“NOW is the time to
take action,” says
Keith Levenstein,
ceo of EconoBEE, a
specialist B-BBEE
consultancy. Even though
travel agency owners
might only need a new
certificate next year, they
will be judged on the new
BEE criteria for the current
running financial year. “In
other words, travel agencies
should start planning now
for a verification that is
going to take place next
year,” he says.
The revised codes have
reduced the scorecard
elements from 7 to 5 by
combining Management
Control and Employment
Equity into one element
and Preferential
Procurement and Enterprise
Development into one
element. “In short, this
means there are going to
be a lot of changes as to
how people are going to
come up with strategies
to comply with the new
scorecard. They’ll have to
work a bit harder and a
bit more diligently to find
strategies,” says Keith.
The new procurement
targets, in particular, are
likely to create havoc in
the travel industry. The
procurement element
comprises the previous
Preferential Procurement
as well as the Enterprise
Development, and has
increased in importance
from 35 to 44 points.
According to Keith, it will
now be more difficult
for companies to reach
targets on procurement.
One of the indicators on
the new element is for a
company to spend 40%
of its procurement from
empowering suppliers that
are at least 51% blackowned.
Claude Vankeirsbilck,
chief sales and marketing
officer of Tourvest Travel
Services, agrees that the
most significant change
will be around preferential
procurement, which will be
more onerous. He adds,
however, that for TMCs this
is relatively small, taking
into account that suppliers’
spend is not deemed as
procurement as the travel
agent doesn’t choose the
procurement (i.e. which
airline to fly) – the client
does. Therefore, the client
is responsible for the
procurement.
But this can be tricky
where it is not clear who
is purchasing the ticket,
says Keith. The client
feels that as he/she pays
the travel agency, his/her
procurement is done with
the travel agency and not
with the airline.
The most straightforward
solution for agents, Keith
says, is to clearly state on
the invoice which expense
is for the client’s account
and which expense is their
own service fee. Keith adds
that this in itself will be
a challenge, as corporate
clients would rather use the
procurement level of their
travel agency than have
to run around looking for
BEE certificates of all the
airlines or other suppliers.
This situation could be
viewed as fronting (i.e. a
deliberate circumvention
of the B-BBEE Act and
the codes. Fronting
commonly involves claims
of compliance based on
misrepresentations of
facts. Window-dressing
is an example of fronting
and includes cases in
which black people are
appointed or introduced to
an enterprise on the basis
of tokenism), which in turn
could lead to jail time. The
agency should carefully
explain to the client how
BEE procurement works and
could assist the client in
collecting BEE certificates
of third-party suppliers.
The car-rental industry
will be severely affected by
BEE procurement targets,
as 90% of procurement is
vehicle procurement from
the Original Equipment
Manufacturers (OEMs),
says Keith Rankin, ceo
of Avis. He foresees a
tough year ahead, with
significant challenges for
the car-rental industry,
as most of the vehicle
OEMs are international
companies, making it
almost impossible for carrental
companies to fulfil
the procurement element of
the new BEE charter.
Keith says Avis is
currently level 2 BEE
compliant but he foresees
the company being at
risk of dropping to a level
6, 7 or even 8 because
of procurement targets.
“The concept of BEE is
valuable, and we support
transformation 100%. But
there is still a lot of work to
be done for the code to be
practical.”
President of Savrala
(Southern African
Vehicle Rental and
Leasing Association),
Marc Corcoran, says
the association will be
engaged with the National
Department of Tourism
over the next few months
to try and assist with
the scorecard alignment
process.
Planning for the new
codes will not be easy for
the travel industry, as the
new sector code for the
tourism industry (which
includes the travel trade)
has not yet been published.
According to Keith, it is
unlikely that the tourism
charter will be aligned with
the revised codes in time
for the deadline next year.
The charter first needs
to be re-drafted with the
help of the entire tourism
industry, after which the
public has to be given
between two months and
a year to comment. Only
then can the new code be
adjusted and finalised.
Whether the tourism
charter will or will not be
aligned in time, the travel
industry won’t receive
a reprieve from the new
codes. Keith foresees that
the Minister of Trade and
Industry, Dr Rob Davies,
might cancel the tourism
sector code in favour of
the amended code until the
tourism sector becomes
aligned. The best option
for the industry, according
to Keith, is to try and
align with the general
published amended codes,
even though they might
change slightly when the
new tourism charter is
published.
