Tourism Snippets on Budget Speech 2015

Gillian Saunders Head of Advisory Services at Grant Thornton Johannesburg and Global Leader: Hospitality and Tourism for Grant Thornton International provides TOURISM commentary and snippets following Finance Minister Nhlanhla Nene’s National Budget Speech presented this afternoon, Wednesday 25 February 2015:

“Once again all of the right things were said about the tourism sector and the Minister rightfully made mention of creating jobs with many opportunities available. However, the proof will really be in his actions – we need more information as to how this will be achieved.”

“Minister Nhlanhla Nene discussed curbing Government spending and he specifically discussed reducing spending on catering, entertainment and venues by 8% per annum, as well as reducing spending on travel and subsistence by 4% per year. We are concerned that these cuts will have a massive impact on some of our already-battling hotels, conference venues, restaurants and entertainment facilities which the Government uses. Government is a major purchaser in the hospitality and tourism sectors and significant cuts like these are going to hurt a number of businesses.”

“SOEs play a key role in promoting economic growth in social development”. The Minister mentioned today in his Budget Speech that Treasure is aiming to restore profitability and achieve operating efficiencies for SAA. This concerns me in terms of our airline in particular – is SAA supporting the national interest in terms of tourism and trade or not? We are on the southern tip of the African continent and air access is crucial for trade and tourism – are we sure that we are making the right decisions here?” Should we not consider a national airline that supports the national interest – yes at a cost to the taxpayer, agreed. After all, we have been paying for SAA for years, but likely reaping far greater benefits in terms of increased tourism.”

“Regarding the Budget Allocations for the Tourism Department and South African Tourism – this section of the Budget certainly got a reasonable increase. However, the Tourism department got very small increases in the prior year so all we’ve really done is make up for previous below-inflation increases. If we really want the sector to perform, it needs a quantum leap in budget allocation. Our marketing budget doesn’t compare to other global competitive destinations especially if we take our weak rand into consideration.”