NATIONAL Treasury stands accused
of killing the very BEE business it
intended to support.
Axing of overrides and commissions;
delays in resolution of service fees; the
limbo in the interim; bad government
behaviour and miscommunication of
government policy are factors that have
led to this crisis.
This was the consensus of TMCs
attending the recent Public Sector
Workshop hosted by GBTA at the CSIR
International Convention Centre in
Pretoria.
“These issues are bread and
butter for us. As TMCs we are barely
surviving,” says md of Duma Travel,
Nomvula Mthombeni, who spoke at the
workshop.
Nomvula says she doesn’t know how
much longer TMCs can survive under
the current conditions.
An earlier casualty, Magic Travel,
went into business rescue earlier this
year. At the time some of the TMC’s
government accounts had not been
paid (see TNW, July 6).
A huge problem the new travel policy
has failed to address is the payment
delays and resulting consequences this
has on TMCs’ cash flow. “Government
sees TMCs as banks,” Robert Wilke,
executive director of Travel With Flair
(TWF), said at the workshop.
Last November, TWF footed the bill
for a government client’s conference,
which still hasn’t been paid. “I went to
National Treasury only to find out this
department doesn’t have allocated
budget. This has a huge ripple effect.
For example, it affects my credit limit
with certain service providers.”
Marco Ciocchetti, ceo of XL Travel,
says TMCs agreed to the new policy on
the condition government departments
would settle their accounts on time.
“Smaller businesses and new entrants
in the market won’t be able to do
government business unless they have
the financial backing.” A new entrant
won’t get credit from suppliers, he
says. “I can’t see them being able to
sustain themselves in the industry.”
“Some government departments are
not aware of the new policy,”
says Robert.
Nomvula says she has had to
write letters to various government
departments explaining to them how
the new policy works. “And when we go
to Treasury, they say ‘no, speak to the
department’.”
Smaller suppliers have also been
negatively affected by the new policy.
Steven Bagg, md of Chakela Hotels
and Resorts, says the new travel
policy has created a perception that
eliminated the smaller companies
from being considered for government
business.
Under the policy, TMCs are required
to provide at least one quote from
one of the preferred accommodation
suppliers mentioned in the policy when
quoting government clients. “They’ve
been given an unfair advantage,” he
says, adding that consultants seem to
think they must book these suppliers
over others.
“Guesthouses and bed and
breakfasts have really got a raw deal,”
says Steven. Under the new
policy, maximum rates for
five-star B&Bs have been
moved from R1 300 to
R900.
“Some of these places
are as good as five-star
hotels and their costs to
operate are not dissimilar.
In fact they’re probably more
because they do not have
economies of scale.”
The trial period for the
new travel policy ends on
September 30. TMCs and
suppliers remain in the dark
as to what the next step is.
“I’ve asked Treasury for their
project plan, but it hasn’t
been shared with anyone in
the industry,” says Nomvula.
“We’re sitting in the middle
of August and we’re all
saying it’s a trial period – at
the end of 40-odd days this
whole thing comes to an
end – what happens then?
I don’t know,” says Grant
Sandham, group sales
and marketing manager of
Premier Hotels and Resorts.
“We’ve had this trial period
and I don’t think as a
collective we know what
works and what doesn’t.”
