forward in Africa’s economic growth and development. Assuming a similar multiplier effect, the Internet could contribute some $300 billion to Africa’s GDP by 2025 (see inset pabel below, “Why the Internet matters”). The Internet will generate economic growth and social transformation in six sectors in particular: financial services, education, health, retail, agriculture, and government. In financial services, for example, M‑Pesa’s mobile money solutions have brought millions of Kenyans onto the financial grid for the first time. Remote diagnostics are expanding medical services to rural areas that have few healthcare professionals. Students are beginning
to learn with new digital education tools, and e-government initiatives are connecting citizens with services. The McKinsey’s report, Lions go digital, examines the progress and potential of the Internet in 14 economies that together make up 90 percent of Africa’s GDP. In addition to measuring the size of their current Internet economies, it evaluates the strength of five fundamental pillars of Internet readiness: national ICT strategy, infrastructure, business environment, access to financial capital, and the development of ICT related human capital. By combining these factors, it is possible to map each country’s progress on its digital journey. (Kenya and Senegal, for instance, are not Africa’s largest economies, but they have nevertheless emerged as the continent’s leaders in terms of the relative economic contribution of the Internet.) This benchmarking provides a framework for understanding the paths that can be taken by the public and private sectors to build a robust Internet economy and capture the Internet’s full potential. Taking stock of the Internet in Africa today Indicators for Internet penetration and usage reveal significant variations across the reports sampled countries, and while Internet penetration is just over 16 percent across the continent as a whole, it is much higher in urban areas, where more than 50 percent of residents use the Internet regularly. Significant investments have been made in recent years to build out backbone infrastructure and roll out 3G networks, allowing millions of Africans to connect for the first time. The continent is also in a better position in terms of international bandwidth, as capacity has been added faster than peak demand has grown. But download speeds are slow, there are very few secure Internet servers in most countries, and the cost of bandwidth remains high. Despite these challenges, Africa will be at the forefront of the next wave of mobile data innovation. Providing Internet access will also become easier to deliver as Africa’s urbanisation rate rises from 40 percent today to 50 percent by 2030. Published with acknowledgement to McKinsey & Company - www.mckinsey.com/mgi McKinseyGlobalInstitute
@McKinsey_MGI
Why the Internet matters The Internet is a catalyst for economic growth. In China, India, and Brazil, it has contributed more than 10 percent of total GDP growth over the past five years, and its impact is accelerating. MGI research has found that an increase in a country’s Internet maturity correlates with a sizable increase in real per capita GDP. As countries go online, they realise efficiencies in the delivery of public services and the operations of large and small businesses alike. The benefits of Internet-driven productivity gains are not limited to Web-based companies: among small and medium-sized enterprises (SMEs), 75 percent of the economic impact of the Internet has accrued to companies that are not pure Internet players. In a global survey of 4,800 SMEs, McKinsey found that across all sectors, companies utilising Web technologies grew more than twice as fast as those with a minimal online presence, generating more revenue through exports and creating more jobs. The Internet also creates tremendous value for consumers. Online prices are, on average, around 10 percent lower than offline prices as a result of the transparency provided by search tools, generating tens of billions of dollars of consumer surplus in the nations with the widest Internet use. Above all, the Internet will enable Africans to keep in contact with friends, relatives, and customers; access public information and services; manage their health; and advance their education. As Africa grows more connected, millions will tap into information and opportunities that were once beyond their reach. They will gain a greater voice in their communities and enrich the world’s flow of commerce and ideas. 14
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BUSINESS
The trouble with travel distribution The digital revolution has upended business as usual in almost all industries, and travel is no exception. Consumers are empowered by information: they have near-instant access to their flight, hotel, and car-rental options; virtual price transparency; and the ability to play suppliers off against one another. The game is now about delivering a superior customer experience. If players can do that, the investment returns will follow. By Robert Carey and David Kang. It’s among the biggest e-commerce markets, and maybe its most turbulent. To compete, players must define their place in travel’s next wave. A decade after the Internet spurred airlines, hotels, and other travel players to sell directly to customers, the sector’s ecosystem is fracturing. Companies are abandoning the systems that are supposed to provide consumers with one-stop shops to book flights, accommodations, and other services. Lawsuits are being filed. And the very people whose interests should be paramount − customers − are being caught in the cross fire. That’s giving newcomers a chance to swoop into a sector that today boasts annual online sales of almost $100 billion, around a third of all global e-commerce activity. This turbulence isn’t a bad thing: the travel sector has reached the next phase in its evolution, and some creative destruction is necessary. In fact, companies are already investing billions of dollars in the next wave of travel e-commerce, from revamping Web sites to changing the technology infrastructure. Consolidation is also creating opportunities that didn’t exist before. But the critical question is whether the sector’s players can find a sustainable path forward before new rivals blaze the trail for them. To name just two candidates: Google recently paid $700 million for ITA Software, whose algorithms form the backbone of 65 percent of flight sales by carriers, while Apple has filed a series of patents for a mobile-device application called iTravel. The bottom line is that travel suppliers, aggregators, and service providers each need to define the sector’s next wave quickly. We suggest that industry incumbents move away from a model focused almost exclusively on reducing channel costs and toward one that seeks to maximize returns by best serving customer needs. And the incumbents must understand that the customer experience not only begins before the time of sale − and even before the time of search − but also extends well after purchase and travel. The changes we recommend don’t require reinventing the wheel: many solutions already exist, but the sector’s myopic focus on costs rather than returns prevents their implementation. Balanced business models that give all value-adding players a seat at the table are what’s needed. A troubled history For a long time, suppliers in the travel sector regarded themselves as service providers and let distributors handle the technology-intensive
process of actually selling airline seats or hotel rooms. The airlines facilitated this approach in the 1960s by creating global distribution systems such as Apollo and Sabre − used by travel agents to search inventory across the world − only to spin them off in the late 1990s, when cash got tight and valuations looked rich. As with many other sectors, the Internet’s arrival changed everything. Online travel booking took off as aggregator sites, such as Expedia, began to give consumers a one-stop shop, in return demanding commissions that forced airlines and hotel operators to rethink their hands-off strategy. US airlines responded by creating a rival online travel agency, Orbitz, but their return to the distribution business was short lived: as financial pressures on the airlines’ core business continued to build, they spun off Orbitz. Recognising the low-cost direct sales model offered by the Web, the airlines set about redirecting shoppers from aggregators’ sites to their own. American Airlines (AA), for example, withdrew inventory from Orbitz in late 2010; in solidarity with Orbitz, Expedia fired back by removing AA’s listings (the airline is now back on both sites). Enterprise RentA-Car also left Orbitz, citing high costs, while US Airways piled onto AA’s disputes by filing suit against Sabre on antitrust grounds. Such disputes are common whenever industries confront the problem of who owns the content and who owns the customer: cable television companies, for example, regularly battle networks over channelaccess issues, and insurers have created their own Internet portals to combat the brokers’ entrenched power. The travel sector’s problem, however, is that the underlying model is fracturing. Traditional travel agencies now tend to tailor their services to business travellers, rather than provide options and products for a broad set of customer segments. Suppliers are making huge investments to lure customers to their direct channels, inadvertently reducing return on investment (ROI) by lifting costs with little immediate increase in revenue. Online aggregators are not only pushing suppliers out and undermining their one-stop-shop proposition, but also digging their heels into a format that emphasizes price as the primary product differentiator. Fundamentally, and most damagingly, consumers increasingly find that they don’t have what they really want: all travel options at their disposal in one place. If this problem persists, they will become more willing to consider superior alternatives. Continued on next page ...
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BUSINESS
The path ahead
2. Win in the era of ‘big data’
So what should be done? We have identified four imperatives for travel companies: making customers the strategic focus, using data to understand them, serving them better through partnerships, and providing the best end-to-end experience to promote both sales and ongoing loyalty.
Travel companies have access to mind-boggling customer data: everything from basic personal information to preferred airline seats, in-flight-entertainment preferences, meals at hotels, and credit card usage. They have the means to paint detailed pictures to drive marketing initiatives that more deeply engage customers, yet few − if any − of them truly maximize the potential of the data at their disposal. There’s no doubt that the synthesis of sales, pricing and revenue management, loyalty, and IT required to deliver on data’s promises is daunting. But there’s equally no doubt that companies from outside the travel sector specifically tooled to make the most of data are going to figure things out, enter the market, and try to steal customers.
1. Focus on customers, not channels The travel sector’s approach for two decades has been to push customers toward lower-cost yet more uniform distribution channels. We believe this is the wrong response to a growing mandate for product differentiation: while some customers value price above all else, that attitude is far from universal. Travellers differ in clear ways when it comes to their requirements − both in their travelling needs (which inform product design) and their shopping needs (which inform merchandising design and are relevant for distribution). Suppliers should shift from a business-to-business, channel-centric approach to a decidedly customer-centric one: the over arching goal should be to win customers, not to fight a zero-sum game with intermediaries. For more on how to win customers, see the table at the end of this article: Understanding travel’s core customers. In an ideal world, suppliers would tailor services to each individual. Reality makes that goal almost impossible to achieve, but travel companies can and should craft focused solutions for a range of broad customer segments. Price-driven leisure travellers, for instance, are drawn to transparency and comparability above all else, shopping at an average of three to four Web sites before making a purchase. So why don’t airlines, hotels, and car-rental companies bring price comparability to their own sites? This is exactly the model adopted by US insurance companies that quote competitors’ prices alongside their own. While there is some risk of customer defection − especially among price-focused travellers − that’s mitigated by the fact that this approach helps earn customer trust and draws valuable insights that enable more effective merchandising. Customers in another segment − unmanaged business travellers − are too small to justify the expensive services of large travel management companies. However, less costly and more efficient technologies make it easier to service this “long tail” of corporate travellers, and suppliers and travel-management companies alike recognise the potential ROI of moving them to online channels. Unmanaged business travellers seek less expensive versions of the services received by larger accounts, such as expense-management tools, profile management, and company loyalty programs. Meeting this demand will be complicated, but in industries such as banking and telecommunications we see a potential answer by combining a customised product offering with a different sales model. Consortiums and partnerships are likely to be the key to success − for example, imagine deploying a sales force to sell airline product bundles to small- and medium-sized businesses, empowered by the latest external advances in tracking and reporting tools. A channel-based mind-set limits the willingness of players, particularly suppliers, to make such moves. Instead, they tend to focus on market share targets for channels (and attempt to achieve these targets with initiatives such as Web site overhauls), without considering what it takes to shift preferences by consumer segment. New capabilities, not cosmetic changes, are what are really needed. Focusing on customer-based ROI rather than on channel targets forces executives to ask themselves how much they are going to invest − in which capabilities and targeting which customer shopping needs − to produce which results. 16
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Amazon.com, for example, became the thorn in the side of every bookseller - and, eventually, every retailer − by mining data to craft individualised customer experiences full of conversion-ready streams of recommendations. Amazon is notably absent from travel, at least for now. Google, however, has tens of billions of dollars in cash reserves and hundreds of employees whose job description is data mining. And its acquisition of ITA, a critical airfare search provider, already allows Google to provide users with instant travel itineraries and links to purchase (to see it in action, simply Google “NYC to LAX”). Meanwhile, suppliers are moving slowly. British Airways recently announced that it would equip flight attendants with iPads rather than paper manifests. This provides a way to capture and use unprecedented levels of customer data, but this capability is only a small step forward − in many ways, incumbents remain squarely on the back foot in the emerging era of big data. It’s not too late: suppliers have a wealth of information and resources they could use to test new ideas. But they need to ask themselves which data they could be collecting, which existing data are not being mobilised, and which capabilities they should be building (or partnering to acquire) to compete on the big data battlefront. 3. Unlock the power of partnerships Imagine if you could type (or speak) the following instruction into your smartphone: “Book my usual flights from Dallas to New York, out Monday and back Wednesday, usual hotel, rental car” − and quickly receive an itinerary compliant with your corporate travel policies. What would it take to achieve that? We see far too many travel companies seeking to undertake local, discrete tasks well and not simultaneously thinking broadly about the kinds of solutions that really engage and stimulate customers. Considering a customer’s mind-set and thinking more creatively about products and services should be a priority, and that may require working with, as well as against, competitors. One good example of this approach is the recently launched hotel search and booking site, RoomKey.com, founded by Marriott International, Hilton Worldwide, Hyatt Corporation, InterContinental Hotels Group, Choice Hotels International, and Wyndham Hotel Group. In the world of consumer packaged goods, we’ve seen such partnerships take off: retailers and manufacturers now share unprecedented levels of information across their supply chains, enabling far more effective merchandising decisions and physicaldistribution and logistics outcomes. Yet the most public dispute in travel − among AA, Expedia, and Orbitz − is the equivalent of a consumer-packaged-goods company pulling its products from a retailer’s shelves: it benefits no one. Our point here is twofold. First, creating new technologies is not necessarily the answer to all the challenges in travel today; indeed, the technical capacity to deliver what consumers need arguably exists already, dispersed in pockets across a dysfunctional ecosystem.
BUSINESS
Second, the potential of partnerships − lateral (supplier–supplier), vertical (supplier–aggregator–provider), or with companies beyond the travel sector − remains to be unlocked. Succeeding here may be more about identifying companies with similar interests and synergistic capabilities than about throwing new money and new technology after problems rooted in structural issues of coordination. Jovago.com, featured on page 10 in this magazine is a good example of lateral partnerships. Editor. 4. Master the entire customer experience Selling a product isn’t the beginning of a company’s relationship with customers; that starts when they first become aware of its brand. Equally, the relationship doesn’t end at the point of sale, because every interaction with customers is an opportunity to foster their loyalty or lose their future business Customer solutions in the travel industry often span multiple players, providing each with an opportunity to showcase its strengths and make a case for becoming a traveller’s favourite. Some companies are actively seeking to forge tighter bonds with customers: for example, KLM Royal Dutch Airlines will soon launch a service that allows its passengers use their Facebook or LinkedIn profiles to choose seatmates on upcoming flights. Malaysia
Airlines is releasing a Facebook service that lets travellers check if friends are on their same flight or headed to their same destination. A critical prerequisite for influencing the customer experience is the dissolution of organisational barriers − not only budgets and planning processes but also ownership of information − to gain a comprehensive view of the customer journey. There should be a single customer databank, not separate ones for information on loyalty, transactions, and pricing. And to make the customer-centric approach a reality, unprecedented levels of coordination among multiple business units (including those responsible for loyalty programs, pricing, sales, marketing, and information technology) are also required. Far too few companies in the travel sector have taken the steps needed to achieve this level of unification. About the authors Robert Carey is an associate principal in McKinsey’s Atlanta office, where David Kang is a consultant; Michael Zea is a principal in the Stamford office. The authors acknowledge the contributions of Andrew Curley, Alex Dichter, and Bryan Hancock to the development of this article. Published with acknowledgement to McKinsey & Company - www.mckinsey.com/mgi McKinseyGlobalInstitute
@McKinsey_MGI
Understanding travel’s core customers ▼
The best price available; likes to comparison shop
▼
Relationship with supplier; confidence that the experience will be positive
▼
Support in managing travel
Employ user-friendly interfaces Consider potential competitors, as solutions may come from outside the current market— for example, the ability to book travel with a smartphone that uses voice recognition. Leverage all available data Understand and mine data to customize for travelers and give access to what’s needed. Automate compliance Ease corporate adoption via automated compliance filters. Offer convenient booking Make the booking experience as easy as it is for leisure travelers. Provide comprehensive solutions For example, pair travel-management services with expense-management tools. Look to banking and telecom for new approaches. Reward loyalty For instance, offer group-based loyalty programs.
▼
Convenient booking interface compliant with travel policies
Meet the traveler’s requirements at scale Provide efficient means to manage travel profiles and book complex trips, while offering traveler perks that drive loyalty. Meet the manager’s needs at scale Provide efficient means to ensure compliance; offer services such as disaster response and meeting planning. Solve complex global itineraries seamlessly For example, offer itineraries that include multiple carriers.
Use full information Employ relevant data to provide all transaction details and options efficiently. Create loyalty Engage loyal travelers through more than points and cobranded credit cards. Leverage customer data, for example, to create proactive recommendations for travel options and personalized perks.
▼
▼
Full-service, flexible solutions compliant with travel policies
▼
1 Service-intensive business traveler
▼
Ways to win them over
▼
What do they want?
▼
Who are they?
Create transparency Offer price comparisons on your own Web site, for example. Be user-friendly Enhance the user experience on your site, taking return on investment (ROI) into consideration. Establish trust Offer unique features that validate customers’ beliefs that booking elsewhere diminishes their service options.
Business Class
1
2 Self-service business traveler*
2
Coach
3 Unmanaged business traveler*
3
4 Loyal leisure traveler
4
5 Price-driven leisure traveler
5
* Self-service business traveler is served by travel-management company; unmanaged business traveler is not. Table courtesy of McKinsey & Company. View this interactive exhibit at: www.mckinsey.com/spContent/trwi12_exhibit.html
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CONSERVATION
No Trade in Rhino Horn
The highly questionable motive to reinstate a legalised trade in rhino horn, as is currently being purported by numerous “conservationists” and businessmen in South Africa, is squaring the South African Government up for a nasty and unnecessary fight, especially in the run-up to the next meeting of the Conference of the Parties (CoP) to the Convention on International Trade in Endangered Species (CITES), writes Jason Bell.
In a new report by Economists at Large called Horn of Contention, commissioned by IFAW to review the literature on the economics of trade in rhino horn, the message is clear – there is no way whatsoever to begin to suggest that a legalised trade in rhino horn would be beneficial to rhino populations in the wild.
At the end of the day, there is a lot of money to be made in trading rhino horn and, if we look at the trend in poaching levels over the past five years or so, illegal practices are clearly worth the risk for those involved. (Since publishing the 2013). There is money to be made all along the trade chain. Those wishing to sell horn on the supply side see conservation as an agricultural practice, i.e. farming. Those wishing to sell horn on the demand end also see rhinos in utilitarian terms, in the case of rhino horn use, superfluous at best. Clearly, something is seriously wrong with this picture.
Click on the cover image to read the report or view this article online at www.tourismtattler.com
In fact, the only guarantee is a huge amount of risk given the lack of data on how and to what extent demand is being driven in the East, notably in China and Vietnam. Without a handle on demand dynamics and firm action in addressing such, not to mention seriously dealing with the criminal syndicates involved in illicit trade, legalising trade could realistically push rhino populations closer to the brink of extinction. Why is it, in this day and age, that we continue to cling to archaic traditions, beliefs and practices? The answer is simple – economics.
It is time for the pro-traders to call it for what it is, i.e. it’s really only about the money, and to stop hiding behind ridiculous arguments that legalising trade would stop poaching and benefit wild rhino populations.
Ignorance is bliss, but I doubt that there are many out there that would support legal trade if they spent a few minutes doing some basic math on the back of an envelope – it is not difficult to see that, even with our very limited understanding of demand variables, supply will never be able to keep up.
Pretoria, please take note. About the author: In his dual role as Regional Director Southern Africa and of the Elephant Programme, Jason Bell is responsible for developing, monitoring and evaluating campaigns and programmes for the International Fund for Animal Welfare (IFAW) within his region and providing leadership for IFAW’s global elephant conservation activities. For further information visit: www.ifaw.org
Rhino Poaching Stats in South Africa by Province Year 2010 2011 2012 2013 2014 Deaths vs Arrests Deaths Arrests Deaths Arrests Deaths Arrests Deaths Arrests Deaths Arrests KNP 146 67 252 82 425 73 606 133 34 06 MNP 00 00 06 00 03 00 03 00 00 00 Gauteng 15 10 03 16 01 26 08 10 00 00 Limpopo 52 36 80 34 59 43 114 34 00 00 Mpumalanga 17 16 31 73 28 66 92 00 00 00 North West 57 02 31 21 77 32 87 70 00 00 Eastern Cape 04 07 11 02 07 00 05 26 00 00 Free State 03 00 04 00 00 06 04 07 00 00 KZN 38 25 34 04 66 20 85 63 03 00 Western Cape 00 02 06 00 02 00 00 00 00 00 Northern Cape 01 00 00 00 00 01 00 00 00 00 TOTAL 333 165 448 232 668 267 1004 343 37 06
18
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KNP = Kriger National Par, MNP = Mpumalanga National Park, KZN = KwaZulu-Natal. Source: www.wessa.org.za
Win
COMPETITION
1 of 3 OR 1 of 3
Generic Adventure Site Guide Online Courses To enter this competition, simply find the answer to the following question (the answer can be found in the text below) and visit the Tourism Tattler website at: www. tourismtattler.co.za/?p=6540.
“What is the basic requirement to be a legal adventure guide?” The first six correct entries drawn after the closing date of 28 February 2014 will win either a GASG or a Trail Smart online training course, with the compliments of Adventure Qualifications Network. The Generic Adventure Site Guide (GASG) skills programme for Adventure Guides is fully approved for both delivery, assessment and recognition of prior learning. This accredited programme can be used for all adventure based activities, such as Bungee Jumping, Kite Boarding, Surfing, 4x4 Trails, Canopy Trails, Mountain Biking, etc. including Paddling and Mountaineering according to the rules of combination to allow a guide to register with DEAT and become legal. Adventure guides are any guides who provide adventure based experiences for paying clients. The basic requirement to be a legal guide is that you must hold a National Qualification as stipulated by the Department of Environmental Affairs and Tourism, (DEAT) which is managed and certified by the Tourism Sector Education Training Authority (CATHSSETA). Once you hold the appropriate qualification, you can then register as a legal guide with DEAT. If you are a working guide but are not yet qualified under the National Qualifications Framework (NQF), and registered with DEAT you are illegal and can be fined.
Trail-Smart Hiking / Outdoor Online Courses Trail-Smart® is an online training course designed by and in consultation with professional adventure guides and international trekking companies to provide tailored pre trip training and preparation for participants on expeditions or treks. The course content covers a wide range of subjects relating to the activities of Trekking / Hiking / Backpacking and travel away from home. Each topic is taught at two levels. The basic level is ‘What you need to know before you go’ and is a very short essential points section for those who have left it too late and only have a few minutes to spend on each topic. The advanced level is an in depth study of each topic, which will thoroughly prepare any participant in the knowledge needed on the subject. In the equipment sections, participants will be taught about the gear, selection for conditions, design principles, care and maintenance and how to get the best use from it. In the non-equipment sections, they will be taught everything they need to know to avoid those surprises we often get when unprepared, and to be self-sufficient in the skill. For more information visit: www.adventure-qualifications.com or www.trailsmart.com or
contact Andrew Friedemann on +44 (0)797 4646 711 or email andrew@adventure-qualifications.com
CATHSSETA Accreditation No. 613/P/000005/2004 Note: Read the Terms and Conditions of this competition, which can be downloaded at: www.tourismtattler.co.za/wp-content/images/AQN-Competition-T&C.pdf
WINNER OF THE LEGEND GOLF & SAFARI RESORT COMPETITION FROM THE DEC 2013 / JAN 2014 EDITIONS CONGRATULATIONS to Susan Findlay of Go Safari in Johannesburg, South Africa. Susan has won two nights for two adults sharing at Legend Golf & Safari Resort located in the Entabeni Safari Conservancy, with the compliments of Legend Lodges. The prize is valued at R12,000.00. www.legendlodges.co.za FEBRUARY 2014
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ENVIRONMENT
Responsible Tourism & the Environment The Earth Day Network will be promoting its Green Cities campaign on 22 April 2014. Launched in 2013, the Green Cities campaign aims to help cities around the world become more sustainable and reduce their carbon footprint. Focused on three key elements – buildings, energy, and transportation – the campaign aims to help cities accelerate their transition to a cleaner, healthier, and more economically viable future through improvements in efficiency, investments in renewable technology, and regulation reform. Energy Most of the world currently relies on outdated electric generation structures that are extremely inefficient and dirty. To help cities become more sustainable, we need to redesign the current system, transition to renewable energy sources, and implement 21st century solutions. Green Buildings Buildings account for nearly one third of all global greenhouse gas emissions. Through simple efficiency and design improvements to buildings we can reduce those emissions drastically. To realize that
STPP supports Climate Leadership Corps Training The Sustainable Tourism Partnership Programme (STPP) and the Climate Reality Project have announced training dates for the popular Climate Reality Leadership Corps, which currently includes more than 6000 Climate Leaders from over 100 countries. Now in their seventh year, these intensive three-day training sessions, led in part by Al Gore, bring together an All Star roster of some of the world’s leading climate scientists, media and communications experts, and practitioners to share the latest science of climate change, best practices in public speaking and social media, leadership skills, and communication strategies. The dates for the Climate Reality Leader training are March 12-14 in South Africa. The Climate Reality Project is partnering with their African Branch Manager, Food & Trees for Africa, for this first ever African training. The training requires formal applications, which can be accessed at www.climaterealityproject.org/africa-training-application “Along with dozens of the world’s leading experts on climate change, I look forward to personally meeting and working with the thousands of new Climate Leaders at this African training,” said Al Gore, Chairman and Founder of The Climate Reality Project. “ “The Climate Leader trainings are thoughtfully constructed to provide a full suite of skills to empower the next generation of climate activists to effectively communicate the climate crisis within their communities,” said Maggie L. Fox, President and CEO of The Climate Reality Project. 20
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vision, cities need to update ordinances, switch to performance based building codes, and improve financing options. Transportation Transportation is the fastest growing source of greenhouse gas emissions worldwide, three quarters of which comes directly from road vehicles. To reduce these emissions and the resulting smog, we need to improve standards, increase public transportation options, invest in alternative transportation, and improve city walkability and bikeability. Through an informative website and a series of in-depth toolkits, the campaign aims to educate the public about each element of green cities and spur individuals to take civic action by signing petitions, sending letters, and organizing events. To find out how you can get involved in the Green Cities campaign visit www.earthday.org/greencities or email: greencities@earthday.org
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2014/01/30 2:42 PM
HOSPITALITY
Star grading unpacked When talking about hospitality establishments like hotels and B&Bs, referring to their star rating is rather common but how many of us really know what it all means? How do hotels get graded and what does each of the star ratings entail? Do the same set of criteria apply to guesthouses or backpackers, as does to a boutique hotel? When you really start thinking about it, a whole lot of questions emerge. Marketing and Communications Manager, Thekiso Rakolojane from the Tourism Grading Council of South Africa (TGCSA) answers a few pertinent questions: Q: What does it take for a hotel/B&B to be considered for grading, i.e. what are the minimum requirements to be graded? A: By definition, a "Hotel" is an establishment that provides formal accommodation with full or limited service to the travelling public. A hotel has a reception area, and offers a dining facility. A hotel must have a minimum of 6 rooms but more likely exceeds 20 rooms. Minimum Requirements for a hotel Star Grading are: • On site representative must be contactable 24 hours, 7 days per week; • All meals and beverages must be provided from outlets within the complex (may or may not be operated by the property); • Servicing of rooms 7 days a week (this includes linen/towel change, removal of rubbish and cleaning); • Formal reception area must be provided; • Bathroom facilities must be en-suite; • Onsite parking with security for guests; • Universal Accessibility. Additional requirements for 4 and 5 Star are: • Concierge, porterage and luggage handling; • Central business centre must be provided; • A range of other miscellaneous services provided eg: baby/ child minding services, messages service, shoe polish, delivery of newspapers, etc. • Full housekeeping and laundry services provided.; • Universal Accessibility. A "Bed and Breakfast" is a more informal accommodation with limited service that is provided in a family (private) home and the owner/manager lives in the house or on the property. Breakfast must be served. Bathroom facilities must be en-suite and/or private. If not, exclusive use of bathroom facilities per room is ensured. In general, the guest shares the public areas with the host family. The minimum requirements for a Bed & Breakfast Star Grading are: • The host/representative must live in the house or on the property; • Breakfast must be included in the tariff; • Daily servicing of the rooms must be included in the tariff; • Bathroom facilities must be en-suite. If not, exclusive use of bathroom facilities per room is mandatory; • Servicing of rooms 7 days a week (this includes linen/towel change, removal of rubbish and cleaning). 22
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Q: Can you give a quick explanation of what guests can expect from the different star-ratings, one through five? A: The minimum requirements as stated above are what the guest can expect from a graded establishment. The levels of quality will however differ based on the star grading achieved i.e. One star − basic and acceptable quality furniture and fittings. Here you can expect acceptable levels of quality in all areas, from the service to the furnishings. You should also be entitled to an adequate breakfast and soap and bath towels in the bathroom. Two stars − good quality can be accepted of a two star graded establishment. In order to be given two stars, an establishment needs to offer good quality service, furnishings and guest care. You should expect breakfast with at least some hot food and hand towels, bath towels and soap in the bathrooms. Three Stars − very good quality should be expected at three star establishments. The quality of service, furnishings and guest care must be of a particularly good quality and you should be able to order just about anything for breakfast. Four Stars − excellent quality is expected. Just one step away from five star luxury, a four star establishment must have excellent quality furnishings, amenities and service. You must be able to enjoy a full breakfast over an extended period and have the option of being served at your own table. Room service should be available at least 18 hours of every day. Rooms have to have a work area that includes a desk and the bathroom should be better stocked than your home. Five Stars − all its facilities and service offerings must be of outstanding quality. From the service to the furniture, everything is expected to meet the best international standards. Breakfast is guaranteed to encompass all tastes, be served all day and include seated and in-room dining. Room service can be ordered 24 hours a day. Q: Has the grading system changed to keep up with changing technology? For example, does a having WiFi available to guests push up its star rating? A: In 2008, the TGCSA in partnership with industry stakeholders embarked on a journey to review the Grading Criteria and Minimum Requirements as a result of various anomalies that had entered the grading system. We made a commitment then that the Grading Criteria and Minimum Requirements would be reviewed every 3 years to ensure that they are in line with international standards of quality as well as relevant to international and local traveller needs. The current grading criteria that were also benchmarked against the UK, New Zealand as well as the Australian Quality Assurance system are globally competitive and very comprehensive. They embrace technology, sustainability and for the first time ever, universal accessibility, which is grading criteria that take into consideration travellers with either mobility, visual or sight impairments. Q: What other technological factors do you consider when grading a hotel? A: Some of the key technological requirements of a graded hotel include: • Either a functional remote controlled television set with free to air channels for three to five star establishments. Four and five star establishments are required to have a minimum 12 channels. A normal television that is made available on client request for one and two star graded establishments. • A business centre for four and five star graded establishments • A dedicated fixed internet option or wireless internet access in each room (four and five star) • A telephone in each room (four and five stars). For more information visit: www.tourismgrading.co.za Published with acknowledgment to news24 (www.news24.com).
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23
LEGAL
The NEW ‘POPI’ aka PROTECTION
OF PERSONAL INFORMATION ACT – PART 9 – PRINCIPLE #7
Compliance standard: RP must have ‘due regard’ to ‘generally accepted' information security practices’ applicable to it generally or ‘specific industry or professional rules and regulations.’
SECURITY SAFEGUARDS
Information processed by an operator (i.e. one who ‘acts in terms of a contract or mandate and without coming under the direct authority of the RP’) must be dealt with as follows : • The operator (or anyone else acting on behalf of the RP) must only process PI with the knowledge or authorisation of the RP; • The operator must treat PI as confidential and not disclose it; • RP must ensure the operator complies with section 19 or the applicable law of the territory where the operator is domiciled (Read with 72 re transborder information flow: additional requirements i.e. (a) DS consent [unless (i) for benefit DS, (ii) obtaining consent not practical + (iii) DS would be likely to have consented]; (OR) b) transfer must be required for performing contract).
The responsible person (‘RP’) must ensure the integrity of personal information (‘PI’) in its possession or under its control (19). What does ‘integrity’ mean’? POPI does not define it. It can mean inter alia ‘perfect condition’, ‘whole or complete.’ Webopedia.com refers to it as ‘the validity of data’ and states that data integrity can be compromised in a number of ways i.e. 1. Human errors when data is entered; 2. Errors that occur when data is transmitted from one computer to another; 3. Software bugs or viruses; 4. Hardware malfunctions, such as disk crashes; 5. Natural disasters, such as fires and floods. • It suggests that such compromise can be minimized as follows: • Backing up data regularly; • Controlling access to data via security mechanisms; • Designing user interfaces that prevent the input of invalid data; • Using error detection and correction software when transmitting data. POPI requires the RP to take(ing) appropriate, reasonable technical and organisational measures’ – see ‘minimize’ the above. Such ‘measures’ must prevent: • ‘loss of, damage to or unauthorised destruction of PI; and • ‘unlawful access to or processing of PI.’ Such ‘measures’ must endeavour to: • Identify ‘all reasonably foreseeable internal and external risks’ • ‘establish and maintain safeguards against such risks’ • ‘regularly verify these safeguards are effectively implemented’ • ‘ensure such safeguards are regularly updated’ given ‘new risks and deficiencies.’ 24
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The above must be contained in a written contract between the RP and the operator. Notification of security compromises [22]: If there are reasonable grounds to believe that PI has been ‘accessed or acquired’ by an unauthorised person, the DS and the IPR must be notified. Notification must take place as soon as possible after discovery of the compromise, unless a criminal investigation will be impeded as determined by the SAPS, NIA or IPR. Such notification must be in writing and conveyed to the DS in one of: • Ordinary mail; • E-mail; • On the website of the PR ‘in a prominent position’; • Published in the news media; • As directed by the IPR; It must contain adequate information for the DS to ‘take protective measures against the potential consequences of the compromise, including the identity of the unauthorised person.’ Disclaimer: This article is intended to provide a brief overview of legal matters pertaining to the travel and tourism industry and is not intended as legal advice. © Adv Louis Nel, BENCHMARK, February 2014.
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Find a Business Travel Partner Fast
Download the SATSA Desktop Widget www.satsa.com/widget/widget.html Whether you are looking for a Destination Management Company, a Tour Operator, a Professional Conference and Event Organiser, an Airline, a Shuttle Service, Car Hire or City and Safari Lodge Accommodation, SATSA members are just a click away - right on your desktop in fact. Besides the member search function, the SATSA Widget will also keep you updated on local travel trade news, events and topical information relating to the region. By doing business with a SATSA member, you’ll have peace of mind knowing that your selected travel trade partner in southern Africa adheres to strict annual compliance criteria in terms of legal, financial and insurance credibility. And you’ll find it reassuring to know that our members are Bonded* to cover advance deposits against your booking.
For more information visit: www.satsa.com or contact: 086 12 SATSA (72872) E-mail: membership@satsa.co.za * The Southern Africa Tourism Services Association (SATSA) is the only inbound tourism NGO to have established a Lost Advances Fund whereby members, and clients of members, have access to a measure of financial protection to cover forward booking deposits in case of the involuntary liquidation of a member. We call this SATSA Bonded (Terms and conditions apply).
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Tourism Tattler Trade Journal
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Debt collection. Cashflow is the lifeblood of any business - bad debts threaten viability. SJA assists, from issueing summonses to executing judgements. Contact: tinal@savage.co.za
Commercial. Registration of companies, trademarks & searches. Drawing up of contracts - leases, sales of business, joint ventures, partnerships & franchises. Contact: jonathanh@savage.co.za
Liabilities. Specialising in Professional Indemnity, Insurance Law, Travel and Tourism liability. Contact: waynef@savage.co.za
Commercial. Corporate Advisory Services, Liquidations, Commercial Contracts, Company Registrations and Intellectual Property Law. Contact: hennies@savage.co.za Labour and Administrative Law. Specialising in Labour Law as well as public and private partnerships in the environmental context. Contact: mariuss@savage.co.za
Personal Injury. SJA’s specialist departments have many years of experience with the Road Accident Fund and this area of the law. Contact: robh@savage.co.za Property. Specialising in Sectional Title and Game Lodge development conveyancing matters. Contact: marleeng@savage.co.za
Johannesburg: Pretoria: (011) 325 0830 (012) 452 8200 E-mail: info@savage.co.za
www.savage.co.za
FEBRUARY 2014
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