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BLACK ECONOMIC EMPOWERMENT (BEE) IN THE HOTEL INDUSTRY OF SOUTH AFRICA

54th ICCA Congress

Session code:##########

A case study by MATIFADZA NYAZEMASANDTON CONVENTION CENTRE JOHANNESBURG SOUTH AFRICA


South Africa – the current reality

• South Africa faces triple transition – political, economic and racial equity

• Political and public sector transformation has been achieved, but economic transformation is yet to be achieved (Fauconnier & Mathur-Helm 2008:17; Acemoglu et al., 2007:5)

• South Africa is limited in its human resource capacity

• The BBBEE act 2003 – government priority is to grow the South African economy while also enabling economic transformation through the inclusion of more black people

• Beneficiaries of BBBEE are black people - African, Coloured and Indian people, women and the disabled

• Black women – the intersection of racial and gender discrimination



BEE policy

BBBEE policy is the government vehicle for accelerating the inclusion of black people into the

economy through equity transfer, human resource, enterprise and community development.

Population: 50.5 mil: African 79.5%; White 9%, Coloured 9%, Indian 2.5%. (Stats SA, 2012).

Although black people represent 91% of South Africa’s population, the economy is controlled by a

small white population.

The implementation of BBBEE policy is characterised by slow adoption and resistance by the

private sector, including by the hotel industry, in South Africa.


The Tourism Sector Charter Scorecard

BBBEE element Tourism industry scorecard 2012*

DTI generic scorecard for private sector 2012**

Ownership 15% 20%

Management control

14% 10%

*Employment equity

14% 15%

*Skills development

20% 15%

*Preferential procurement 15% 20%

*Enterprise development 14% 15%

*Socio-economic development

8% 5%

TOTAL 100% 100%

The research focus was on the five elements that hotel executives have direct control over



Research projectTheories underpinning BBBEE policy formulation and affirmative action

Neo-liberalism and public-private partnerships.Substantive equality, affirmative action, racial redress.

Effectiveness of affirmative action and BBBEE in the private sector

Case studies on Brazil, Canada, India, Malaysia, USA and South Africa.

BBBEE implementation in the hotel industry and tourism sector

Baseline studies on tourism.Case studies on BBBEE in the private sector.

Theories underpinning tourism policy and development

Importance of tourism for economic development.Government and private sector in tourism.Hotel industry and the tourism value chain.

Management theories in hotels and BBBEE

Human resource management.Talent management and career development.Small enterprise and community development.Sustainable and responsible tourism.

Hypotheses on developing a framework for BBBEE implementation in the hotel industry



Findings - factors influencing BBBEE implementation in hotels

Theme Factors inhibiting BBBEE implementationFactors facilitating and opportunities for

BBBEE success

Industry approach

to BBBEE policy

Administrative burden of BBBEE Adherence to two BBBEE charters Relevance of Tourism Sector Charter Appeal of hotel industry to black

investors and managers More time required to implement BBBEE

policy Competition - hotel industry not first

choice

The role of industry associations in promoting tourism

Government as an enabler in hotel development

Role of hotel group Slow pace of implementing BBBEE Divergence in group strategies vs. hotel

unit activities

Role of the hotel group in providing strategic direction and support

GM having targets on BBBEE GM having incentives on BBBEE

Role of hotel

general manager

Attitude of hotel GMs towards BBBEE policy

Knowledge on BBBEE policy Experience of GM

GM supporting BBBEE policy for equitable representation

GM as a key player in implementing BBBEE at hotel unit

Experience of GM

Hotel attributes Star rating of hotel Location of hotel

Star rating of hotel Location of hotel



Summary of factors influencing BBBEE implementation in hotels

Theme Factors inhibiting BBBEE implementationFactors facilitating and opportunities for BBBEE

success

Employment equity and

skills development

Shortage of skilled black candidates Appeal and attractiveness of the hotel industry Meeting the needs of “black diamonds” and

Generation Y Matching areas of skills shortage with career

advancement Relevance of apprentice model of training Availability of succession pool Capacity of hotel training staff and hotel

graduates Deficiency in general educational system

Making the industry attractive for black managers – incentives?

Making the industry attractive for students Influencing curriculum development in hospitality

institutions Nature of skills development in hotels and

relevance of the apprentice model

Preferential

procurement and

enterprise development

Engagement in low risk areas for black procurement – cleaning, security

Low investment in assisting and growing black enterprises

Impact of group procurement policy Availability and capacity of small black

enterprises

Group procurement work for enterprise development Providing business assistance to small enterprises Role of Tourism Enterprise Partnership/industry

Socio-economic

development

Donations model not empowering communities Donations to communities in cash and kind Agenda for responsible and sustainable tourism –

pro-poor tourism Alignment of BBBEE and sustainable tourism



Solutions for BBBEE success – framework for BBBEE in hotel industry

Unemploy-ment

Incomeinequalities

Educationsystem

ACHIEVING SUCCESS IN BROAD-BASED BLACK ECONOMIC EMPWERMENT IN

HOTELS

PRIMARY FACTORS

General Manager has

BBBEE targets

General Manager is

incentivised on BBBEE

General Manager

supports BBBEE policy

Hotel has +75%

representation of black

management

SECONDARY

FACTORS

Experience of General Manager

Availability of small black enterprises

Capacity of small black enterprise

Hotel Group policy

Star rating of hotels

Location of hotels

Attractiveness of the hotel

industry

Image of hotel industry

Availability of succession pool

in hotel

Skills shortage in hotels and in

market

Hotel graduates:•Effectiveness of hotel schools•Capacity of hotel graduates

Competitor offerings

Government tourism

policy

Tourism sector charter

BOUNDARY

FACTORS

Skills development

Sustainable tourism

Black diamond middle class

culture

Generation YOther Government regulations


Summary of findings on employment equity and skills development

• Some progress in the representation black managers in middle management.

• Reliance on internal resources for the recruitment of black management

• Activity in skills development was reported to be high

• Hospitality is not a first choice career for graduates and black market - there is no

best at entry point

• investment in making industry more attractive – second choice career positioning

• Building institutional capacity at technical colleges – industry involvement

• Compliance vs empowerment - the final glass ceiling – black representation at

general manager level is low


Summary of findings on small enterprise development

• The business volumes on preferential procurement from small black enterprises was

low.

• Hoteliers opted for low skills and less risk business when dealing with black suppliers

because of lack of confidence in small black enterprises.

• There was some level of proactive engagement by hotels in providing assistance to

small enterprises. The level of engagement was determined by hotel groups and

corporate policy.

• Generally, hotel managers do not have the capacity to make a significant impact but

hotel groups can develop small enterprises which are sustainable. This requires case

by case approach ideally managed from a corporate or regional perspective.

Presentations & Public Speaking

Tuesday 3 November | Why empowerment and equality for women is a critical international meetings industry issue | Mati Nyazema