ANTON GILLIS: Tourism levy is far too important for some hospitality players to ignore

As a law-abiding South African, you pay your taxes. Yes, you might despair at the corruption, but you recognise that those taxes go towards paying for the roads we drive on, houses for people who desperately need them, and the salaries of the teachers, nurses, doctors and social workers that are vital to a functioning society. And if you pay your contribution chances are you get upset when you find out other people aren’t paying their fair share. 

I say that to illustrate something I’m deeply upset about. Some of SA’s biggest hospitality and tourism players aren’t paying their fair share. More specifically, they aren’t contributing to the SA Tourism Levy, despite the considerable benefits it brings. These same hoteliers are quick to moan and criticise, yet refuse to be part of the solution. 

The voluntary levy, introduced in 2009, is designed to promote and market tourism in SA to local and international markets. Raised by Tourism Marketing SA and professionally administered by the Tourism Business Council of SA (TBCSA), all players in the sector — from independent bed & breakfasts to conference venues and resorts — are meant to pay 1% of their accommodation revenues as the levy. But some simply don't. Whether through ignorance or simple stubbornness, these nonpayers are still reaping all the benefits of everyone else’s contributions without paying their portion.

It’s frustrating, not just because they’re happy to take those benefits but also because we could do so much more as an industry if everyone paid their fair share. It is common cause that more tourists equals more employment. 

Not a costly burden 

Before looking at why that’s so dangerous, it’s important to emphasise how valuable the tourism levy is while placing little to no financial burden on those expected to pay it. Let’s start with the value provided by the levy, which is positioned to help tourism establishments deploy initiatives that work in the interest of tourists. To explain how it does so, let me put on my other hat as Kruger Gate Hotel CEO for a moment.

As an independent hotel our marketing budget only stretches so far. It is highly unlikely that we would ever be in a position to fund a TV commercial to the Chinese market. However, if the TBCSA had to deploy funds to such a marketing awareness initiative we would all benefit.

The same would be true if a tourist region such as KwaZulu-Natal’s Hibiscus Coast wanted to launch a fresh marketing campaign and draw in new visitors. In other words, the levy benefits everyone: not just the parties proposing ways to draw from it. It makes no sense why competitors wouldn’t want to participate yet are happy to accept the reward. 

The levy is, in other words, something that helps ensure a lot of good is done in the SA tourism sector. It also does so without placing any real financial burden on the businesses that are supposed to pay it. All players in the sector that pay the levy pass the cost on to their guests or customers, meaning that it doesn’t affect how much of a profit or loss they make. 

Everyone must pay their fair share 

Of course, the money raised by the levy can only go so far. A lot of businesses are contributing to it, but SA has to compete against international tourism destinations with bigger marketing budgets and stronger currencies that allow them to market to more people in more places. 

That said, SA would raise a lot more money through the tourism levy if everyone who’s supposed to pay it did. Unfortunately, that’s simply not the case. Within the industry, it’s common knowledge that some established hotel groups don’t contribute to the levy. The same is true of many of the so-called “apart-hotels” and short stay accommodation providers that have emerged in recent years.

One could argue that they are new to the industry and don’t know about industry practices, but I would counter-argue that the staff they are employing are not and are well aware of such practices. I would further offer that the onus is on the tourist associations to inform them and hold them accountable to industry best practices.

What is even more infuriating is that a few board members of some of the very same industry bodies charged with safeguarding and promoting tourism in SA don’t bother to contribute to the tourism levy. Worst of all, some parastatals that offer accommodation don’t pay either. 

The practice of not paying is alarmingly widespread. Contacts within TBCSA tell me just over 500 businesses contribute to the tourism levy. However, more than 5,000 establishments have been graded by the Tourism Grading Council. Factor in all the other kinds of businesses that are supposed to pay and it’s clear only a small fraction of the businesses supposed to be paying the levy do so. I then ask why do we bother grading at all?

These players may think that they’re saving their customers a bit of money or that they shouldn’t feel obliged to pay what is a voluntary levy. But that kind of thinking is shortsighted and does SA tourism no favours. 

Voluntary only works if everyone volunteers 

Imagine how many new visitors SA would have every year if every business that’s supposed to contribute to the levy did so. What kind of marketing campaigns would that budget unleash? 

As with most things that are voluntary the tourism levy can only reach its true potential if everyone (or at least a vast majority) pays into it. Fundamentally I believe the levy should remain voluntary too. Anything more compulsory and we risk the independence of the receiving and administering bodies as well as the ability to roll out agile, effective marketing campaigns. 

I’d also like to reassure anyone sceptical of the tourism levy that in my dealings with the TBCSA has always been completely transparent.

It is also welcoming to anyone who wants to volunteer their time to join their quest for promoting SA. That means anyone contributing to the levy knows what the money is being spent on and how beneficial it is.   

Instead, I’d like other bodies such as the Federated Hospitality Association of SA to play a bigger role in ensuring that their members contribute to the levy. One way they could do this is by supporting TBCSA and the Tourism Grading Council’s roadshows, which deal with the importance of the levy. But that isn’t enough on its own. There must be sustained education about what the tourism levy does, and how much more it could do if everyone paid their fair share. 

Tourism already plays a major role in the SA economy, but that role could be significantly bigger if only everyone played their part. A voluntary levy may seem like an annoyance to some, but with greater levels of participation it could well be key to unleashing the country’s full potential. 

• Gillis is cofounder of the Hospitality Asset Management Company.