Presentation on theme: "Tourism SBU INFORMATION AND AWARENESS WORKSHOP Johannesburg Tebatso Matlala 18 March 2014."— Presentation transcript:
Tourism SBU INFORMATION AND AWARENESS WORKSHOP Johannesburg Tebatso Matlala 18 March 2014
2 Introduction Sectors covered by SBU: SBU Approach to development of these sectors Accommodation: hotels, guest houses, game lodges (efficiency of room size currently under review) Niche Tourism: adventure & sports tourism, business tourism, attractions (including theme parks and natural attractions), health tourism. Exclusions: stand alone restaurants (unless linked to an attraction), casinos and gambling facilities, property development, timeshare/fractional developments. Aligning activities with industry goals as indicated in National Tourism Sector Strategy and IPAP2/NGP Proactive development of projects in subsectors through identifying potential projects, project scoping, pre-feasibility and feasibility studies. Assessment and funding of applications as received Support for the dti programs in some subsectors (Arts and Crafts, backpackers, avitourism) Active participation and sponsorship of industry events (HICA, Sports Exhibitions, Imvelo)
3 3 Financing Products IDC offers a wide array of financial instruments, including: Equity Quasi-equity Commercial debt Guarantees These may be provided as a single facility or in combination R3 m minimum loan amount and financial contribution of between 40%- 50% from the shareholders
4 Development Funds Department Transformation and Entrepreneurial Scheme (TES) 47m HIGH DEVELOPMENT RING FENCED FUNDS R 100 m Isivande Womens Fund (IWF ) Risk Capital Facility (RCF ) Unemployment Insurance Fund (UIF) R2bn IDC Business Support Unit R 1 bn GRO – E - SCHEME R10bn
5 5 Financing Criteria Consider funding of start-ups, expansions and refurbishments Project must demonstrate significant development impact Security is tailored to the transaction and may include personal suretyship, corporate guarantees, bonds over fixed and movable assets, pledge and cession of shares Comprehensive business plan must be submitted.
6 6 Financing Criteria Focused management team with ability to adapt to market forces Product specifications to be in line with intended grading with upfront input from management and marketing company Approved buildings plans and building cost estimates prepared by a QS Clearly defined marketing strategy in terms of product offering, target market, key success factors Financial contribution of at least 40% from the shareholders
7 Review of IDCs progress in the industry to date The Tourism SBU played and active role in the industry over the past 10 years Current exposure of ca R2.56 billion (of which R800 million is still to be drawn) to 88 clients. Geographical spread (value and number) A total of 53% in value and 47% in number of transactions are to BEE: - Black owned (10% in value, 11% in number), Empowered (43% in value, 32% in number), 4 companies are owned by Black Women. Most of the exposure is to the accommodation sector with: - 4 in Other recreational facilities (Sandown Bay Fishing, Knysna Elephant Park, Tourvest Guma) - 3 Restaurants (Wandies, Eagles Fare) - 1 Sporting activity (Cape Epic) - 1 Travel Agency (Basfour)
8 Industry Environment Change in environmentImplications for Industry and SBU Sector Strategies Successful hosting of 2010 SWCCountry image enhanced which is expected to result in increased visitor numbers and improved industry performance. SA is seen as an investment destination with potential investment opportunities in the long term. New and upgraded tourism infrastructure Improved capacity to handle projected growth in visitor numbers will lead to improved industry performance and should mitigate market risk for tourism investments. Current overcapacity in accommodation sector in certain nodes Hotel performance to remain strained for some time, cautious investment in accommodation sub-sector in over developed nodes. Strategic focus on improved geographic spread and development of non- accommodation sub-sectors. Continued depressed economic climate Tighter credit markets thus difficulty in raising finance, new developments stalled, trading conditions strained, lower travel volumes due to strong Rand.
9 ConstraintImplications if constraint not addressed Responsible party Possible solutions Air accessLimited growth in inbound arrivalsDept of Tourism and Transport Deregulation of airline industry to improve inbound and regional air access Safety and Security concerns Limited visitor numbers due to negative country image GovernmentEffective policing, pro-active country marketing and effective responses to bad news Legal requirementsLong lead times and difficulty to obtain EIAs and rezoning approvals dti, DWAEffective implementation of legislation with minimal bureaucracy Unresolved Land Claims Community disillusionment, ineffective use of resources, limited industry growth Department of Rural Development and Land Reform Fiscal support for land settlements Inadequate SkillsService levels compromised, tourism not seen as long term career Government, private sector Apprenticeship programs, offer tourism studies at tertiary level RegulationHealth Tourism opportunities limited until regulation issues resolved Dept of Health and Tourism Regulatory issues relating to medical visas, post hospital care, transportation of bodies and capacity issues to be resolved. Support from provincial government Limited development in underdeveloped provinces Provincial government Provincial government to be better organised with regards to tourism opportunities. Demand Development Other Constraints to Industry Development
10 High-Level Sector Development Strategies Industry Goals 1.Grow tourism sectors absolute contribution to GDP by more than average GDP growth 2.Achieve transformation within tourism sector 3.Provide excellent people development and decent work within the tourism sector 4.Entrench culture of travel amongst South Africans 5.Deliver a world class visitor experience 6.Address geographic, seasonal and rural spread. IDC Goals 1.Prioritise development outside established tourist nodes 2.Active development of subsectors outside of accommodation 3.Entrench a culture of travel amongst South Africans 4.Transformation of sector through support to BEE to own start-ups. Improved Geographic SpreadSubsector DevelopmentTravel culture Focus Areas SA Rest of Africa Development Adventure & Sports Tourism Niche TourismDomestic travel facilities Key Strategies/Initiatives KZN Beach Tourism Mpumalanga and Limpopo attraction projects SADC opportunities East & West Africa – Business Hotels Western Cape kite surfing facility Northern Cape Extreme Sports facility Eastern cape opportunities Theme Park development Backpackers Develop or refurbish facilities suitable and affordable for domestic market Jobs (5 years) 500 0 in SA 100 300 Potential Constraints Suitable Land (location, price, zoning) Equity partners Community buy-in Onerous EIA requirements Bulk infrastructure (water, electricity) Air Access Provincial and local government support
Industrial Development Corporation 19 Fredman Drive, Sandown PO Box 784055, Sandton, 2146 South Africa Telephone (011) 269 3000 Facsimile (011) 269 3116 E-mail email@example.com Thank you