EFTA00578074.pdf

South Africa's 41 Wor ld Travel Tourl m CounLil Travel & Tourism Economic Driver the 21st Century for TRAVEL & TOURISM Gmaii ns5„ .Jobs EFTA00578074 WTTC MEMBERSHIP Daniel AtToiler* Chohnum Kuoni Travel Holding Limited Don Carty Chairman American Airlines Peter Armstrong Pfesearna & CEO Great Canadian Railtour Co Praphant Asam-aree Ptesning N.C.C. Management & Development Co.. li d. Ted Balestreri Chninnon & CEO Cannery Row Company Roger Halloo Global Vacation Group James E. Barlett Pershing & CEO Galileo International Juergen Bartels Chairman & CEO Westin Hotels & Resorts Paul Blackney Chairman XTRA On-Line Stephen F. Bollenbach President & CEO Hilton Hotels Corporation James Brown Chief Operating Officer Rosewood Hotels & Resorts Robert H. Burns* Chairman RHB Holdings I.imited Manfred Rosette Chohnum Messe Berlin GmbH Peter Cass Ptesning Preferred Hotels & Resorts Alun Cathcart Chahnum & CEO Avis Europe Gerlach Cerfontaine President Amsterdam Airport Schiphol U. Gary Charlwood Chairman & CEO Uniglobe Travel (International) Inc. Christophe Charpentier Chabman Havas Voyages Cheong Choong Kong Deputy Chairman & CEO Singapore Airlines Limited Robert Collier Mee Chairman Saturn Overseas Holdino, parent company of Inter-Continental Hotels and Resorts John H. Dasburg President & CEO Northwest Airlines Jim Davidson President & CEO System One Company Robert H. Dickinson. CTC President Carnival Cruise I.ines Michael J. Durham President & CEO The SABRE Group Sir John Egan• Chief Executive BAA plc Elhamy Ellayra Chairman & CEO Emma Ravel Sebastian Escarrer Chief Execuave Office, Sol Melia William R Fall Chaiinuen & CEO Canadian Pacific Hotels Bernard D. Frelat President & CEO Rail Europe Group. Inc. William H. Friesell Choi/num Diners Club International Haney Golub* Chairman & CEO American Express Company Maurice H. Greenberg Chairman. President & CEO American International Group R. Craig Hecuba Chaim/an & CEO Avis. Inc. Robin W. Ingle Chaiinuen Ingle International Inc. Xabier de Irak Chairman & CEO Iberia Noel Irwin-Hentschel Chainmen & CEO AmericanTours International Clive Jacobs Chainmen & CEO Holiday AMOR International David W. Jarvis Chief Ewe-odor Hilton International Andre Jordan* Chemnudn LUSOTUR S.A. Gerhard Kastelic Pirshlent & CEO Vienna International Airport Richard R. Kelley Chairman Outrigger Enterprises. Inc. Geoffrey J.W. Kent Chaiiman Abercrombie & Kent Sol Kenner, Chairman Sun International Herald Klein• Member of the Executive Board Lufthansa German Airlines Jonathan S. Linen Vice Chairman American Express Company William W.N. Liu Remittent & CEO Abacus Distribution Systems William E. Lobeck Thrsidem Republic Industries Inc Automotive Rental Group Nashirudeen Mallam-Hasham Chairman & Mat aging Mimeo, Air Mauritius J. W. Marriott. Jr.• Chapman & CEO Marriott International. Inc Sir Colin Marshall* Chan mat British Airways PLC Isao Matsuhashi Chaeirmen of the Board Japan Travel Bureau Inc. James McCrea Managing Director Air New Zealand W James McNerney Jr President & CEO GEAircraft Engines Sandy Miller Chairman of the Ronal & CEO Budget Rent-a-Car Steve Miller Chief Executive Officer Resort Condominiums International. Inc. Marilyn Carlson Nelson President. CEO and lice Chair Carlson Companies, Inc. Roland Nilsson President & CEO Scandic Hotels AB P.R.S. ()heal* Site President and Chairman The Oberoi Group Frank A. Olson' Chairman & CEO The Hertz Corporation James J. O'Neill President ONEX Food Services. Inc. Joaquim Paiva Chaves Managing Director Sonae Thrismo Alan Parker Managing Director Whitbread Hotel Company Gary L Paxton President & CEO Dollar Rent-A-Car Systems Inc Girard Nilsson* President of the Supervisory Roan( Accor S.A. Gilles Nilsson Chairman & CEO EuroDlsney S.A. Dionisio Pestana Chairman Group Pestana Alberto del Pino Chief Executive Officer Allegro Resorts Sir Ian Prosser, Chairman Bass PLC Reed Travel Gmup Mandarin Oriental Hotel Group Sir Ralph Robins Chairman Rolls-Royce plc Michael D. Rose Chnuman Promos Hotel CorporationMarrah's Entertainment. Inc. Carl Ruderman Chairman Universal Media. Inc. Pave Zupan Ruskovic President Atlas Travel Agency Ivan Michael Schaeffer President & CEO Woodside Travel Trust Robert Selander President & CEO MasterCard International John L. Sharpe President & COO Four Seasons Hotels and Resorts Fernando Souza Pinto President & CEO Yang Ron Stringfellow Executive Chairman Southern Sun Group Ian Swain Thesedon Swain Travel Services. Inc. Ratan Tata Chairman & Managing Director The Taj Group of Hotels Jose Antonio Taxon President & CEO Amadeus Global Travel Distribution Jonathan M. Tisch President & CEO laws Hotels Mustafa Turkmen CEO & Managing Director Enternasyonal Tourism Investments. Inc. Yapi Kredl Bank of Turkey Stanley Tollman Chairman The Travel Corporation Wolf-Riidiger Uhlig Mameging Dann SRS Hotels Steigenberger Reservation Service Leo NI van Wijk Pendent KIM Royal Dutch Airlines Joseph Vittoria Chairman & CEO Travel Services International Daniel P. Weadock President & CEO ITT Sheraton Corporation Jurgen Weber Chairman Lufthansa German Airlines John Wilson Chief Executive Millennium & Copthorne Hotels plc Vincent A. Wolfington• Chain/um Carey International. Inc. Ron Woodard Thesidon Boeing Commercial Airplane Group Hani Yamani Chairman Hani A Z Yamani Investments Ltd Shuichim Yamannuchi Chairman East Japan Railway Company Ulrich 'Berke Chief Execuebe The Thomas Cook Group Honorary Members Sir Frank Moore. AO Chairman Taylor Byrne Tourism Group James D. Robinson III Chairman & CEO RRE Investors. LLC Chairman Emeritus. WTTC Tommaso Zanzotto President T'L Associates President Geoffrey H. Lipman *Executive Committee Member EFTA00578075 World Tr • v it I —6 — Ton fl ans Council Eweutive Committee Chairman Ramey Golub Anonican Empress Company Viee•Chairmen Robot L. Crandall Anonican Airlines Sir Cohn Marshall British Ainrays pie Otani Pelisson Ace°, S.A. Committee Members Daniel Attunes KfleMi Trawl Holding Limited Sir John Egan litAA plc Andre Jordan !mmar S.A. Sol Kenner San International ilemat Klein Lufthansa German Airlines 1. W. Manion, Alarrunt International. Inc P.R.S. ObefOt The (Theroi Group Prank A. Olson The Herr. Corporation Sir Ian Prosser Bum plc Vincent A. Mutilation Carey Intonational. Inc. Immediate Past Chairman RObefl El. Burns ROB Holdings Lamoied Chairman Emeritus lames I). Robinson Ill RRE lawman. LW President Geoffrey II. Lipman Wail,i T.rrrl@ Tourism Council %%Tie Registered Office: 20 Grosvenor Place. London SW1X 71T. U.K. Tel: (444-171) 838 9400 Fax: (444-171) 838 9050 http://www.wac.org e-mail: Creatinglobsecompusent.com A Company- Lamed by Centime. Reputation No. 2506591 September 1998 President Nelson Mandela Executive Deputy President Thabo Mbeki Republic of South Africa In support of your South Africa Jobs Summit, the Members of the World Travel & Tourism Council, the global business leaders forum, urge you to reflect the significant job creation potential of Travel & Tourism in the Jobs Summit action plan. This report, based on new concepts of Satellite Accounting being developed through inter- national public/private sector collaboration shows the direct economic impact of the South African Travel & Tourism industry. It also calculates Travel & Tourism's very strong flow through effect across the economy, stimulating employment in upstream suppliers and downstream servicers of travellers and travel companies — construction, telecommunica- tions, retail and manufacturing. It suggests that by 2010 more than 174,000 new jobs can be created directly by the Travel & Tourism industry, and 516,000 jobs can be created, directly and indirectly, across the broader South African economy. These will be good jobs ranging across the employment spectrum from white to blue col- lar. They will pay higher than average wages and be particularly accessible to women, the unskilled and new entrants into the job market. They will incorporate high levels of train- ing. The majority will be in small and medium-sized enterprises — often in city centres or rural areas where structural unemployment is most severe. We also set out general policy directions based on our Millennium Vision — which we believe could help to realise that potential. These are closely aligned to the broad policy goals of your government, reflected in the "Tourism in Gear" approach. The Members of the World Travel & Tourism Council stand ready to work with you to create hundreds of thousands of jobs into the new Millennium. Respectfully. Harvey Golub Chairman Geoffrey H. Lipman President TRAVEL &TOURISM: Cre-ati Jobs EFTA00578076 SOUTH AFRICA TRAVEL & TOURISM CREATING JOBS* 1998 2010 T&T Industry Jobs 250,000 420,000 % of Total 2.4 3.1 Jobs Created 175,000 T&T Economy Jobs 735,000 1,250,000 % of Total 7.0 9.3 Jobs Created 516,000 *Baseline Scenario • "figures rounded" EFTA00578077 South Africa's Travel & Tourism - Economic Driver for the 21st Century This Report: Assesses the impact of 'fravel & Tourism - day and stay, business and leisure, domestic and international — in the South African economy. It covers: • T&T INDUSTRY showing the size of the sector — transport, accommodation, catering, recreation and related activities. • T&T ECONOMY showing the impact of Travel & Tourism as it ripples through the wider economy. It uses the modern statistical measurement technique of 'National Satellite Accounting' to identify direct economic effects of travellers and travel companies, as well as the indirect economic effects of suppliers and support services. WTTC/WEFA are at the forefront of international public/private sector research in this area. Develops a range of forecasts about the future of Travel & Tourism: • Baseline — the most likely. • Optimistic — with most favourable circumstances. • Pessimistic — with most unfavourable circumstances. These have been devised with help of a panel of local experts. Unless otherwise specified, the baseline forecast is used throughout. Makes a series of policy recommendations which are designed to help government tap the huge potential benefits that Travel & Tourism offers South Africa. It should be read with regard to wider trends towards globalisa- lion, privatisation, regionalisation and public/private sector driven market economies. In order to become fully competitive South Africa, together with the wider Southern African region, must continue to move towards liberalised markets. TIP OF AN ECONOMIC ICEBERG T&T Industry ACCOMMODATION • CATERING / /0 ENTERTAINMENT • /• RECREAT ION /TRANSPORTATION AND OTHER :ressioimemmane •- TRAVE ELATED SERVICES T&T Economy Services • Oil/Gas Supply • Wholesalers • Printing/Publishing • Utilities • Financial Services • Sanitation Services • Furnishings and Equipment Suppliers • Security Services • Rental Car Manufacturing • Transportation • Administration • Tourism Promotion • Ship Building • Aircraft Manufacturing • Resort Development • Glass Products • Iron/Steel • Computers • Utilities • Concrete • Mining • Plastics • Chemicals • Textiles • Metal Products • Wood EFTA00578078 The Reality of South Africa's Travel & Tourism Travel & Tourism is emerging as a leading global economic driver for the 21st century. In South Africa, it is already an important contributor to employment and wealth creation, with a huge flow through effect which touches all sectors of the economy. In the past three years, Travel & Tourism has created 187,170 new jobs across the South African economy alone. It has enormous potential as a catalyst for future economic and social development throughout the entire Southern African region. Travel & Tourism is different from most other industries because travellers are by definition mobile and they generate economic activity at different times and places — often indistinguishably from that generated by local residents. These activities, however, have a huge flow through effect across other economic sectors. Satellite Accounting maps that impact. Today's T&T INDUSTRY represents: 248,141 jobs: 2.4% of total employment Rand (R)16.982m GDP: 2.6% of the total Today's T&T ECONOMY represents: 737,600 jobs: 7.0% of total employment R53.2bn GOP: 8.2% of total GDP R24.2bn exports: 13.2% of total exports R12.8bn capital investment: 11.4% of total investment (11770WEPA estimates) Strengths and Weaknesses South Africa has tremendous advantages in the global tourism market and some critical challenges. The future prosperity of the sector will be assured only if these advantages are consolidated and the weaknesses minimised. ■ The characteristics of South African tourism products are in line with global market trends for adventure tourism, ecotourism, cultural tourism etc. ■ Since 1994 there has been significant increased capacity for tourism in accommodation, transport. airlinks etc. There has been increased coordination of tourism initiatives in Southern Africa for expansion and increased diversity of products. a South Africa represents exceptional value for money for visitors from key origin markets. ■ South Africa has a positive international image for its democratic political transformation. But ■ Some parts of South Africa are increasingly seen as unsafe for tourists. ■ There are gaps in infrastructure and lack of capacity in some areas. ■ Product quality and service levels do not always meet international standards. Prospects The future for Travel & Tourism in South Africa could take very different forms, depending on several key factors including government monetary policy, the rise or fall in crime and the effectiveness of the industry's product development and marketing. SOUTH AFRICA Travel & Tourism Economy GDP Pessimistic, Baseline & Optimistic 1988-2010 (Billions of Rand) 350 300 250 200 150 100 50 0 1988 1993 Optimistic Base Pessimistic 1998 2003 2010 SOUTH AFRICA Travel & Tourism Economy Employment Pessimistic, Baseline & Optimistic 1988-2010 (Thousands of Jobs) 1600 1400 1200 1000 800 600 400 200 0 Optimistic Pessimistic 1988 1993 1998 2003 2010 EFTA00578079 South Africa Travel & Tourism Forecast: Baseline Case 1998 2010 Rand % of Tot Rand Growth °/0 of Tot % Real** Consumer Expenditures 23.2 5.8% 79.3 6.4% 3.5% Business Travel 8.8 29.1 3.4% Government Expenditures 0.8 0.5*/* 4.9 1.1% 9.2% Capital Investment 12.8 11.4% 47.8 13.5*/* 5.1% Exports 24.2 13.2% 109.2 17.5% 6.8% T&T Demand 69.8 270.2 5.2% GDP* 53.2 8.2*/* 210.9 10.3% 5.5% Imports* 16.6 9.2*/* 59.3 9.5% 4.6% Taxes* 15.0 8.4*/* 55.1 10.6% 4.8% Employment* (Thous) 737.6 7.0% 1,253.7 9.3% 4.5% •T&T Economy Totals "Annualized Growth All Rand figures are in Billions. In the most likely "baseline scenario," forecast : ■ South African consumers will spend more of their disposable income on Travel & Tourism which will grow to 6.4% of total personal consumption by 2010. ■ Government Travel & Tourism expenditure will also increase by almost 10% per year. ■ The share of private capital expenditure attributed to Travel & Tourism will rise at about 5% per year, and will be focused, not only, on major hotel and resort development, but also on game parks and guesthouses. ■ Foreign visitor spending will continue to grow at double digit rates for the next two years and at more than 6% per year for the first decade of the 21st century. To make this baseline a reality, and indeed to reach towards the optimistic scenario, a climate needs to be created to encourage a relatively safe and hospitable environment for travellers; targeted marketing and clear branding; incentives for investment — particularly for improvement of infrastruc- ture: maintenance of quality; and progressive expansion of cooperative ventures in the Southern African region. In these circumstances, Travel & Tourism could add more than half a million new jobs across South Africa's economy over the next 12 years. Most of these jobs. will be for young people, first time job seekers and women. They will be strongly concentrated in small businesses and local communities throughout the country. In many cases they fit model employment patterns: ■ They can be created at low cost, and faster than most industries ■ They are service and export related ■ They stimulate regeneration and cohesion by counter- balancing the flow from disadvantaged rural areas ■ They are often created in small, family run businesses ■ They provide significant opportunities for women ■ They are ideal for young, or first time employees ■ They can provide education, training and skill development ■ Wages are at or above the economic average South Africa Travel & Tourism Forecast 2010 — Pessimistic and Optimistic Cases ---- Pessimistic ---- Optimistic Rand % of Tot Rand % of Tot Consumer Expenditures 55.3 4.9% 119.1 9.6% Business Travel 20.6 42.9 Government Expenditures 2.9 0.6% 8.7 2.0% Capital Investment 32.3 9.1% 74.3 21.0% Exports 69.2 11.1% 181.7 29.1% T&T Demand 180.3 426.7 GDP* 139.6 6.8% 336.0 16.4% Employment* (Thous) 1,043.7 7.76/0 1,570.5 11.6% •T&T Economy Totals. All Rand figures are in Billions. EFTA00578080 Realising the Potential Travel & Tourism is already a strong and growing force in South Africa — generating wealth, jobs and investment across the economy and enhancing social development. Its impact will be substantially increased if: ■ The people of South Africa reap the benefits at the community level. ■ The underlying policy framework is conducive to dynamic growth. ■ The private sector develops competitive products and leading edge international standards of service ■ Government creates a climate which attracts invest- ment, streamlines regulation and builds infrastructure. ■ Consumer interest and confidence is maintained. Modern travellers are discerning and have an increasing choice of destinations. Reputations have to be carefully and creatively built on a base of quality, but they can be lost overnight. It is vitally important that safety and security is assured. Maintaining consumer confidence should be a top priority for government, if the potential benefits of tourism to the economy are to be realised. There is a growing consensus as to the pivotal role of Travel & Tourism in sustainable economic and social development in the Southern African region. There is, for example, a strong correlation between the concepts contained in WITC's Milleniwn Vision for Africa, the World Economic Forum's recent Namibia summit Tomorrow's T&T INDUSTRY can represent: 422,182 jobs: 3.1% of total employment Rand (R) 68.1bn of GDP: 3.3% of the total Tomorrow's T&T ECONOMY can represent 1,253,700 jobs: 9.3% of total employment R210.9bn of GDP: 10.3% of the total R109.2bn of exports: 17.5% of the total R47.8bn of capital investment: 13.5% of the total (IVTTCAVEM VS esfinnues) conclusions and the government's Tourism in Gear Strategy V lir TOURISM IN GEAR WTTC AFRICA MILLENNIUM VISION WEF NAMIBIA Develop Tourism as a National priority Highlight Travel & Tourism as a strategic economic/ employment priority,based on its full economic impact Recognize the full value of Tourism across the economy and measure it through Satellite Accounts Implement a new International marketing strategy, freshen branding and particularly develop eco and cultural tourism Advance Sustainable growth, regional public & private sector marketing, majoring on Afrikatourism to promote cultural and natural heritage Establish an internationally recognizable brand, leverage natural wildlife and culture of Southern Africa into national strategies Improve quality and quantity of skilled manpower in tourism,and upgrade hospitality front line service Invest in education and training to raise operational quality,standards and competitiveness Put education and training at the forefront of national and regional tourism development. Investigate Infrastructure needs and resources, leverage government programs towards tourism and obtain special funding allocations. Attract support from international financing institutions for Travel & Tourism infrastruture Engage international/regional financial institutions in tourism growth, advance publicfprivate sector initiatives, develop infrastructure for sustainable growth. EFTA00578081 Recommendations Against this background WTTC recommends that the South 1. Make Travel & Tourism a strategic economic and employment priority ■ Recognise Travel & Tourism's flow through effect across the economy and establish a National Satellite Account to measure it. ■ Reflect Travel & Tourism in mainstream policies for employment, trade, investment and education. 2. Move Towards Open and Competitive Markets ■ Progressively liberalise trade, transport and telecommunications through the World Trade Organization and regional trading regimes. ■ Pay particular attention to opening up air transport markets to attract more long haul services and improve regional networks by expanding liberal aviation accords, bilaterally and regionally. ■ Upgrade promotion to match prevailing competitive approaches: restructure SATOUR with adequate funds along public/private sector cooperative lines and coordinate provincial, national and regional marketing. ■ Consider building on the branding concept of "Afrikatourism" highlighting South Africa's unique natural. cultural and wildlife traditions. 3. Pursue Sustainable Development ■ Establish clear procedures and guidelines for planned and sustainable tourist expansion as proposed in Tourism in GEAR: pay particular attention to eco tourism and ensure that park facilities are expanded sustainably. ■ Adopt the principles of Agenda 21 for the Travel & Tourism Industry developed by the WTTC, the World Tourism Organization and the Earth Council. Make South Africa a GREEN GLOBE destination and encourage certification. African Government: ■ Ensure that sustainable Travel & Tourism strategies take into account the need for local community development, engagement and empowerment. ■ Expand microloans to provide incentives for local community based sustainable tourism enterprises. 4. Eliminate Barriers to Growth Build safety and security provisions into national, provincial and local tourism strategies and practice putting a special emphasis on Travel & Tourism in overall policing strategies. ■ Place education and training at the forefront of tourism development, expanding it in school curricula and highlighting its career prospects and role in national economic rejuvenation: introduce measures to increase skills — particularly front-line service. ■ Expand Infrastructure, particularly for airports, air traffic control and streamline border clearance. eliminating visas where possible. ■ Engage international financial institutions including the World Bank and the African Development Bank to support sustainable tourism infrastructure in lending priorities. ■ Develop fiscal regimes which encourage tourism growth, exports, investment, infrastructure, business innovation and job creation. We believe such policies, developed with close public/private sector collaboration would ensure the creation of between half a million and 800,000 new jobs across the South African economy by 2010. EFTA00578082 Satellite Accounting Concepts Other Demand Consumption Demand (Millions of Rand) 50,623 19,135 69,758 El Travel & Tourism Consumption - traditionally known as visitor spending, this is the primary measure of Travel & Tourism expenditures which includes personal, business and government travel provided by or for visitors. It also captures purchases of travel-related consumer durables. 1 : 1 Travel & Tourism Demand - in order to capture the broader impact that Travel & Tourism has on the econ- omy, this concept expands Travel & Tourism Consumption to include related capital and infrastruc- ture investment, government spending and exports of manufactured goods used abroad by Travel & Tourism. T&T Industry - is the direct South African value-added and employment associated with Travel & Tourism Consumption (A). Direct producers include airlines, hotels, car rental, tour agents/operators and retail shops, etc. D. T&T Economy - is the direct and indirect South African value-added and employment (D1 and D2) associated with Travel & Tourism Demand (B). Direct producers include C plus aircraft manufacturers, resort developers, highway construction, etc. D1 D2 Indirect producers include fuel suppliers, food suppliers, paper suppliers and wholesalers, plus steel producers, electrical equipment makers, wood products, etc. Supply (Millions of Rand) Direct GDP Indirect GDP Imports Total Supply 16,982 21,589 12,052 50,623 6,419 8,160 4,556 19,135 23,401 29,749 16,608 69,758 Direct Jobs 4 4 4 Employment (Jobs) Indirect Jobs Imports Total lobs 248,141 287,150 N/A 535,290 93,791 108,535 N/A 202,327 341,932 395,685 N/A 737,617 When to Use Which Result/Estimate A. When illustrating Travel & Tourism's consumption demand B. C. D. When illustrating Travel & Tourism's total demand in the economy When making GDP and employment com- parisons between Travel & Tourism and other industries When making GDP and employment assessments of Travel & Tourism's total economic impact 8 EFTA00578083 This report follows the concept of Satellite Accounting, developed by public/private sector experts under the auspices of the World Tourism Organization. It deals with all Travel & Tourism — day and stay, business and leisure, international and domestic according to United Nations definitions. It identifies, from South Africa's National Accounts, items such as personal consumption, intermediate inputs, govern- ment expenditures, imports/exports, and value-added related to Travel & Tourism. The report shows three forecast scenarios — baseline, opti• mistic and pessimistic. Unless specified the baseline is used. T&T Industry Direct visitor activity (transportation, accommodation, catering, recreation and travel services) South Africa's Travel & Tourism Economic aim Performance and Potential It considers two different, but related measurements of Travel & Tourism illustrated in the charts below: ■ T&T Industry: The concept of the direct Travel & Tourism Industry. This shows the size of the industry and can be used to compare Travel & Tourism to other industries in the economy. ■ T&T Economy: The concept of the direct and indirect Travel & Tourism Economy. This shows the more comprehensive "flow through effect" that Travel & Tourism has across the economy as a whole. SOUTH AFRICA Travel & Tourism Employment (Thousands of Jobs) 900 800 700 600 500 400 300 200 100 0 1995 I Economy r_j Industry I 1996 1997 1998 1999 2000 SOUTH AFRICA Travel & Tourism GDP (1998 Constant Rand Billions) no so 60 40 ao 20 10 0 ■Economy .Industry T&T Economy Direct and indirect from visitor activity, capital investment, exports and government services. 1995 1996 1997 1998 1999 2000 9 EFTA00578084 Travel & Tourism Potential - The Industry and the Economy at a Glance Travel & Tourism — encompassing transport, accommoda- tion. catering, recreation and services for travellers — is one of the world's largest industries and creators of quality jobs. Worldwide, in 1998 it is expected to generate USS 4.4 trillion of economic activity, forecast to grow to USS 10.0 trillion by 2010. In South Africa, in 1998, Travel & Tourism is expected to generate Rand 69.8 billion - US$ 13.1 billion - of econo- mic activity, growing to Rand 270.2 billion — US$ 30.0 billion — by 2010. In 1998, the T&T Industry should contribute 4.2% to world- wide Gross Domestic Product (GDP), rising to 4.4% by 2010. The T&T Economy should contribute 11.6% to 1998 GDP and 12.5% to 2010 GDP. The South African T&T Industry is expected to contribute 2.6% to GDP in 1998, rising to 33% by 2010. The T&T Economy contribution should grow from 8.2% to 10.3% in the same period. Travel & Tourism is a high growth activity, which is forecast to increase its total economic activity by 4.1% per annum worldwide in real terms over the next twelve years. In South Africa, Travel & Tourism economic activity is expected to grow by 84.3%, in real terms, between 1998 and 2010. That represents 5.5% per annum. Travel & Tourism is human•resource intensive, creating quality jobs across the full employment spectrum. In 1998, in 10.7 jobs is generated by the T&T Economy. The T&T Industry accounts for 3.2% of global employment. Today there are 79.2 million T&T Industry jobs and 231 million in the T&T Economy rising to 116.8 million T&T Industry jobs and 328 million T&T Economy jobs by 2010. In South Africa in 1998, T&T Economy employment is estimated at 737,617 jobs or 7.0% of total employment, which is 1 in every 14.2 jobs. By 2010, this should grow to 1.254 million, 9.3% of total employment or 1 in every 10.8 jobs. The 248,141 T&T Industry jobs account for 2.4% of total employment in 1998 and are forecast to rise to 422,182 or 3.1% of the total by 2010. Travel & Tourism is a major exporter, with inbound visitors injecting dollars and foreign exchange directly into the economy. In South Africa, exports make up a very important share of Travel & Tourism's contribution to Gross Domestic Product. Of total exports, services and merchandise, Travel & Tourism is expected to generate 13.2% in 1998, growing to 17.5% by 2010. Travel & Tourism is a catalyst for construction and manu- facturing. In 1998. the private and public sectors combined are expected to spend US$ 779 billion in new Travel & Tourism capital investment worldwide — 11.8% of the total — rising to US$ 1.8 trillion by 2010 — 12.0% of the total. Current capital investment in South Africa's T&T Economy is estimated at Rand 12.8 billion — US$ 2.4 billion — or 11.4% of total investment. By 2010, this should reach Rand 47.8 billion — US$ 5.3 billion - or 13.5% of the total. Travel & Tourism is both a generator and receiver of govern- ment funds. Globally in 1998, Travel & Tourism is expected to generate US$ 802 billion of taxes — 10.6% of total — while channeling US$ 253 billion of government expenditures — 6.8% of total. By 2010, taxes should increase to US$ 1.8 trillion — 11.4% of the total - and government spending to US$ 542 billion -7.4% of the total. Taxes from Travel & Tourism in South Africa in 1998 are expected to total Rand 15.0 billion — US$ 2.8 billion — or 8.4% of total taxation. In contrast, government operating expenditures are forecast at Rand 0.8 billion, or 0.6% of the total. Over the next 12 years, South Africa's Travel & Tourism taxes are expected to grow to Rand 55.1 billion or 10.6% of total taxes. During this period, government spending is forecast to grow to Rand 4.9 billion, or 1.1% of overall expenditures. 10 EFTA00578085 Potential Driving Forces The following factors are expected to drive the future growth of South African Travel & Tourism. Dependant on their evolution three forecast scenarios have been developed: • Baseline: the most likely. • Optimistic: with most favourable circumstances • Pessimistic: with most unfavourable circumstances Unless otherwise specified baseline forecasts are used throughout. Quantitative assumptions — largely reflecting macroeconomics — are provided by WEFA's internally consistent trade-linked forecast for South Africa and 80 other economies of the world. Qualitative assumptions - socio economic, policy, marketing, etc. - are from local public/private sector sources. Maximising Conditions South Africa's tourism depth and diversity of products are in line with evolving global market trends for adventure tourism, ecotourism, cultural enrichment, etc. A Tracking market trends and focusing on priority target markets that are in line with South Africa's tourism attractions. ♦ Building on the concept of Afrikatourism, in particular focusing on the sustainable utilisation of natural and cultural resources. A Strategic and innovative marketing of Southern Africa as a destination. Significant increased tourism capacity in accommodation, transport, airlinks, attractions, etc., building on the momentum gained since 1994. A Targeted marketing to ensure that there is synergy between supply and demand. ♦ Investment promotion and incentives to sustain the momentum of responsible capacity growth. Increased co-operation and co-ordination of tourism initiatives in Southern Africa and resultant expansion of product depth and diversity (e.g. Transfrontier Parks and Spatial Development Initiatives, RETOSA, etc.). A A shared vision for Southern Africa and practical initiatives to address issues of common interest and mutual benefit (e.g. immigration procedures, product quality assurance, co-ordinated marketing etc.). Exceptional value for money relative to key competitors — mainly based on favourable exchange rates. A Responsible pricing strategies. Positive global perceptions of peaceful political transformation in South Africa. A Building on and maintaining the positive political momentum. Minimising Negative Conditions Perception and reality of personal safety of tourists declining. ♦ Improved safety and security situation, with particular focus on tourism areas. Tourism related infrastructure and capacity gaps. ♦ Focusing government infrastructure priorities on tourism related services (e.g. public transportation, road infrastructure, liberalisation of airspace, etc.). Decline in product quality and service levels. ♦ Effective quality assurance programmes and appropriate human resource development. 11 EFTA00578086 . II MI Forecast Scenarios - Alternatives In forecasting the Travel & Tourism Satellite Account for South Africa. WEFA has employed its full range of economic databases and resources to develop a baseline scenario that it believes has the highest probability of occurring at this moment in time. However, as the recent and unexpected Rand devaluation illustrates. major changes are often not predictable. WEFA has developed two additional forecasts — optimistic and pessimistic scenarios — to illustrate the range of passible results for South Africa Travel & Tourism. Unless otherwise indicated, the figures in this report represent the baseline scenario . BASELINE: THE MOST LIKELY ♦ Increasing per capita income will bring Travel & Tourism's share of personal consumption up gradually over the forecast period (from 5.7% in 1997 to 6.4% in 2010) as non-luxury items such as food and apparel decline in share. As a result of the Rand's depreciation, a near-term shift occurs within personal consumption from international expenditures to more domestic travelling. This has no net effect on PCE but does increase Travel & Tourism GDP as the import portion of PCE declines. • Government expenditures in Travel & Tourism related categories will experience strong growth, approaching 10% annually, but will remain relatively low, as major structural shifts in spending are unlikely. These increases include expected growth in marketing expenditures for basic international campaigns. ♦ Private capital investment in tourism depicts strength in terms of Travel & Tourism's share, registering 11.8% in 1997. This is expected to continue and even increase as major investment items in the hotel, resort, casino and tourism retail market are initiated and completed over the next ten years, bringing Travel & Tourism's share of private investment up to 13.5% by 2010. This growth is supported by capital investment in the smaller sectors of guesthouses and game parks. ♦ Foreign visitor spending (service exports), while not maintaining the remarkable real double-digit growth of the past decade, is expected to continue its strong real growth over the forecast period, registering 12% and 11% in 1999 and 2000, respectively. Steady growth will continue into the next decade, averaging over 6% annu- ally. In the near-term, growth will be enhanced by the increased purchasing power provided by a weaker Rand. In the longer term, visitor expenditure growth will be accommodated by the strong investment taking place in the latter part of the 1990s. South Africa Travel & Tourism Forecast: Baseline Case 1998 2010 Growth Rand % of Tot Rand % of Tot % Real* * Consumer Expenditures 23.2 5.8% 79.3 6.4% 3.5% Business Travel 8.8 29.1 3.4% Government Expenditures 0.8 0.5°/o 4.9 1.1% 9.2% Capital Investment 12.8 11.4% 47.8 13.5% 5.1% Exports 24.2 13.2°/o 109.2 17.5% 6.8% T&T Demand 69.8 270.2 5.2% GDP* 53.2 8.2% 210.9 10.3% 5.5% Imports* 16.6 9.2% 59.3 9.5% 4.6% Taxes* 15.0 8.4% 55.1 10.6% 4.8% Employment* (Thous) 737.6 7.0% 1,253.7 9.3% 4.5% •T&T Economy Totals • •Annualized Growth All Rand figures are in Billions. 12 EFTA00578087 Rand % of Tot In developing the pessimistic case scenario, the forecase assumes that the positive conditions are not met and the negative conditions prevail. The optimistic case scenario assumes that positive conditions are met and the negative conditions are minimised. PESSIMISTIC: WITH MOST UNFAVOURABLE CIRCUMSTANCES  Government Travel & Tourism expenditure growth remains modest, averaging growth of less than 5% per annum.  Foreign visitor spending real growth slows in 1998 (8.4%) and in 1999 (5.3%), which ripples through the outlook for private capital invest- ment. dampening growth over the next ten years.  Tight monetary policy in the form of high interest rates constrains tourism spending by South African residents. This contains Travel & Tourism personal consumption to less than 1% growth annually, as well as domestic invest- ment. Total capital investment is dampened from 5% growth in the baseline down to less than 2% annually. Forecast Scenarios - Alternatives OPTIMISTIC: WITH MOST FAVOURABLE CIRCUMSTANCES ♦ Crime directed towards tourists falls dramatically. ♦ Government investment and consumption of Travel & Tourism shares are increased in the short term which provides impetus for increased Travel & Tourism expen- ditures in other sectors. Although the base of government Travel & Tourism consumption is small, real growth of close to 15% annually and an assumed multiplier of approximately 2 helps to boost Travel & Tourism personal consumption up to 7.2% growth in 1998 and 5.9% in 1999. ♦ In addition to the impact of a weaker Rand on domestic tourism, SA residents' long-term demand increases as a product of focused marketing and improved infrastructure. This trend, in conjunction with rising per capita income. brings the T&T share of personal consumption up from 5.7% in 1997 to 9.6% in 2010. ♦ Currency depreciation has strong positive impact on foreign visitor arrivals, and service exports continue strong growth over forecast period. Return on interna- tional marketing expenditures exceeds expectations. This increases real growth of Travel & Tourism exports to an average of approximately 10% over the forecast period compared to 6.5% in the baseline forecast. ♦ As foreign visitor and domestic tourism spending increases, capital investment rises to meet increased demand. Above average returns on investment spur on further investment growth in later years, bringing the average real growth to 8% per annum compared with just below 5% in the baseline forecast. South Africa Travel & Tourism Forecast 2010 - Pessimistic and Optimistic Cases ---- Pessimistic ---- -- Optimistic ---- Rand % of Tot Consumer Expenditures 55.3 4.5% 119.1 9.6% Business Travel 20.6 42.9 Government Expenditures 2.9 0.6°4 8.7 2.0°k Capital Investment 32.3 9.1°4 74.3 21.0°k Exports 69.2 11.1°4 181.7 29.1°k T&T Demand 180.3 426.7 GDP• 139.6 6.8°4 336.0 16.4°4 Employment* (Thous) 1,043.7 7.7°4 1,570.5 11.6°k •T&T Economy Totals. All Rand figures are in Billions. 13 EFTA00578088 i Total Demand Travel & Tourism in South Africa is expected to produce Rand 69.8 billion of total demand in 1998, including: ■ Rand 23.2 billion of Travel & Tourism personal con- sumption by residents — 5.8% of total consumer spend- ing; • Rand 8.9 billion of business and government travel by companies and government employees; • Rand 0.8 billion of government expenditures, to provide individual and collective services to the South African Travel & Tourism industry and its visitors — 0.6% of total government spending; ■ Rand 12.8 billion of capital investment in personal, commercial and public Travel & Tourism facilities, equipment and infrastructure by residents, Travel & Tourism companies, local and national governments — 11.5% of total capital investment; and • Rand 24.2 billion of visitor and merchandise exports generated from international markets — 13.2% of total exports. The pie chart below shows the importance that visitor exports — 26.5% of total Travel & Tourism demand — has on SOUTH AFRICA Travel & Tourism Total Demand (1998 Constant Rand Billions) 80 75 70 65 60 55 50 1995 199e 1997 II 2000 WORLD Travel & Tourism Total Demand (1998 Constant USS Billions) IMO 0.500 0.250 4,000 3.750 9,500 ¶996 1997 1996 1999 1995 2000 the T&T Economy, particularly in relation to the limited government support for the sector. The bar charts below for the period 1996.2000 show that South African Travel & Tourism is consistently posting strong real growth year-upon-year at 5.5% per annum — 50% above the world average. The longer term perspective shown in the surface chart reveals the leap in total Travel & Tourism demand from 1995 with the liberalising socio political environment. South Africa Travel & Tourism base case growth is expected to total 114.9% from 1998 to 2010 compared to the world composite of 79.1% real growth. This baseline forecast esti- mates total Travel & Tourism demand at Rand 270.2 billion by 2010. Under the pessimistic scenario this figure would total Rand 180.3 billion. The optimistic scenario would total Rand 426.7 billion. SOUTH AFRICA Travel & Tourism Total Demand - 2010 (Rand Billions) Pessimistic Case Base Case Optimistic Case 180.3 270.2 426.7 SOUTH AFRICA Travel & Tourism Total Demand (1998 Est. Rand Billions) One En:4416G* Wind roffmion 0 2 el l Penatol Goof aut.". (232) 6185r YGON tozOs MG Go/10mM Kolco150036) Gov, Oped.Once..) WORLD Travel & Tourism Total Demand (1998 Est. USS Billions) Govl °Goal tedlenve)(176.1) Capeal karolvn I7n 7I 011icv &ports Oa _rose r i PorsonilOzaWMPISona-021”) Goa 8460ocl (MM) 1X6) BUNIOSS TtlY01098.1) Ifilter °PCS 0 2") SOUTH AFRICA Travel & Tourism Total Demand (Cumulative Real Growth, Percent) 120 90 60 30 0 1988 1993 1998 2008 1010 WORLD Travel & Tourism Total Demand (Cumulative Real Growth, Percent) 80 60 40 20 0 1988 1993 1998 2009 20)0 14 EFTA00578089 The T&T Industry in South Africa will directly generate an estimated 248,141 jobs in 1998. and a total 737,617 jobs, directly and indirectly, across the broader spectrum of South Africa's economic activities. These will include: • Travel company employment, providing private sector services to visitors and business travellers; ■ Government agency employment, providing public sector Travel & Tourism services to visitors, business travellers, travel companies and the community-at- large; and • Supplier company employment, providing goods and services (manufacturing, construction, wholesale, financial services, agricultural, etc) to travel companies and government agencies which serve visitors. The direct T&T Industry jobs are forecast to grow to 422,182 by 2010 increasing the industry sham of total employment from 2.4% to 3.1% of total employment. The 737,617 jobs in the T&T Economy will account for 7.0% of the total workforce, or I in every 14.2 jobs in South Africa in 1998. This is forecast to grow to 1,253,700 jobs — 9.3% of total employment by 2010 — injecting more than half a million new jobs into South Africa's economy. SOUTH AFRICA Travel & Tourism Employment (Thousands of Jobs) 900 8,93 700 400 500 400 80 200 103 640444”/ hd.,1"/ I WORLD Travel & Tourism Employment (Millions of Jobs) 250 . SW84' 7 • hthWir 200 150 100 so 0 1 I I Employment This long-term growth, averaging 4.5‘,‘ per year. although strong by world standards, is actually slower than recent history where T&T Economy employment grew by 18.9% in 1995 alone. Indeed there was a gain of more than one full percentage point for Travel & Tourism jobs within the South African economy between 1995 and 1997. During this two- year period, more than 120,000 jobs were created, increasing the percent of total jobs from 5.4% to 6.5%. The employment results for South Africa are measurably effected by the large government and domestic employment sector results. Excluding these two sectors from the equation raises the T&T Economy employment result in 1998 from 7.0% to 8.9% of total jobs. The difference between the pessimistic and optimistic case scenario for employment in 2010 is more than half a million jobs. T&T Economy Employment - 2010 (Thousands of lobs and Percent of Total) SOUTH AFRICA Pessimistic Case 1,043.7 7.7% Base Case 1,253.7 9.3% SOUTH AFRICA Travel & Tourism Employment (Percent of Total) E:crory 1995 '996 1997 1993 1999 2000 WORLD Travel & Tourism Employment (Percent of Total) 10% 8% 61 4% 21 0% E:tecry 1995 1996 1997 1993 1999 2000 Optimistic Cato 1,570.5 11.6% SOUTH AFRICA T&T Economy Employment (Cumulative Real Growth, Percent) 80 80 40 20 0 1988 1993 1998 2003 2010 WORLD T&T Economy Employment (Cumulative Real Growth, Percent) 80 60 00 20 0 1988 1993 1998 2003 2010 15 EFTA00578090 Gross Domestic Product The T&T Industry in South Africa is expected to produce Rand 17.0 billion of direct Gross Domestic Product (GDP) in 1998 - 2.6% of total GDP. This is expected to almost double in real terms to Rand 68.1 billion by 2010 — 3.2% of overall GDP. The T&T Economy is expected to produce 1998 GDP of Rand 53.2 billion — 8.2% of overall GDP. By 2010, this is forecast to gain more than 2.0% percentage points to total 10.3%, or Rand 210.9 billion. This figure illustrates the massive flow through effect of Travel & Tourism. The recent results and near-term forecasts — 1995-2000 are particularly significant. From 1992 to 1994, South Africa Travel & Tourism GDP posted real negative growth, while in 1995 it recovered with 26.5% real positive growth. Looking forward to 2010, annualised gains of 5.3% are forecast for T&T Economy GDP. Few other countries can match this growth. This growth outlook is exceptionally positive for all ele- ments of the Satellite Account, but it is clear that South Africa Travel & Tourism exports, growing at 6.3% per year, is particularly significant. Comparing internationally, South African T&T Economy GDP is well below the global norms of 11.7% of overall GDP where the Asia / Pacific crisis is having a major effect. World Travel & Tourism related GDP is expected to show little growth between 1995 and 2000, with pick-up only in the new millennium. This situation offers real opportunity for South Africa. The pessimistic case scenario for South Africa holds T&T Economy GDP to 6.8% of total GDP in 2010. The baseline forecast shows an increase to 10.3%. The optimistic sce- nario totals 16.4% of GDP. SOUTH AFRICA T&T Economy GDP - 2010 (Rand Billions and Percent of Total) Pessimistic Case Base Case Optimistic Case 139.6 210.9 336.0 6.8% 10.3% 16.6% SOUTH AFRICA Travel & Tourism GDP (1998 Constant Rand Billions) SOUTH AFRICA Travel & Tourism GDP (Percent of Total) 10, 70 60 50 40 30 20 Hifi! 10 0 0- lags 1996 11497 ECtrytr, 1996 1999 frou,1 2000 SOUTH AFRICA Travel & Tourism GDP (Cumulative Real Growth, Percent) 525 100 7s so 2$ 0 25 Ail 1988 1993 1998 2003 2010 WORLD Travel & Tourism GDP (1998 Constant USS Billions) WORLD Travel & Tourism GDP (Percent of Total) WORLD navel & Tourism GDP (Cumulative Real Growth, Percent) 4.000 •Economy • Mosby 124 80 3.600 10•- 60 3,000 2.500 40 2.000 1,500 20 1.000 500 ■ Economy ■Industry 0 0 1995 1996 1997 1996 1999 2000 1988 1993 1998 2003 2010 16 EFTA00578091 Examination of Travel & Tourism capital investment results and forecasts lends greater insight into the market forces at work in the economy and the expectations by the public and private sector to meet the challenges and opportunities in the years ahead. In 1998, Travel & Tourism capital investment in South Africa is expected to total Rand 12.8 billion, or 11.5% of total national investment. For South Africa, this expectation includes Rand 12.6 billion of investment from the private sector and Rand 0.2 billion of investment from the public sector. Worldwide, Travel & Tourism capital investment is expected to total S779 billion, or 11.8% of the total in 1998. Over the next twelve years (1998-2010), the average contri- bution of Travel & Tourism to the national capital invest- ment accounts is expected to grow from 11.5% to 13.5%. For the most part, Travel & Tourism capital investment has strong links to the business cycle, major events such as nat- ural disasters, and significant sociopolitical changes. In South Africa, major investment was made in 1991, followed by several years of uncertainty and then a major vote of confidence in 1995/1996 totalling 44% real growth. SOUTH AFRICA Travel & Tourism Capital Investment (1998 Constant Rand Billions) Is 14 13 12 11 10 9 $ 19% 1996 1992 1998 1999 10:0 WORLD Travel & Tourism Capital Investment (1998 Constant USS Billions) 900 850 800 no 700 650 600 1 9 9 5 1996 1997 1998 1999 2030 Capital Investment Looking forward to 2010, Travel & Tourism capital invest- ment in South Africa is forecast to grow 5.5% per year in constant Rand. The comparable global growth expectation is 4.5% per year. Noticeable from the graphs below is South Africa Travel & Tourism's increasing share of total capital investment — 10.3% in 1995 growing to 12.3% in 2000. This compares to a world share that is relatively stable at 11.4%. The base case scenario suggests significant opportunity for growth to 13.5% of total capital investment by 2010. The pessimistic scenario expects 9.1% of investment. The opti- mistic scenario results in a massive 21.0% of total capital investment in 2010. r SOUTH AFRICA Travel & Tourism Capital Investment - 2010 (Rand Billions and Percent of Total) 2 Pessimistic Case Base Case 32.3 47.8 9.1% 13.5% Optimistic Case 74.3 21.0% SOUTH AFRICA Travel & Tourism Capital Investment (Percent of Total) 12 5% 120% 115% 120% 105% I00% 1996 1997 1918 1999 1995 2000 WORLD Travel & Tourism Capital Investment (Percent of Total) 1995 1996 1997 1998 1999 2800 SOUTH AFRICA Travel & Tourism Capital Investment (Cumulative Real Growth, Percent) tee 120 80 40 0 1948 1993 1998 2003 2010 WORLD Travel & Tourism Capital Investment (Cumulative Real Growth, Percent) 100 so 60 40 20 0 1989 1993 1999 2003 2010 17 EFTA00578092 Personal & Business Travel al In 1998, South Africa is expected to generate Rand 23.2 bil- lion of personal Travel & Tourism consumption by residents — 5.8% of total personal consumption. Corporate travel of Rand 7.1 billion and government employee travel of Rand 1.8 billion add a further Rand 8.9 billion of visitor activity. Unlike South African visitor exports that depend on the international market for consumers, the business generated in these two categories depends on the South Africa econo- my itself. As the South Africa economy grows, South Africa consumer and business travel follow suit. Over the next twelve years to 2010, personal Travel & Tourism in South Africa is expected to grow at an annual rate of 3.5%, while business/govemment travel is expected to grow at an annual rate of 3.3%. Although most of this Travel & Tourism takes place within South Africa, part takes place abroad. The Satellite Account is required to capture all Travel & Tourism demand attribut- able to South Africa residents, visitors and travel companies. When the spending does take place abroad, the Account generates a corresponding -import credit" in the supply side SOUTH AFRICA Personal & Business Travel & Tourism (1998 Constant Rand Billions) 36 MB:away Irclaby 23 15 10 5 0 ID WORLD Personal & Business Travel & Tourism (1998 Constant USS Billions) MOO MEconany 9gi6bY tisco 2,000 MOO 1.000 SOO 0 accounts, ensuring an accurate assessment of Travel & Tourism "produced" in South Africa and Travel & Tourism "produced" abroad. In 1998, South Africa residents will spend just under 6% of their personal expenditures on Travel & Tourism. This is lower than the world average of 10.5%. This is however consistent with other developing countries. And, in those emerging economies, personal consumption tends to increase in direct relation to the standard of living and per capita income. By 2010, South Africa expects to see Travel & Tourism per- sonal consumption increase to 6.4% of total consumption. The optimistic scenario calls for an increase to 9.6% of total consumption, while the pessimistic case would result in 4.5% of the total. SOUTH AFRICA Travel & Tourism Personal Consumption - 2010 (Rand Billions and Percent of Total) Pessimistic Case Base Case Optimistk Case 55.3 79.3 119.1 4.5% 6.4% 9.6% SOUTH Africa Travel & Tourism Personal Consumption (Percent of Total) SOUTH Africa Travel & Tourism Personal Consumption (Cumulative Real Growth, Percent) 5.9% 00 60 5.8% 40 5.7% 20 5.6% 0 5.5% .20 1995 1996 1997 1998 1999 2000 WORLD Travel & Tourism Personal Consumption (Percent of Total) BO% 102% 106% 10.8% 10.2% 100% 1997 1998 1995 1996 1559 2000 1905 1993 1990 2003 2010 WORLD Travel & Tourism Personal Consumption (Cumulative Real Growth, Percent) 80 60 40 20 0 1955 1993 1998 2003 2010 18 EFTA00578093 Travel & Tourism exports are an important and growing item of South Africa's Economy. In 1998, Travel & Tourism services exports — visitor spending — are expected to amount to Rand 18.5 billion; merchandise exports should account for a further Rand 5.8 billion. Together they represent more than one-third (34.7%) of total Travel & Tourism demand for the nation. Between 1995 and 2000, Travel & Tourism is expected to increase its share of total South African exports from 10.0% to 14.9% — a gain of almost five percentage points. Through to 2010, South Africa visitor exports arc forecast to increase annually in constant Rand — at an average annual rate of 7.2%. During the same period, merchandise exports are expected to grow at an annual average of 5.4%. For the period 1998 — 2010, the overall Travel & Tourism export growth for South Africa of 6.8% per annum is sub- stantially ahead of the expected worldwide figure of 5.4%. And the reduced level of the Rand against major currencies could increase the South African export growth rates. The pessimistic case scenario suggests that 2010 Travel & SOUTH AFRICA Travel & Tourism Exports (1998 Constant Rand Billions) Exports Tourism exports will reach 11.1% of total exports. The base- line figure is 17.5% of all exports. The optimistic case sce- nario forecasts Travel & Tourism at 29.1% of total exports. SOUTH AFRICA Travel & Tourism Exports - 2010 (Rand Billions and Percent of Total) Pessimistic Case Base Case Optimistic Case 69.2 109.2 181.7 11.1 17.5% 29.1% SOUTH AFRICA Travel & Tourism Exports (Percent of Total) 09 141% 14% 20 12% 15 10% 10 8% 1995 1998 1997 1996 1999 2000 WORLD Travel & Tourism Exports (1998 Constant USS Billions) 1,100 16% 14% 1.000 12% 900 10% BOO 8% 700 6% 1995 1996 1997 1998 1999 2000 1996 1895 1997 1998 1099 2000 WORLD Travel & Tourism Exports (Percent of Total) 1996 1996 1997 1998 1999 2000 SOUTH AFRICA Travel & Tourism Exports (Cumulative Real Growth, Percent) 250 200 150 100 50 WORLD Travel & Tourism Exports (Cumulative Real Growth, Percent) 160 120 80 40 0 1988 1993 1998 2003 2010 19 EFTA00578094 Government Spending Government expenditures include: individual expenditures — Rand 147 million in 1998 — which can be linked to individual visitors like museum subsidies or immigration services; and collective expenditures — Rand 619 million in 1998 — which are undertaken for the community-at-large like airport administration, tourism promotion, security or sanitation. National and local government agencies in South Africa are expected to spend Rand 766 million to provide individual and collective government Travel & Tourism services to visitors, travel companies and the community-at-large. This figure represents only 0.6% of total government expenditure. By 2010 this figure is expected to increase to 1.1% of total government expenditures. This represents an annual constant Rand gain of 9.0% per year. Although this component is the fastest growing element of South Africa Travel & Tourism demand, it is a very low percentage contribution by world standards. In 1998, the average country is expected to contribute 6.8% of its overall government expenditures to Travel & Tourism related functions, more than 10 times the South African level. SOUTH AFRICA Travel & Tourism Gov't Expenditures (1998 Constant Rand Billions) 0.90 020 0.70 0.60 0.$0 ■ 1995 19% 1997 1996 1999 2000 There should, in principle, be a direct link between the size and impact of an industry like Travel & Tourism on the economy (in terms of GDP) and the amount of funding allocated by government toward that sector. In South Africa, the ratio of Travel & Tourism GDP to government expenditure is 15 to 1, compared to a worldwide ratio of. 1.7 to I — meaning that South Africa's contribution is dramatically lower than the global norm. This could mean underfunding of tourism infrastructure and services and requires further detailed analysis of South Africa's govern- ment expenditures beyond the framework of this report. The pessimistic scenario sees scarcely any growth in this area. The optimistic scenario more than triples the contri- bution to 2.0% of total government expenditure, an annual constant Rand gain of 15% per year. SOUTH AFRICA Travel & Tourism Gov't Expenditures - 2010 (Rand Billions and Percent of Total) Pessimistic Case Base Case Optimistic Case 2.9 4.9 8.7 0.6% 1.1% 2.0% SOUTH AFRICA Travel & Tourism Gov't Expenditures (Percent of Total) 040% 055% 0.50% 0.45% 040% 1995 10% 1997 19% 1999 2000 WORLD Travel & Tourism Gov't Expenditures (1998 Constant USS Billions) WORLD Travel & Tourism Gov't Expenditures (Percent of Total) 21/3 7.4% 265 7.2% 255 7.0% 245 8.8% 235 6.6% ZIS 4% 1995 1996 1997 1996 1999 2000 1995 1996 1997 1998 1999 2808 SOUTH AFRICA Travel & Tourism Gov't Expenditures (Cumulative Real Growth, Percent) 200 160 120 so so 0 1 1981 1993 1990 2003 2010 WORLD Travel & Tourism Gov't Expenditures (Cumulative Real Growth, Percent) 60 45 15 0 19103 1993 1990 2003 201( 20 EFTA00578095 South Africa's Travel & Tourism economy is expected in 1998 to generate Rand 15.0 billion in tax revenue. The largest portion of this total is Rand 6.6 billion personal income taxes paid by the 737,617 direct and indirect employees in South Africa. Next are the indirect transaction taxes such as sales, VAT and accommodation taxes which total Rand 5.9 billion generated from sales of Travel & Tourism goods and services. Third is Rand 2.6 billion generated from income taxes on Travel & Tourism companies. All totalled, South Africa's Travel & Tourism economy is responsible for 8.4% of total national and local taxes paid in South Africa. Through to 2010, South Africa's Travel & Tourism tax contribution is expected to increase 74% in constant Rand. By then, the T&T Economy will account for 10.6% of South Africa's tax revenue. As Travel & Tourism employment increases, personal and real property tax revenues will also grow. As visitor counts SOUTH AFRICA Travel & Tourism Taxes (1998 Constant Rand Billions) 16 14 12 10 8 6 1995 1996 1997 1998 1999 2000 WORLD Travel & Tourism Taxes (Percent of Total) WORLD Travel & Tourism Taxes (Cumulative Real Growth, Percent) WORLD Travel & Tourism Taxes (1998 Constant USS Billions) and spending increases, so do the indirect transaction taxes collected by Travel & Tourism companies. As Travel & Tourism businesses expand, so do the income taxes associated with those businesses. These are truisms but it is worth noting that in 1998 total travel related taxes amounted to some Rand 15.0 billion in sharp contrast to the Rand 0.8 billion travel related govern- ment expenditure during the same period. SOUTH AFRICA Travel & Tourism Taxes (Percent of Total) 900 13% SSO 12% 800 11% 750 10% 700 9% 650 600 8% 1995 1996 1997 1998 1999 2000 1995 1996 1997 1998 1999 2000 SOUTH AFRICA Travel & Tourism Taxes (Cumulative Real Growth, Percent) 125 100 75 50 25 0 80 60 40 20 0 1988 1993 1998 2003 2010 21 EFTA00578096 Satellite Account Tables I 1997 1998E 1999E 2000E 2O10P 1995 1996 South Africa Travel & Tourism - Rand (Millions) - Nominal Rand Travel & Tourism Demand Side Aggregates Consumer Expenditures 16,853 18,674 20,836 23,177 25,695 28,779 79,319 Durables 9,038 9,984 11,168 12,498 13,868 15,573 44,278 Non-Durables 6,044 6,706 7,436 8,201 9,047 10,069 25,990 Services 1,771 1,985 2,232 2,477 2,781 3,137 9,051 Business & Government Travel 6,374 7,309 8,108 8,850 9,864 10,958 29,065 Corporate 5,181 5,939 6,524 7,0% 7,929 8,835 23,117 Government 1,193 1,370 1,585 1,753 1,935 2,123 5,947 Government Expenditures - Individual 79 91 129 147 171 198 937 Visitor Exports 8,977 12,085 14,685 18,449 21,893 25,891 87,104 Travel & Tourism Consumption 32,283 38,159 43,758 50,623 57,625 65,827 196,425 Government Expenditures - Collective 333 383 540 619 720 833 3,936 Capital Investment 8,427 9,927 11,080 12,753 14,833 16,708 47,782 Public 153 168 160 173 183 202 5% Private 8,274 9,760 10,919 12,580 14,650 16,506 47,186 Exports (Non-Visitor) 3,195 4,501 5,075 5,762 6,264 7,085 22,091 Travel & Tourism Demand 44,237 52,970 60,454 69,758 79,442 90,453 270,235 T&T Industry Supply Side Aggregates Direct and Indirect Effects Employment 401,702 452,343 487,039 535,290 562,030 596,990 911,290 Gross Domestic Product 23,525 28,731 33,1% 38,571 44,377 50,941 153,327 Compensation 13,144 15,912 18,405 21,620 24,905 28,632 91,407 Depreciation 2,918 3,462 3,970 4,595 5,153 5,778 12,272 Operating Surplus 4,934 6,370 7,328 8,642 10,313 12,100 36,779 Subsidies 385 481 500 562 650 746 1,943 Indirect Taxes 2,915 3,469 3,994 4,276 4,656 5,178 14,813 Personal Taxes 2,658 3,300 3,975 4,778 5,187 5,999 17,944 Corporate Taxes 729 1,167 1,368 1,862 2,279 2,510 7,278 Total Taxes 6,302 7,935 9,337 10,916 12,122 13,686 40,034 Imports 8,757 9,428 10,562 12,052 13,248 14,886 43,098 Direct Effects Employment 181,309 208,744 224,026 248,141 261,345 278,165 422,182 Gross Domestic Product 10,251 12,645 14,595 16,982 19,585 22,524 68,131 Compensation 6,286 7,625 8,811 10,345 11,950 13,760 43,926 Indirect Taxes 1,170 1,416 1,618 1,729 1,889 2,104 6,001 Indirect Effects Employment 220,392 243,600 263,013 287,150 300,685 318,825 489,108 Gross Domestic Product 13,274 16,086 18,602 21,589 24,791 28,417 85,1% Compensation 6,858 8,287 9,594 11,275 12,954 14,871 47,480 Indirect Taxes 1,744 2,053 2,376 2,547 2,767 3,073 8,812 T&T Economy Supply Side Aggregates Direct and Indirect Effects Employment 550,451 627,912 672,860 737,617 774,824 820,325 1,253,722 Gross Domestic Product 32,237 39,883 45,862 53,150 61,178 69,998 210,942 Compensation 18,011 22,088 25,427 29,792 34,334 39,343 125,754 Depreciation 3,999 4,806 5,485 6,331 7,103 7,940 16,883 Operating Surplus 6,760 8,842 10,123 11,909 14,218 16,626 50,600 Subsidies 527 668 691 775 896 1,025 2,673 Indirect Taxes 3,994 4,815 5,518 5,892 6,419 7,115 20,379 Personal Taxes 3,643 4,581 5,491 6,584 7,150 8,243 24,686 Corporate Taxes 1,000 1,620 1,890 2,566 3,142 3,448 10,013 Total Taxes 8,636 11,015 12,899 15,042 16,712 18,806 55,078 Imports 12,000 13,087 14,592 16,608 18,264 20,455 59,293 Direct Effects Employment 248,448 289,763 309,499 341,932 360,294 382,227 580,824 Gross Domestic Product 14,047 17,553 20,163 23,401 27,001 30,951 93,732 Compensation 8,614 10,585 12,173 14,255 16,475 18,908 60,432 Indirect Taxes 1$04 1,965 2,236 2,383 2,605 2,892 8,256 Indirect Effects Employment 302,004 338,149 363,360 395,685 414,530 438,098 672,899 Gross Domestic Product 18,189 22,330 25,699 29,749 34,177 39,048 117,210 Compensation 9,397 11,504 13,254 15,537 17,859 20,435 65,322 Indirect Taxes 2,390 2,850 3,282 3,510 3,814 4,223 12,123 22 EFTA00578097 Satellite Account Tables II 1995 19% 1997 1998E 1999E 2000E 2010P T&T Accounts as % of State Accounts based on Nominal Dollar results Consumer Expenditures 5.71 5.64 5.68 5.78 5.79 5.83 6.40 Durables 11.38 11.13 11.15 11.32 11.27 11.29 11.85 Non-Durables 3.21 3.19 3.20 3.25 3.25 3.27 3.53 Services 6.49 6.44 6.49 6.53 6.58 6.63 7.07 Government Expenditures 0.43 0.43 0.53 0.55 0.58 0.61 1.09 Individual 0.16 0.16 0.20 0.21 0.22 0.24 0.44 Collective 0.70 0.71 0.86 0.90 0.94 1.00 1.68 Capital Investment 10.29 10.61 10.72 11.45 12.14 12.30 13.49 Public 1.86 1.77 1.48 1.50 1.52 1.54 1.83 Private 11.23 11.60 11.80 12.60 13.31 13.44 14.73 Exports 9.99 11.10 11.96 13.18 14.20 14.87 17.50 Merchandise 3.03 3.45 3.52 3.59 3.62 3.66 4.06 Services 54.16 63.75 70.05 79.12 87.03 92.01 110.00 T&T Industry Supply Side Aggregates (Direct and Indirect) Employment 3.96 4.44 4.73 5.10 5.28 5.48 6.75 Gross Domestic Product 4.85 5.29 5.58 5.98 6.16 6.36 7.48 Compensation 5.11 5.61 5.92 6.39 6.64 6.89 8.14 Depreciation 4.42 4.80 5.03 5.38 5.57 5.77 6.71 Operating Surplus 4.63 5.02 5.29 5.68 5.88 6.10 7.22 Subsidies 6.33 7.06 7.44 7.98 8.22 8.49 9.84 Indirect Taxes 4.87 5.30 5.55 5.93 6.14 6.36 7.42 T&T Economy Supply Side Aggregates (Direct and Indirect) Employment 5.42 6.16 6.54 7.02 7.28 7.52 9.28 Gross Domestic Product 6.65 7.35 7.71 8.24 8.50 8.75 10.29 Compensation 7.01 7.79 8.18 8.80 9.16 9.47 11.20 Depreciation 6.06 6.66 6.95 7.42 7.68 7.93 9.23 Operating Surplus 6.34 6.97 7.31 7.82 8.10 8.38 9.93 Subsidies 8.67 9.79 10.28 11.00 11.34 11.66 13.53 Indirect Taxes 6.68 7.35 7.66 8.18 8.46 8.73 10.21 Personal Taxes 7.01 7.79 8.18 8.80 9.16 9.47 11.20 Corporate Taxes 6.34 6.97 7.31 7.82 8.10 8.38 9.93 Total Taxes 6.77 7.47 7.82 8.37 8.67 8.97 10.57 'Ravel & Tourism Real Growth (Per Annum) based on 1990 Constant Rand Consumer Expenditures 3.6 2.7 2.6 3.7 2.6 3.0 3.9 Business & Government Travel 5.8 5.9 3.0 2.1 3.5 3.2 3.4 Government Expenditures (0.5) 7.0 31.4 7.2 8.3 8.2 9.1 Exports 31.6 23.4 13.4 14.3 9.5 9.7 6.3 Capital Investment 32.5 11.4 4.8 10.8 9.5 5.9 4.4 Travel & Tourism Consumption 9.4 9.4 7.4 8.6 6.5 6.4 5.2 Travel & Tourism Demand 16.7 11.3 7.0 8.8 6.8 6.3 5.1 T&T Industry Supply Side Aggregates (Direct and Indirect) Gross Domestic Product 19.4 14.1 8.4 10.1 7.6 7.1 5.3 Employment 12.2 12.6 7.7 9.9 5.0 6.2 4.5 T&T Economy Supply Side Aggregates (Direct and Indirect) Gross Domestic Product 26.5 15.6 7.9 9.8 7.7 6.8 5.3 Employment 18.9 14.1 7.2 9.6 5.0 5.9 4.5 navel & Tourism - USS (Billions) -1990 Constant Rand Consumer Expenditures 9,668 9,929 10,189 10,570 10,845 11,173 15,884 Business & Government Travel 3,787 4,009 4,129 4,215 4363 4502 6,288 Government Expenditures - Individual 47 51 67 71 77 84 204 Visitor Exports 6,245 7,616 8,808 10,325 11,541 12,788 23,851 Travel & Tourism Consumption 19,748 21,604 23,193 25,182 26,826 28,547 46,226 Government Expenditures - Collective 199 213 279 300 324 351 857 Capital Investment 5,720 6,375 6,682 7,402 8,107 8,585 13,422 Exports (Non-Visitor) 2,223 2,836 3,044 3,225 3,302 3,499 6,049 Travel & Tourism Demand 27,889 31,028 33,198 36,108 38,560 40,983 66,555 T&T Industry Supply Side Aggregates (Direct and Indirect) Gross Domestic Product 14,226 16,228 17,585 19,357 20,828 22,315 36,668 Total Taxes 3,811 4,482 4,946 5,478 5,689 5,995 9,574 T&T Economy Supply Side Aggregates (Direct and Indirect) Gross Domestic Product 19,494 22,526 24,294 26,674 28,713 30,663 50,447 Total Taxes 5,222 6,221 6,833 7,549 7,843 8,238 13,172 23 EFTA00578098 The South African Satellite Account for Travel & Tourism 1998 1998 Estimates (Rand Millions, Except Employment) Consumer Expenditures 23,177 Business & Gov't Travel 8,850 Government Expenditures (Individual) 147 Visitor Exports 18,449 Travel & Tourism Consumption 50,623 Government Expenditures (Collective) 619 Capital Investment 12,753 Exports (Non-Visitor) 5,762 Travel & Tourism Demand 69,758 T&T Industry Supply 50,623 T&T Industry Production South Africa Gross Domestic Product (GDP) (Direct & Indirect) 38,571 Wages & Salaries 21,620 Employment (Dir. & 535,290 Operating Surplus, Depr. and Subsidies 12,675 Imports 12,052 Travel & Tourism Supplier Supply 19,135 T&T Economy Supply 69,758 T&T Economy Production South Africa GDP (Direct & Indirect) 53,150 Wages & Salaries 29,792 Empl. (Dir.8and.) 737,617 Personal Indirect Corp. Income Personal Indirect Corp. Income Taxes Taxes Taxes Income Taxes Taxes Taxes 4,778 4,276 1,862 Total Taxes 6,584 5,892 2,566 Total Taxes Imports 10,916 24 15,042 EFTA00578099 The WTTC/WEFA Travel & Tourism Satellite Accounting research for 1998 reflects: significant realignment of con- cepts with the latest work of the public/private sector Experts Committee under the auspices of the World Tourism Organization, analytical and data enhancements and application of WEFA's latest world and national macroeconomic forecasts. This new research provides greater detail on the inter- linkages of the T&T Industry and the broader T&T Economy. The former captures the production-side "industry" equivalent for comparison with other industries; the latter reflects the flow through effect of Travel & Tourism across the economy-at-large. The Satellite Account is based on a "demand-side" concept of economic activity — the activities of visitors and travel companies, because Travel & Tourism does not produce a homogeneous product or service like traditional industries (agriculture, electronics, steel, etc.). Instead, Travel & Tourism is a collection of services such as transportation, accommodations, restaurant meals, immigration and park services, and entertainment; and products (durables and nondurables, consumer and capital) such as souvenirs, recreational vehicles, automobiles, aircraft manufacturing and resort development. The Satellite Account uses two major demand concepts; Travel & Tourism Consumption and Travel & Tourism Demand, which help differentiate between the T&T Industry and the T&T Economy. Travel & Tourism Consumption focuses on visitor demand including: ■ Consumer Expenditures — Incorporating traditional personal spending by South African residents on services that are normally associated with Travel & Tourism — lodging, transportation, entertainment, meals, financial services etc; as well as durable and nondurable goods which are purchased by residents and used for Travel & Tourism activities. ■ Business and Government Travel — Corporate and government travel expenditures that mirror those of personal consumption (transportation, accommodation, meals, entertainment etc.). but are undertaken in the course of business or government work. ■ Government Expenditures (Individual) — Services by agencies and departments such as cultural institutions (art museums) or national parks, customs and immigration on behalf of individual visitors. ■ Visitor Exports — Expenditures by international visitors on goods and services. Travel & Tourism Demand, in addition, incorporates products and services for industry demand including: ■ Government Expenditures (Collective) — Services by agencies and departments associated with Travel & Tourism, but made on behalf of the community-at-large, such as tourism promotion, aviation administration, security services and sanitation services. ■ Capital Investment — by Travel & Tourism providers (the private sector) and government agencies (the public sector) to provide facilities, equipment and infrastructure to visitors. ■ Exports (Non-Visitor) — which include consumer goods sent abroad for ultimate sale to visitors such as clothing, electronics or gasoline; and capital goods sent abroad for use by industry service providers (such as aircraft or cruise ships). By applying input/output modelling to these two aggregates, the Satellite Account is able to differentiate between: ■ T&T Industry Production and T&T Economy Production; ■ Imports; ■ Direct and Indirect impacts; and ■ Gross Domestic Product (GDP) elements — Wages & Salaries. Indirect Taxes, Operating Surplus, Depreciation, and Subsidies. In the same way. Employment can also be quantified in terms of the "T&T Industry" and the broader —T&T Economy." T&T Industry Employment (Direct) generally includes those jobs with face-to-face contact with visitors — airlines, hotels, car rental, restaurant, retail. entertainment etc. ■ T&T Industry Employment (Indirect) includes those faceless jobs associated with industry suppliers — caterers, laundry services, food suppliers, wholesalers, accounting firms etc. ■ T&T Supplier Employment (Direct) generally includes those faceless jobs associated with government agencies, manufacturing and construction of capital goods and exported goods used in Travel & Tourism. ■ T&T Supplier Employment (Indirect) generally includes those faceless jobs associated with supplied commodities — steel producers, lumber, oil production etc. The first two categories cover T&T Industry Employ- ment while all four cover T&T Economy Employment. 25 EFTA00578100 South African Travel & Tourism Realising the Potential - The Policy Framework Travel & Tourism is already an important contributor to employment and wealth creation in South Africa, with a huge "flow through effect" across the entire economy. It has enormous inherent potential to increase its impact if the underlying policy framework is conducive to dynamic growth. This will require the full determination of government to create a policy framework which induces invest- ment, stimulates demand and encourages quality. It will also require the commitment and application of the private sector to operationalise globally competitive products and service standards. In this respect there is a very strong correlation between concepts contained in WTTC's Millennium Vision for Africa, the World Economic Forum's recent Namibia summit conclusions and the government's Tourism in Gear Strategy. TOURISM IN GEAR WTTC AFRICA MILLENNIUM VISION WEF NAMIBIA Develop Tourism as a National priority Highlight Travel & Tourism as a strategic economic/ employment priority,based on its full economic impact Recognize the full value of Tourism across the economy and measure it through Satellite Accounts Implement a new International marketing strategy, freshen branding and particularly develop eco and cultural tourism Advance Sustainable growth, regional public & private sector marketing, majoring on Afrikatourism to promote cultural and natural heritage Establish an internationally recognizable brand, leverage natural wildlife and culture of Southern Africa into national strategies Improve quality and quantity of skilled manpower in tourism,and upgrade hospitality front line service Invest in education and training to raise operational quality,standards and competitiveness Put education and training at the forefront of national and regional tourism development. Investigate Infrastructure needs and resources, leverage government programs towards tourism and obtain special funding allocations. Attract support from international financing institutions for Travel & Tourism infrastruture Engage international/regional financial institutions in tourism growth, advance public/private sector initiatives, develop infrastructure for sustainable growth. WTTC congratulates the South African Government for its forward looking GEAR strategy and also strongly recom- mends that the key related aspects of the Africa Millennium Vision and the WEF Namibia Tourism declaration be reflected in its implementation. A consensus is building within the public and private sectors as to the pivotal role played by Travel & Tourism in sus- tainable growth. job creation and social development across the entire national economy and the economy of the Southern African region. While the private sector can and must play an increasingly important role in developing quality products and services geared to international and regional demand. government must create the underlying conditions for market confidence. dynamism and sustainability. This will mean leadership in encouraging investment. streamlining regulation and building infrastructure. In this context. recent substantial growth has generated sig- nificant investment in tourist accommodation - short-term efforts must be focussed on encouraging sustained demand and providing expansion in related infrastructure. Above all consumer interest must be maintained in a climate where safety and security of travellers is secured. In today's world of discerning customers and competing destinations reputations have to be carefully and creatively built: but with instant global communications they can be quickly lost. This is a high priority challenge if South Africa's tourism potential is to be realised — and the broadscale economic wealth and job creation which will accompany it. 26 EFTA00578101 RECOMMENDATIONS Make Travel & Tourism A Strategic Economic And Employment Priority Recognise The Economic Contribution Travel & Tourism has only recently emerged as a discrete economic sector as borders have opened, nations democra- tised, living standards risen and whole sectors of society gained the freedom move across international borders. This has been coupled with cheaper transport and accommoda- tion. Vine magazine says we are on the verge of "the golden age of travel", with more and more of the world's population able to visit more and more of the world's nations. Travel & Tourism is expected to contribute significantly to 21st century service sector-driven growth. Bill Gates (Microsoft) identifies it with healthcare and education as the key target market sectors, and John Naisbitt (Megatrends) forecasts it will rank with information technology and telecommunications as lead sectors of the new millennium global economy. In South Africa, Travel & Tourism has grown dramatically since the beginning of the 1990s — well above the world average. Major factors have included: ■ A stable and open democratic regime ■ World renowned natural & cultural resources, which offer real comparative advantage and are in the main- stream of evolving global demand. ■ Attraction of private investment ■ Growth of small and medium sized enterprises (SMEs) ■ Historically good basic infrastructure. Wilt believes that it has substantial further potential to: ■ Improve the balance of payments ■ Stimulate entrepreneurship — particularly in small businesses ■ Catalyse investment ■ Create large number of sustainable jobs — particularly for women and young people ■ Help social development in local communities Tourism is a complex of products and services, provided to meet consumer, business and government demand for travel in domestic and international markets. It is decentralised and woven into the economy because tourists are mobile and consumption occurs before (eg. tickets), during (eg. food) or occasionally, after the trip (eg. photos). The major components — transport, accommodation, cater- ing, entertainment and travel organisers — are dominated by SMEs of under 50 employees. But in practice, Tourism impacts far beyond these immediate sectors because of the intensivity of its interaction with other areas of the economy, through the suppliers of goods and services to travellers and travel companies — such as telecommunications for mes- sages, agriculture for meals and financial services for cash or credit. Wilt urges all public and private sector stakeholders to recognise Travel & Tourism's full impact across the economy, and its untapped potential and to collaborate in a strategic initiative to grow the sector sustainably. In this context, the governments"Tourism Growth Fund" is a vital catalyst for achieving government-led, private sector driven and community based progress. Recognise The Industry Employment Creation Potential Because it is a service, tourism is a "people delivered" activ- ity and thus an intensive creator of jobs. Figures in this report show that Travel & Tourism is one of the largest creators of direct and indirect employment worldwide. This same impact is apparent today from the South African satellite account — with almost 250,000 jobs in the Travel & Tourism Industry and nearly 740,000 in the broader econo- my, whose livelihoods depend on a buoyant Travel & Tourism sector. This impact will intensify over the next decade with the potential for adding 175,000 new jobs in the industry and more than 500,000 across the economy with the baseline forecast. The optimistic scenario gives a potential of more than 800,000 new travel related jobs in the economy at large. These include jobs in upstream suppliers like aircraft or cruiseship constructors, hotel fitters or airport engineers, and in downstream servicers like retail, petrol stations, clothing manufacturers and food suppliers. The former depend on travel company purchases, the latter are driven by travellers expenditures. There are also jobs created in the public sector that cater to visitors — like border inspectors, air traffic con- trollers and museums. 27 EFTA00578102 Contrary to conventional wisdom, Travel & Tourism created jobs — inside and outside the industry — range across the entire employment spectrum and in many cases have charac- teristics which fit model employment patterns: ■ They can be created at low cost, with few barriers to entry, and faster than most industries. ■ They are service and export related. ■ They provide an impetus to regeneration and social cohesion by counter-balancing the flow of people to the cities from disadvantaged rural areas. ■ They are often created in small and medium sized enterprises, encouraging traditional arts / crafts activities and family-run businesses. ■ They provide significant opportunities for women. ■ They are ideal for young or for first time employees. ■ They have good capacity for education, training and skill development. ■ Wages are equal to or above the industrial norm. WTTC encourages the South African Government to recog- nise the scale, scope and characteristics of jobs created. directly and indirectly by Travel & Tourism, and to factor this into mainstream employment, trade, investment and educa- tion policies. We underline the importance of the catalytic "flow through effect" across many industrial sectors, and of public/private sector partnerships to support infrastructure and education — the key areas to facilitate Travel & Tourism growth. We urge consideration of flexible working practices to increase industry responsiveness, productivity and innova- tion. At the same time to avoid regulatory rigidities and pro- tectionism which will have he reverse effect. We suggest particular consideration be given to tourism in policy mechanisms that enhance rural employment, and in areas where manufacturing is declining. Establish Effective "Satellite Accounting" Travel & Tourism's economic and employment impacts can- not be separated from the need for effective measurement of the sector and its "flow through effect" Travel & Tourism as a new industry is not discretely identi- fied in charts of national account — rather its component parts are scattered throughout the accounts. Public sector analysis and related policies tend to overlook or understate the impact of the industry, or deal with its smaller components. The technique of satellite accounting is designed to measure the new service sectors, and this report has simulated a Travel EMPLOYMENT IMPACT - 1998 mil T&T ECONOMY: THE FLOW-THROUGH l Wholesale and retail trade 164,73S Catering and accommodation services 66,323 Transport and storage 66,002 Government 42,985 General labour and domestics 35,127 Agriculture, forestry and fishing 34,911 Motor vehicles and parts 34,174 Business services 30,667 Building construction 26,577 Non-electrical machinery 25,482 Electrical machinery 21,342 Metal products 13,477 Finance and insurance 13,105 Other 13,043 Other community and personal services 12,821 Textiles 11,761 Communication 11,623 Diamond and other mining 10,973 Other industries 9,633 Other transport equipment 8,393 Clothing 8,380 Food 8,097 Wood and wood products 6,050 Petroleum refineries 5,362 Printing and publishing 4,387 Beverages 4,128 Electricity, gas and steam 4,037 Coal mining 4,009 Paper and paper products 3,991 Other non-metallic minerals 3,980 Other chemical products 3,874 Leather products 3,254 Basic iron and steel 2,932 Plastic products 2,906 Civil engineering and other construction 2,814 Industrial chemicals 2,706 Furniture 2,645 Rubber products 2,456 Basic non-ferrous metals 2,287 Medical & health services 1,439 Gold mining 1,270 Pottery, china and earthenware 1,116 Glass and glass products 1,114 Footwear 632 Water supply 517 Tobacco products 79 Total T&T Employment 737,617 28 EFTA00578103 & Tourism Satellite Account for South Africa. It uses the lat- est definitions, and evolving accounting concepts developed within the World Tourism Organization's public/ private sec- tor study group. It incorporates WTTC/WEFA modelling experience from some 20 national and regional studies around the world and WEFA's global macroeconomic data- bases. WTTC encourages the South African Government to develop a Travel & Tourism Satellite Account, and offers to collab- orate in this endeavour. Pending completion of such an approach WTTC stands ready to update and adapt this simu- lated Account as a low cost option to ensure that adequate data is available to factor Travel & Tourism into economic and employment strategies ACTION ■ Recognise Travel & Tourism's full impact across the economy and use private/public sector partnerships to exploit its untapped potential. ■ Reflect Travel & Tourism in mainstream policies for employment, trade, investment and education with a focus on encouraging flexible working practices and enhancing rural tourism employment. ■ Ensure that Travel & Tourism's flow through effect across the economy is appreciated by all sections of Government and establish a National Satellite Account to consolidate this recognition. Move Towards Open and Competitive Markets Liberalise Markets A liberal international and regional trading regime with free flowing markets for goods and services will help Travel & Tourism grow, and in turn enhance wealth and jobs creation. Increased trade encourages business trips, and growing disposable income expands leisure travel. The ongoing programmes of the World Trade Organization and of SADEC provide a framework for progressive liberali- sation and should be vigorously pursued. Sustained efforts should be made to incorporate Travel & Tourism as a key element in these mechanisms. In growing Travel & Tourism, the biggest single challenge is to achieve competitive air transport opportunities. The major- ity of international business travellers, as well as a significant and growing number of leisure travellers, arrive by air — par- ticularly from the major tourism origin markets. In Africa as a whole, air traffic has increased by 120% over the past 5 years, with Southern Africa as the magnet. And while it is the case that South Africa has gone far in libera- lising its domestic and international aviation regimes, more can be done to increase services, expand price/product options and encourage competing carriers. In the latter context the privatisation of airlines and airports is a constructive step forward which should be brought to early conclusion. In this process clear, equitable, transparent pro- curement and investment provisions should be established. Similarly WTTC has identified measures in its report Air Transport and Freer World Trade for progressively and deci- sively liberalising air transport agreements at a bilateral. regionalateral and multilateral levels. This includes the open- ing of entry and pricing regimes — essential to the growth of long-haul and regional tourism. Studies undertaken for the World Tourism Organization suggest that for every job saved through protection of airline interests, up to four can be lost in the economy as a result of lost tourism spend. We urge that the employment impact of expanding tourism be made a primary and continuous input to the development of South African Aviation policies. Furthermore, liberal aviation accords should be aggressively sought with South Africa's principle bilateral and regional air transport partners — particularly in major tourist generat- ing markets. A related issue is the need to ensure that international tele- communications markets are also liberalised. An increasing amount of Travel & Tourism operations — and virtually all distribution and sales transactions — flow through telecom- munications circuits. Where telecommunications are monopoly-controlled, there are often restrictions on access, high costs and unreasonable operating conditions. This in turn limits the potential for mar- ket-oriented expansion of Travel & Tourism, with negative national and international economic impacts in terms of cost, operational efficiency and customer service. Opening telecommunications markets will lower costs and enhance service for travellers and travel companies. Enhance Promotion Spending by foreign travellers constitutes export earnings for South Africa's economy in the same way as manufacturing or agricultural exports. Travel & Tourism should enjoy the same incentive regimes as other export sectors. It is particularly significant for South Africa given the drama- tic current growth and long range forecasts of almost 7% per annum through to 2010. Worldwide there is increasing awareness of the importance of 29 EFTA00578104 Travel & Tourism and the competitive need for improved promotion. WTTC shares the view expressed in Tourism in Gear that: ■ the absence of a clear product branding and fresh mar- keting strategy is a main weakness; ■ it is important to broaden and diversify the product offer, to highlight the real African character of the desti- nation; ■ any Travel & Tourism development action plan should include a fresh promotional drive to grow tourism arrivals in South and Southern Africa. While the focus of this drive should be the growing, high- yield international markets, the emerging domestic and regional markets should also be targeted - particularly special high growth segments like nature, educational & youth tourism. WTTC suggests that the government of South Africa particu- larly take note of the existing highly successful Travel & Tourism promotional models developed by the Canadian and the Australian governments. Their common features are: • Top level active political support and engagement. • Declared Strategy - with clear targets and detailed implementation gameplan. • Involvement of major stakeholders in the development process. • Strong public and private sector cooperation with out- reach to partners across the T&T Economy. • Substantially increased public sector funding and exceptional inducements for private sector matching. • Private sector leadership in marketing strategies. • An integrated approach across government departments and particularly in co-ordinating national, state and local promotional efforts. • Formal Launch to raise the profile of the campaign and the media interest. I There is real need for a strong national leadership branding which optimises resources, focuses the myriad of interests - public and private sector, national and local - and gets the attention of travellers in an increasingly competitive global marketplace. This will require particular attention to a coordinated approach to internet marketing and distribution to optimise South Africa's visibility. A powerful brand, such as Afrikatourism, is also important in attracting and maintaining media interest, and in high profile positioning in the vitally important but increasingly complex electronic distribution channels. The rationale behind Afrikatourism is that conservation can and must benefit people in a tangible way by creating jobs and local community development in this way Tourism can turn African resources into a very valuable product, while simultaneously protecting and restoring them. There will nevertheless be a concomitant need to upgrade South Africa's nature tourism foundations to match inter- national and regional competition. This applies particularly to National Parks where this is a huge potential to cater to a growing market segment with quality accommodation, infrastructure and service. WTTC believes that organisations like the Open Africa Initiative, the University of Pretoria's Centre for Africa- Tourism, the Conservation Corporation and others give South Africa an excellent base for development of such branding approach, and will continue to work closely with these bodies. IIMMir ACTION • Progressively liberalise trade, transport and telecommunications under the auspices of the World Trade Organization and SADEC. • Continue to open up air transport markets, attract more long haul services, expand the range of price and product options and encourage competition. • Upgrade promotion to match prevailing competitive approaches, restructure SATOUR with adequate funds, build in public / private cooperation and examine the coordination of provincial, national and regional marketing. natural, • Build on the Afrikatourism brand which focuses on South Africa's unique cultural and wildlife traditions. I 30 EFTA00578105 Pursue Sustainable Development Since the Rio Earth Summit it is widely recognised that sustainability has to be at the core of all policy making and development planning. Travel and Tourism is no exception. With twice the number of travellers predicted over the next decade or so, there are evident implications for consumption, waste and resource utilisation. At the same time, we are neither extractive nor resource focussed, and because of the intensive involvement of people as consumers and service providers, and the pervasive spread across the economy there is a real possibility to be a catalyst for positive action. The environment - ecological, economic and social - is South Africa's main heritage and Travel & Tourism's core asset. It is imperative to ensure that the economic and social bene- fits which the industry brings, and the investment which underpins it, are sustainable in the longer term. Within the African continent, South Africa has been gifted with such a wealth and variety of resources, that it has a leading edge position of comparative tourism advantage. The South African Government and the private sector has long been involved in the sustainable management of resources, and TOURISM IN GEAR highlights the need to establish clear procedures and guidelines for planned and sustainable tourism expansion. WTTC supports the effort undertaken by the Government in this area and stresses the importance of: ■ a clear leadership strategy tied into mainstream Agenda 21 developments. ■ Involvement, encouragement and incentivisation of the private sector. ■ Close interrelationship of infrastructure, fiscal and education/training policies and programs. In this context we urge the government to take account of the principles of Agenda 21 for the Travel & Tourism Industry developed by WTTC, the World Tourism Organization and the Earth Council. Its central messages are that: ■ sustainability will need a balance of private initiative, economic instrument and regulation. ■ global principles must be reflected in local action ■ market-based delivery mechanisms should be encouraged. It proposes specific actions for governments and the industry to achieve these goals, in areas such as waste utilisation, energy and resource conservation, water management, com- munity involvement, customer awareness and staff training. It also suggests locally driven processes for continuous stake- holder consultation and involvement. WTTC is undertaking with its partners a five year implemen- tation of this sectoml Agenda 21 program, to create aware- ness and local implementation - including an African Think Tank in Zimbabwe in late 1998. At the operational level, WTTC"s GREEN GLOBE pro- gramme - backed by a growing number of Travel & Tourism industry associations - is a key component of this Agenda 21 initiative. GREEN GLOBE aims to build an environmental ethic into all aspects of Travel & Tourism, on a corporate and destination basis. The program draws on a worldwide database of best practice and offers destination management programs and industry guidance - including leading edge ISO type certification. In the context of Sustainable Development, a relevant place must be assigned to social issues linked to local communities development and empowerment. As an underlying principle, any sustainable Travel & Tourism strategy should involve local entrepreneurship, community shareholding. partnership and participation in tourism by the widest spectrum of citizens. Travel & Tourism has the potential to stimulate and regener- ate rural and peripheral areas, by building capacity at grass- roots level and providing the instruments for economic self- sufficiency. Travel & Tourism is often the only viable alternative to agri- culture, can thus become a source of income and benefits for emerging areas with high tourism potential, also by generat- ing a host of tourism-related activities and services - electric- ity, water, local shops, banks, post office etc.- which benefit local populations and tourists alike. At community level many jobs can be provided which do not require great capital outlay - for example local guides, local music and dance shows, craft workshops. The local tourism industry can help promote and market these activities, which 31 EFTA00578106 in general maintain or even increase the quality of the tourism product. In this context, WTTC supports the concept of pilot pro- grammes to evaluate and demonstrate the potential of tourism which involve and sustain local communities. We also encourage financing institutions to promote microloans for local tourism entrepreneurship initiatives. WTTC is ready to work with the government of South Africa and the private sector to advance these concepts of sustain- able development within the framework of its Millennium Vision. Growth and the jobs it will create depend on building a sound environmental framework for tomorrow's develop- ment. ACTION ■ Establish clear procedures and guidelines for planned and sustainable Travel & Tourism expansion as proposed in 'Tourism in GEAR'; pay particular attention to eco- tourism and ensure that park facilities are expanded sustainably. ■ Adopt and apply the principles of Agenda 21 for the Travel & Tourism Industry deve- loped by the WTTC, the World Tourism Organization and the Earth Council and encourage transnational and sub-regional projects. ■ Make South Africa a GREEN GLOBE destina- tion, targeting the corporate sector with certified standards, and new tourism areas such as the LUBOMBO SDI with tailored GREEN GLOBE environmental programmes.. ■ Ensure that sustainable Travel & Tourism strategies take into account the need for local community development, engagement and empowerment. Work with the business community to implement these strategies.. ■ Expand microloans to provide incentives for local community based sustainable tourism enterprises and use pilot projects to evalu- ate and demonstrate local sustainability. I Eliminate Barriers to Growth Ensure Safety of Tourists The safety and security of visitors is a fundamental condition for all tourism destinations. It is however particularly impor- tant for South Africa, where the otherwise exceptional repu- tation is being shadowed by the actual and perceived level of crime. "Tourism in Gear" highlights the importance of co-operative efforts to address and contain criminality. WTTC strongly supports this view, and suggests that security and safety issues must be built into the national tourism strategy as well as taken into specific consideration at local/destination level. Travel & Tourism should also be reflected as a priority in policing strategies. WTTC agrees with the launch of a communication campaign to improve perceptions of security in the marketplace — with positive effect on potential tourists as well as investors and the establishment of a database on security trends to support it. Yet, even more fundamental is the need for a strong effective law enforcement regime that deals with the substantive issues. In addition, WTTC suggests that existing global models of visitor security are reviewed which could usefully be imple- mental in South Africa. While conscious that there is clear recognition of this aspect of tourism development at the highest public and private sector levels, we want to underline its pivotal importance. It could over time be the major difference between the opti- mistic and pessimistic scenarios — and that means a differ- ence of half a million jobs across the economy. Invest in Human Resources Education and training presents major opportunities and challenges for a rapidly expanding Travel & Tourism sector in South Africa. Human Resource Development (HRD) must adapt to increasing globalisation, diversifying products and changing customer expectations. Strategies must therefore be developed which enhance the employment capacity of Travel & Tourism and increase the quality of service to internation- al levels. WTTC shares the -Tourism in Gear" view that South Africa's HRD should mainly focus on: ■ Improving the quality and quantity of skilled manpower in the sector, by establishing a Sectoral Training Organisation for tourism training and a Southern Africa Training Tourism Academy ■ Upgrading front-line service and training ■ Expanding Travel & Tourism in schools, by finalising curricula and introducing training programmes for teachers 32 EFTA00578107 For best results, mechanisms should be developed for close co-ordination between the public and private sectors to ensure that education, training and skill levels can keep pace with industry growth and competitive demands. Travel & Tourism should have access to Government-funded training and education programs on at least an equitable basis with other industries. The private sector should be playing an active role in ensur- ing the maintenance of the highest international standards of management and service, both through access to internation- al skills and experience to ensure competitiveness, and through the implementation of training and career structures capable of supporting the development of skills. As part of its new Millennium Vision initiative in emerging states, WTTC will work closely with Reach and Teach to advance these concepts in South Africa, the Southern African Region and the continent at large. Expand Infrastructure Infrastructure remains a critical component in Travel & Tourism development in South Africa, if the full potential of employment generation, export earnings and regional devel- opment effects are to be realised. In most cases public infrastructure which supports Travel & Tourism expansion will also serve other urban and regional development purposes. Infrastructure development programmes are also important to ensure sustainability by ensuring that the fruits of good environmental management are not lost through inadequacy in capacity. Quality infrastructure is also essential in order to diversify the product base, remove bottlenecks, ensure good service and distribute benefits of tourism flows around the economy. It is not only a question of coping with increasing numbers of visitors, but to make sure that the patterns of flow don't affect the natural or built heritage. nor run counter to local interests. WTTC believes that there is a need to conduct in-depth investigation of infrastructure needs/ resources, and attaches particular importance to air transport infrastructure. In particular. airport expansion and air traffic control system modernisation are priorities for Travel & Tourism growth. An increased private sector role should be pursued in this development. Current land-based ATC systems should be switched to satellite navigation as soon as possible to contain operating costs, improve safety and reduce congestion. With pressures on budget and space resources likely to come under increasing stress, the problem of finding more efficient and speedy procedures to manage border clearances will escalate dramatically in future years if serious congestion is to be avoided. Existing initiatives for facilitating cross border flows of business travellers need to be supplemented by examination of more far reaching measures to welcome visitors — including those arriving from outside the region and leisure travellers generally. WTTC is working with the Multilateral Investment Guarantee group of the World Bank and other international bodies to advance the concept of investment in sustainable Travel & Tourism Infrastructure. WTTC urges the South African government to interest and involve the international financing community in supporting the provision of travel related infrastructure as a matter of strategic priority. The World Bank family. the African Deve- lopment Bank and regional institutions need to dramatically change their vision of tourism, and to recognise its vital development and job creation capacity. Tax Intelligently Travel & Tourism should pay its fair share of taxes — and it does. This Report indicates that the South African T&T Economy will generate Rand 15 billion in tax revenues in 1998 — some 8.4% of overall taxes. This could rise to 10.6% of tax revenue by 2010 simply under the baseline scenario. The growth and prosperity of the industry, including the investment necessary to generate those future revenue flows, will depend in no small part on the competitiveness of Travel & Tourism, including whether it receives equitable treatment relative to other industries and to competing destinations. 33 EFTA00578108 There is an increasing tendency worldwide for governments to target Travel & Tourism as a revenue generator, to meet short term budget objectives with little thought to the longer term consequences on demand and job creation. Often this involves unco-ordinated actions of national, state and municipal authorities. For example, according to WTFC's Tax Barometer, in the city of Johannesburg a total basket of Travel & Tourism related taxes has increased by some 13% in the last year alone. Also, taxes are often levied on travellers at different points of the journey, so that what may at first appear a small amount has a much greater impact on the final product as a whole. WTTC believes that travellers and travel companies should not be taxed in a discriminatory way. International visitor spending is an export and should be taxed like other exports. An increasing number of "user fees" are being applied to Travel & Tourism — for air tickets, security, airport construc- tion, highways and the like. WTTC firmly believes that the principle of "User Pays — User Benefits" should be applied in such cases, with the funds earmarked for the related Travel & Tourism infrastructure, transparently dispersed and with collection time limited to the specified project completion. ACTION ■ Review models of visitor safety and security and build provisions into the national tourism strategy. Ensure these are reflected in provincial and local tourism plans. Encourage law enforcement agencies to recognise and integrate specific Travel & Tourism issues into local policing strategies. ■ Place education and training at the forefront of tourism development, expand the range of school and college curricula and highlight industry career prospects and role in the economy. Introduce measures to raise skills and standards -- particularly front-line service. Develop mechanisms for public/business-private sector buy-in and involvement. ■ Review and expand infrastructure, particu- larly for airports, air traffic control and streamline border clearance, eliminating visas where possible. ■ Encourage the international financial institutions, including the World Bank and the African Development bank, to support sustainable tourism infrastructure in lending priorities and programmes. ■ Apply WTTC principles of fair taxation to s_ Travel & Tourism - fair revenue generation, efficiency, equity, simplicity - and give Travel & Tourism equitable access to industry export incentives and exemptions. Apply the 'User pays - User benefits' principle. a This report unequivocally demonstrates the enormous potential for Travel & Tourism in South Africa. WTTC will be pleased to work with the South African government and other stake- holders in further developing this recommendations into a cohesive policy framework. Travel & Tourism can lead South Africa and the Southern African region into a new economic era creating half a million new jobs across the economy in the first decade of the new Millennium. 34 EFTA00578109 What is GREEN GLOBE? GREEN GLOBE is a worldwide environmental manage- ment and awareness program for the Travel & Tourism industry based on Agenda 21. Its prime objective is to provide a low-cost, practical means for all Travel & Tourism com- panies and destinations to undertake improvements in environmental practice leading towards ISO style certification. Why GREEN GLOBE? A clean healthy environment is the core of the Travel & Tourism product, and is essential to future development. Good environmental practice is not only morally right; it makes sound business sense and can lead to significant cost savings. What are its origins? GREEN GLOBE was developed by the World Travel & Tourism Council (WTTC), a global coalition of industry Chief Executive Officers, with the involvement of the Earth Council and its Chairman, Dr. Maurice Strong, former Secretary General of the 1992 Rio Earth Summit. The concept has the broad support of the United Nations Environment Program (UNEP). Major regional and sectoral Travel & Tourism organizations have joined GREEN GLOBE as Industry Associates and are working to encourage their members' participation. Who can join? Membership is open to Travel & Tourism companies of any size, type and location which commit to improvement in en- vironmental practice and to countries with similar goals. a I= GREEN GLOBE' al How does it work? GREEN GLOBE helps a company to develop an environ- mental program suited to its specific requirements, and brings numerous business benefits. GREEN GLOBE mem- bers have access to: ■ Advice in tailoring practices to changing environmental needs ■ Tools to help evaluation and to improve performance • Information on environmental good practice and cost saving techniques • Recognition of your environmental commitment What are the benefits? • Continuous practical help to build environmental considerations into daily business decisions ■ A service which is tailored to the size, business focus and level of environmental activity of your company ■ Cost-saving and commercial opportunities What is the cost? Membership fees are structured to ensure that the program is accessible to companies of any size; they range from USS 200 per annum for companies with turnover of less than US$ I million, to US$ 5,000 for companies with turnover of more than US$ 30 million. If your company is not already a GREEN GLOBE Member, and you would like further information about the program. please contact WITC. 35 EFTA00578110 pi Wor ld Tr•vel —6— Toorism Council APRINAARKCompany TECHNICAL REVIEW TEAM The World Travel & Tourism Council (WTTC) is the Global Business Leaders Forum for Travel & Tourism. Its Members are Chief Executives from all sectors of industry, including accommoda- tions, catering, entertainment, recreation, transportation and other travel-related services. Its central goal is to work with governments to realise the full economic impact of the world's largest generator of wealth and jobs - Travel & Tourism. World Travel & Tourism Council 20 Grosvenor Place, London SW1X 7TT, U.K. Tel: 44-171-838.9400 Fax: 44.171.838-9050 Email Creatingiobs@compuserve.com www.wttc.org World Travel & Tourism Council P.O. Box 6237 New York, New York 10128 U.S.A. Tel/Fax: 1-212-534.0300 Email 73132.3165@compuserve.com The WEFA Group is one of the world's leading economic consulting and forecasting firms with nearly 300 economists worldwide. It distributes data on 152 countries and forecasts 94 country economies in depth. Founded in 1963 by Lawrence R. Klein, 1980 Nobel Laureate in Economics, Wharton Econo- metric Forecasting Associates (WEFA) was the original economic forecasting firm started at the request of business leaders who wanted objective, independent forecasts for business planning and analysis. Over the years, WEFA built its reputation on academic standards, quality research and forecast accuracy. In 1987, WEFA merged with Chase Econometrics, an independent subsidiary of Chase Manhattan Bank that provided unequaled planning support to financial institutions, corporations, and government agencies for over 15 years to form the WEFA Group. The WEFA Group and its predecessors have always been at the forefront of economic consulting, forecasting and analysis. Dr. M. Fabricius Department of Environmental Affairs and Tourism & Chairperson Dr. S. Bah Central Statistical Services Prof. E. Heath University of Pretoria Mr. H. Kleynhans Department of State Expenditure Mr. M. Nkosi SATOUR Ms. A. Myburgh Central Statistical Services Ms. R. Pietersen Central Statistical Services Mr J. du Ness's Department of Finance Mr. J. Prinsloo South African Reserve Bank Dr. M. Saayman SATOUR (Board Member), Potchefstroom University Ms. G. Saunders Grant Thornton and Kessel Feinstein Mr. C. Walker Tourism Business Council of South Africa WTTC would like to thank Dr. Mike Fabricius and all the technical review team for their advice and assistance during the production of this report. The financial support of American Express is also gratefully acknowledged. 0 World Travel & Tourism Council, 1998 Use of data and information from this Report is authorized provided source is acknowledged. 36 EFTA00578111 EFTA005781 12 IVor ld Travel —&— Tourism Council World Travel & Tourism Council 20 Grovesnor Place London, UK SW1X 7TT Tel: 44-171-838-9400 Fax: 44-171-838-9050 Email: CreatingJobs@compuserve.com www.wttc.org EFTA00578113