Tag Archives: accommodation pricing

World Cup accommodation rates “reasonable”, says survey

The Grant Thornton survey about World Cup pricing, conducted on behalf of the Ministry of Tourism, shows that “most World Cup accommodation prices have increased by a reasonable amount, despite persistent concerns about profiteering, South African Tourism Minister Marthinus van Schalkwyk said on Friday”, says a Reuters report.

The survey found that the accommodation pricing of the 2479 accommodation establishments, including hotels, guest houses, B&B’s and self-catering establishments, that participated in the survey, were charging a premium of less than 50 % on their 2010 summer rate.  However, the rates premium in Gauteng, which sees Johannesburg hosting the opening and closing matches, is more than 50 % for more than two-thirds of the establishments, according to the survey.

According to a media release from Cape Town Tourism, the survey results show that fewer than 20 % of accommodation establishments in the Western Cape are charging more than 50 % of their 2010 rate, reflecting this province’s call to responsible pricing.

Van Schalkwyk is quoted as saying that “The majority of accommodation establishments in South Africa are very responsible, we know that 74 percent will be charging prices during the World Cup that are very reasonable” at the news conference.

The Tourism Minister said that rate increases were to be expected during major events, but warned the industry about the damaging effect exorbitant prices could have on the World Cup legacy.  “We will continue to do everything to discourage excessive premiums when these do occur.  I am satisfied that by far the majority of accommodation establishments are acting responsibly and are sensitive to our warnings about price hiking and its effects” said Minister van Schalkwyk.    The Minister encouraged soccer visitors “to shop around to get the best deal”. 

The Tourism Minister’s “praise” of the industry was to be expected, in that the survey conducted on his Department’s behalf could not have come up with any other finding for South Africa, to save face in the face of international criticism about “price gouging”.   However, praising price increases of “below 50 %” is not commendable, as the accommodation industry guideline for World Cup accommodation rates was the 2010 rate + 10 %.  The ‘under 50%’ rate that lies between 11 – 49 % is equally rip-off as is that which lies over 50 %!  

The Gauteng accommodation industry is profiteering from the demand versus supply in Johannesburg, and it being a central point for matches at a number of stadia.   The two-thirds of estabishments charging an add-on of more than 50 % should be ashamed of themselves for charging excessively.  

The sample size of just more than 2 400 establishments is small in comparison to the many thousands of accommodation establishments in the country.   One would assume that the more price compliant establishments would have been more likely to have responded to the survey, therefore skewing the results.

Minister of Finance, Tourism and Economic Development in the Western Cape, Alan Winde, has threatened to name and shame the Western Cape “overnight accommodation establishments” that charge excessive rates during the World Cup.  The Minister would be advised to check on restaurant and transport prices too, as reports of excessive pricing have also been levelled against these sectors, reports Eye Witness News.  

Flaws in the Grant Thornton questionnaire design may also have skewed the results – read our criticism of the study questionnaire here.

Chris von Ulmenstein, Whale Cottage Portfolio: www.whalecottage.com

World Cup pricing survey will provide incorrect information

Having been a market researcher for a large part of my career, I completed one of the 5 questionnaires received yesterday from Grant Thornton, a consultancy contracted by the Department of Tourism to conduct a survey amongst accommodation establishments, with shock as to its poor design.  The results of the survey will be used to prove that South African accommodation is not ripping off soccer fans for the World Cup.

Given that the consultancy will stand to make a good income out of the survey, it is surprising that Grant Thornton have got the survey design so wrong, meaning that much of its survey will be meaningless, being based on incorrect or missing information.  It is pretty clear that Grant Thornton does not know how the tourism industry operates, despite its work it conducts in the industry!

The survey problems are the following:

1.  The survey shows that it is hotels that have been used as a model for the survey.  Guest houses, self-catering establishments, and B&B’s outnumber hotels by far.

2.  The questionnaire becomes intimidating when one has to state one’s room types – again the design is for hotels, and the various room types do not match those of guest houses/B&B/self-catering establishments.  Surprisingly, single rooms are not listed as an accommodation type.

3.  It is made even more complicated in respect of the rates charged per room type – small accommodation establishments do not quote “STO” rates, and tend to charge the same for all room types – the table requesting this information could be intimidating for a small accommodation establishment.  “Not applicable” options are lost after the first question, and one is not told how to deal with pricing of room types one does not have.

4.  A bigger concern is the time period used for the study – the industry has been admonished for “price-gouging”, and FEDHASA CEO Brett Dungan has pointed a finger at the industry, telling it that the World Cup runs from 11 June – 11 July, and that it should therefore charge normal winter rates from 1 – 10 June and from 12 July onwards.   However, the survey asks for one World Cup rate only, from 1 June – 31 July, thereby condoning this pricing policy.

5.  The question that shows that Grant Thornton is not in touch with the industry is the one requesting information about current pricing – it obviously wants to compare the World Cup rates charged with those charged currently and the year prior – however, it defines these as “2010” and “2009”.  In the accommodation industry generally, and this would include hotels, one quotes 2008/2009, 2009/2010, etc, giving that the rates usually change from the start of the summer season of every year, i.e. October.   The information generated about current rates would therefore create confusion and potentially incorrect answers, importantly required as a benchmark for the World Cup pricing comparison.

It is inexcusable that a company of Grant Thornton’s stature could have got a survey, which could have been made so much more simple and more meaningful, so wrong.

Chris von Ulmenstein, Whale Cottage Portfolio: www.whalecottage.com

World Cup accommodation pricing to be investigated

The Minister of Tourism, Marthinus van Schalkwyk, has announced that he has contracted Grant Thornton to conduct a survey of accommodation prices during the June/July World Cup period, and to benchmark these against the prices of accommodation in countries that previously hosted FIFA World Cups, reports www.iol.co.za.  The survey is to be conducted, despite the tourism industry body Tourism Business Council of South Africa and FIFA’s MATCH accommodation agency denying that World Cup prices are excessive.

The survey comes amidst international criticism that accommodation pricing is excessive and deemed to be “rip-off”.   Van Schalkwyk said that “the survey would help safeguard the reputation of the South African tourism industry, since South Africa is a ‘value-for-money destination’  Price-hiking could damage the reputation of our tourism industry”, he said.

Van Schalkwyk did make it clear that tourists could not expect to pay normal low-season rates during the World Cup : “……June and July 2010 will be high season in South Africa”.

The Grant Thornton survey will only be conducted amongst professional accommodation establishments, and will exclude private homes.

The Tourism Business Council of South Africa (TBCSA), which claims to be ‘the official umbrella body for organised business in the South African travel and tourism industry’, and MATCH, FIFA’s accommodation agency, have made a joint statement that the industry pricing is not rip-off nor excessive, reports S A Tourism Update.  The TBCSA chairman Mmatsatsi Marobe praised the tourism sector for not charging “exorbitant prices as they understood the long-term effect on tourism into South Africa, but it was the doing of a few small suppliers that put South Africa in a bad light”, she said.   The MATCH Chairman, Jaime Byron, came with the following brilliant logic about pricing: “…the 2010 FIFA World Cup was expected to be more expensive than previous tournaments because it was a long-haul destination.  This makes South Africa inherently more expensive”, he is quoted as saying!   It was noted by them that the media should be careful about attacking the World Cup pricing, as it had to be accurate about what exactly was included in the prices quoted in such media reports (e.g. accommodation, tickets, transport).  

The TBCSA/MATCH statements are ironic, as MATCH has been blamed for excessive “rip-off pricing” since it started recruiting accommodation for the World Cup four years ago, demanding a 30 % commission from accommodation establishments initially, and now just adding this commission percentage on to the already high accommodation rates! 

Chris von Ulmenstein, Whale Cottage Portfolio: www.whalecottage.com