THE KwaZulu-Natal Department of Economic Development, Tourism and Environmental Affairs is to introduce a ten percent hospitality levy in the province in a bid to create a war chest to attract major events to the province of KwaZulu-Natal.

However, this could make an already under-pressure sector even more nervous in the Dundee area.  Tourism Dundee calculated last year that in 2012 tourism brought in about R60-million into the local economy.

Rising fuel costs, poor roads in the battlefields area and now a ten percent levy that guides will be forced to pass on to customers may further damage this important sector.

Hotels and B and Bs will also have to pass on the levy increase to customers.

MEC for the department, Michael Mabuyakhulu said the department would engage and consult the different stakeholders on the proposed hospitality levy before it is implemented

“The huge spin-offs that accrue to the economy not only of our province and our country but as well as sister countries within the SADC region as a result of bidding for, and hosting major events mainly led by the government, are a critical pillar for the advancement of the radical economic transformation agenda.

Business events or meetings, incentives, exhibitions, congresses as well as major leisure events are one of the most powerful modern means to bring about social and economic development in a destination. Such events not only stimulate tourism flow and spend in a destination, but are the most important form of post tertiary education and training. They stimulate networking amongst professional association peers and even stimulate the development of new industries,” he said.

He said business events, in particular, also stimulate new leisure tourism flow in that between 20% and 40% of delegates to such gatherings tend to be converted as destination brand ambassadors and return as leisure tourists with their friends and family.

“Based on our benchmarking exercise, there are a number of factors that determine the success of a business events destination. One of these is the establishment of a business events bid and support fund to support the activities of the KwaZulu-Natal Convention Bureau and other role-players, including government departments and entities, who go out to canvass for and attract these events into our province.

Sponsorship or support measures are often required in order to secure bids for certain business events. In addition, support funding is required for activities such as delegate boosting and other forms of promotion in order to ensure the success of the secured event.

There are a number of excellent case studies on the concept of business events bid and support fund that exist. Amongst these are the Glasgow, Vienna, Sydney, Barcelona, Singapore, Toronto and San Francisco.
In these destinations, these are driven through a very strong partnership between the public and the private sector,” he said.

He said currently the province was mainly funding bid initiatives directly through allocations shared between the province and respective municipalities and, mostly, Ethekwini Municipality.

“However, based on our analysis of the abovementioned case studies, the public-private sector partnership applied in these destinations includes the establishment of a hospitality levy. This is a combination of direct contributions by the industry players as well as a service fee or levy charged onto the specified affected services. We will be introducing a 10% hospitality levy as from the 1st of April in 2015. We will be shortly engaging the tourism think tanks and all industry players before the end of the month of Septermber 2014.”

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