20160812 Travel and Accommodation Strategy CFO Forum
National Treasury Strategic Initiative Travel & Accommodation Presented by Estelle Setan Chief Director Strategic Procurement Office of the Chief Procurement Officer bn 7 1 bn R2 . R8.6 bn R3 . m m R9 53 R9 86 R4 30 m R4 64 m Landscape Assessment R9.5 bn 2 Strategy Objectives Online Government Travel Directory National Travel Policy
Improved payment methods Positive engagement with the industry sectors Government Agreements 3 Engagement of the Cross-Functional Sourcing Team Project Stream Compliance Management Department International Relations and Cooperation Travel Management Companies Justice and Constitutional Development South African Police Service National Treasury Domestic Accommodation Domestic Car Rental & Domestic Air Travel Department Rural Development & Land Affairs Department of Correctional Services Gauteng Provincial Treasury Department of Agriculture and Forestry KZN Provincial Treasury National Treasury Justice and Constitutional Development Department of Trade and Industry North West Provincial Treasury Department of Telecommunications and Postal Services Department of Labour Department of Home Affairs Department of Tourism Department of Public Works Department of Statistics South Africa Department of Basic Education Limpopo Provincial Treasury National Treasury Department of Public Enterprises
Provincial Treasury Limpopo Provincial Treasury North West Provincial Treasury Gauteng Provincial Treasury KwaZulu-Natal Provincial Treasury Eastern Cape Provincial Treasury Free State Provincial Treasury Mpumalanga Provincial Treasury Northern Cape Provincial Treasury Western Cape Provincial Treasury Contact Person T Gaziba M Makhuwia Sanjay Singh General Pillay Nancy Letlape Yvette van Niekerk Ntsane Ramokgula Phillip Rammai Jeanette Thobejane Victor Mncube Carol Coleman Nancy Letlape Yvette van Niekerk Sanjay Singh Suresh Nanakan Motlogelwa Serapela Radilo Mokone Phale Naake Zandile Mbethe Nametso Matshika Tau Nyaku Gideon Modutle Ian Chabalala Sonnika Lundt Joel Kekana Nancy Letlape Yvette van Niekerk Abel Makhafola Contact person Joel Kekana Motlogelwa Serapela Jeanette Thobejane Carol Coleman Zilindile Bobani Nosipho Ngcebetsha Linda Riddles Nombedesho Nkamba Vuyisile Gumbo Nadia Ebrahim
4 Consultations prior to issuance of the Policy Framework 11 January 2016 1. Department of Basic Education 2. Department of Telecommunication and Postal Services 3. Department of Correctional Services 4. Mpumalanga Provincial Treasury 5. Department of Trade and Industry 6. Department of Defence 7. Eastern Cape Provincial Treasury 8. Department of Public Enterprises 9. Kwa Zulu-Natal Provincial Treasury 10. Free State Provincial Treasury 11. Department of International Relations and Cooperation 12. Gauteng Provincial Treasury 13. Western Cape Town Provincial Treasury 12 February 2016 1. Gauteng Provincial Treasury 2. Department of Justice and Constitutional Development 3. Mpumalanga Provincial Treasury 4. North-West Provincial Treasury 5. Department of Labour 6. Department of Water and Sanitation 7. South African Revenue Services 8. Department of Higher Education 9. Department of Environmental Affairs. 5 Roadshows after the issuance of the Policy Framework ROADSHOW PROGRAM Thursday 02 Jun 2016 Economic Cluster (Depts & PEs) Central & Social Cluster (Depts & PEs) Friday 03 Jun 2016 Finance Cluster (Depts) Monday 06 Jun 2016 Tuesday 07 Jun 2016 Wednesday 08 Jun 2016 Thursday 09 Jun 2016 Friday 10 Jun 2016 Justice Cluster (Depts & PEs)
Monday 13 Jun 2016 Tuesday 14 Jun 2016 Wednesday 15 Jun 2016 Thursday 16 Jun 2016 Friday 17 Jun 2016 Mpumalanga Province Gauteng Province Northern Cape Province Monday 20 Jun 2016 Tuesday 21 Jun 2016 Wednesday 22 Jun 2016 Thursday 23 Jun 2016 Friday 24 Jun 2016 Monday 27 Jun 2016 Finance Cluster (PEs) North West Province Free State Province (Moved to 20 July) Public Holiday Limpopo Province KZN Province Eastern Cape Province Western Cape Province 6 Travel and Accommodation Strategy Implementation Phase 1 National Travel Policy Framework (NTPF) issued on 1 April 2016 NTPF to be adapted and adopted by Departments on 1 July 2016 (or 1 April 2017?) Corporate rates with full service domestic airlines Maximum allowable rates for hotel and lodging effective 1 April 2016 Enforcing net and non-commissionable rates with 2 Airlines and 4 Hotel Groups to which 3 TMCs must adhere to (allowed a fee increase)
Appointment of panels of TMCs by 30 September 2016 Standard remuneration model for TMCs (Management fee or transaction fee) 7 Travel and Accommodation Strategy Implementation Phase 2 Long terms contracts which involve issuing of RFPs: Domestic shuttle services Domestic car rental services Method of payment Lodge and virtual cards Technology Professional Conference Organisers (PCOs) Direct venue transfers Coach and bus hire Tour operators Long leases for cars 8 Benefits Most cost effective accommodation rate vs R1300 Upfront discounts on domestic flights SAA up to 30% BA Comair - up to 25% 9 Negotiated Airfares Applicable Fare discounts Booking classes Percentage discount applicable within the regions below from published fares. Domestic Booking classes Percentage discount applicable from published fares. Domestic Business Class Economy Class
C J Z D Y B M K H S Q T V L G W 26 24 24 10 30 na 27 27 27 12
8 7 7 5 0 0 Applicable Fare discounts Business Class Economy Class J Y B&H M&K V,S,N, Q and O 20% 25% 16% 12% 10% 10% 7 Days Advance Purchase 14 days Advance Purchase 10 Savings Example on Airfares As a way of understanding the impact of the proposed fee increase, see the following example: There will be 3 examples of airfares provided that justifies and demonstrates savings.
The below is an example of an SAA air ticket to Cape Town : 1. SA 2. SA 303 Y 18AUG JNBCPT HS1 354 Y 19AUG CPTJNB HS1 0600 1705 0810 1900 O O E TH E FR Airfare is as follows : R7070.46 this is the normal SAA airfare Airfare is as follows : R5474.46 this is the same class of travel with same flexibility but using the new SAA treasury deal code 30 % discount Airfare is as follows : R3536.46 if airfare is booked in V class (Economy class ) total discount percentage is almost 50 % discount on the normal fair and has limited flexibility based on the class being available when booked The above displays the various methods of saving the departments and agencies need to implement to start reflecting savings. 11 ACCOMMODATION Voucher Includes BAND 1 BAND 2 BAND 3 Room Only Bed & Breakfast Dinner, Bed and Breakfast Tourism Levy Tourism Levy Tourism Levy
VAT VAT VAT 2 x soft Drinks at Dinner Graded Hotel, Boutique Hotel, Lodge or Resort 1 Star BAND 1 BAND 2 BAND 3 R 580 R R 2 Star R 900 R 1 030 R 1 230 3 Star R 1 100 R 1 200 R 1 400 4 Star R 1 250 R 1 350 R 1 550
5 Star Bed & Breakfast, Country House or Guest house R 2 100 R 2 200 R 2 500 BAND 1 BAND 2 BAND 3 710 855 1 Star R 300 R 450 R 630 2 Star R 500 R 650 R 830 3 Star R
900 R 1 050 R 1 230 4 Star R 1 000 R 1 150 R 1 330 5 Star Self-Catering* R 1 200 R 1 350 R 1 530 BAND 1 BAND 2 BAND 3 BAND 2 BAND 3 1 Star R 580 2 Star R 900 3 Star R 1 100 4 Star R 1 250
5 Star R 1 450 Meal Allowances BAND 1 Breakfast R 120 R - Lunch R 150 R 150 R 150 Dinner R 150 R 150 R Total R 420 R 300 R - R 150 Accommodation costs are assumed to be inclusive of Parking and Wi-Fi (if available), and exclusive of Laundry
expenses. *Including Exclusive and Shared Facilities. Exclusive facilities offer travellers a sole occupancy unit consisting of one or more bedrooms and self-contained public areas e.g. kitchen, dining area and lounge. Shared Facilities consisting of one or more bedrooms and self-contained shared public areas e.g. kitchen, dining area and lounge. 12 Potential savings on Accommodation Cost Containment Model for Accommodation 100% 1300,00 All 14,00 1944,00 1944,00 Es tim ex ated pe n an dit nu ur m e ts Ni gh Be d Ne go Ta tiatio rg n et TO TA L y
To u ri ( 1 sm % Le ) v m Co m 180,00 pe r 65,00 iss s ftd rin k So Di n 250,00 NEW PROPOSED COST CONTAINMENT MODEL Proposed Grid Model io n 135,00 ne r t Br ea kf as
Ra te m Ro o St ar R Ac co m M ati ng ix CURRENT COST CONTAINMENT MODEL 600 000 1 166 400 000 600 000 12 825 000 BAND 3 Dinner, Bed & Breakfast Tourism Levy VAT 2 SoftDrinks with Dinner 2,50% 1 Star 855,00 2,50% 2 Star 1230,00 18 450 000
80% 3 Star 1400,00 672 000 000 10% 4 Star 1550,00 93 000 000 5% 5 Star 2500,00 75 000 000 100,00% 871 275 000 Potential saving using the Grid Model 295 125 000 Assumptions 1. Assuming we have an accommodation mix that most of our stays will be in 3 star hotels (80%), 10% in 4 star, 5% in 5 star and 5% in 1 and 2 star hotels 2. Assuming we have an estimated 600 000 bed nights per year (our top 5 TMC gave us 425 000 bed nights) 3. Assuming we reduce Travel Agents commission to 0% and pay them Management Fees (instead of % commission/service fee per transaction) and Instruct them to use Corporate Agreements for Air, Hotels, Car Rental which NT will centrally negotiate 13 Communication NT Circular 1 of 2016/2017 on 2 March 2016 Implementation of National Travel & Accommodation Project (Interim period arrangements) MFMA Circular 82 on 30 March 2016
Guidance on National Travel Policy Framework, domestic air travel and domestic accommodation NT Instruction 1 on 15 April 2016 Implementation of the National Travel Policy Framework by 30 June 2016 Institutions to adapt institutional instructions, policies and operating procedures NT Circular 4 on 15 April 2015 Negotiated corporate rates with airlines Maximum allowable rates for accommodation 14 Challenges Communication within Government and with stakeholders Conflicting interest of TMCs service vs rebates & incentives Rates inflated to include rebates & incentives Enforcing net and non-commissionable rates TMC remuneration based on percentage of transaction Limited transparency on actual spend Sub-standard reporting Non-payment by Government & TMCs Travel Policy measures to enforce behaviour and compliance 7 days Restrictive measures for class of travel air and accommodation Conservative maximum allowable rates for guest establishments Cost Instruction 1 of 2013/2014 of R1300 not repealed Implementation of Travel Policy Framework by 1 July 2016 15 Next Steps Extend implementation date of the Travel Policy to 1 April 2017 Departments to provide inputs on Travel Policy by 30 September 2016 Issue revised Travel Policy Framework by 1 November 2016 Revise maximum allowable rates for non-hotel accommodation Issue Cost Containment instruction applicable to Travel & Accommodation only Robust communication and change management strategy
Engage with Auditor-General with regard to audit queries TENDER FOR APPOINTMENT OF PANEL(S) OF TMCs (10 Panels) 16 TMC Tender RT34-2016 Pre-qualification 70% Threshold NT FS WC EC MPL KZN NC LIM NW GP 90/10 Evaluation NT FS WC EC MPL KZN NC LIM NW GP CURRENT LEGISLATION DO NOT MAKE PROVISION FOR FRAMEWORK CONTRACTS
T M C TMCs that pass the 70% threshold TMC that are offering their service in FS (Local Econ Dev) FS Depts PE 3C Officials from FS depts and PEs to constitute a BEC and evaluate their part of the bid NT to co-ordinate and support Prov reserve the right to appoint as many TMCs as they want 17 Information Required Transaction Volumes / Budget for Travel Broken down in Accommodation, Air, Car Rental , Shuttle Serv etc Local & International Current status of contracts, expiry date, etc. to assess the readiness to evaluate program for evaluation over a 13-30 day period. Are you using an OBT or any other Technology / Traditional? Other? 18 Understanding this industry is like eating a bowl of spaghetti Estelle Setan 19 END
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