Tag Archives: B&B’s

FEDHASA CEO misleads accommodation industry about World Cup

In the past few months hotel association FEDHASA CEO Brett Dungan has been on a PR-binge, setting himself up as the national spokesperson for the accommodation industry on all matters relating to Accommodation and the World Cup.

Three months ago Dungan started punting the www.rooms4u.travel portal, in conjunction with S A Tourism.  Very quickly Carl Momberg of www.capeinfo.com  discovered that Dungan was the private owner of the website, whose ownership is not declared publicly.  At that time, tourism bureaus were up in arms about the move by S A Tourism to set up an accommodation booking portal in competition with themselves, via Dungan’s website.  Dungan now states on his website that it is not the official website of the Department of Tourism.

In the Cape Times of 10 March, an article entitled “Some SA hotels won’t be sustainable and may face closure” quotes Dungan extensively, having addressed Parliament’s portfolio committee on tourism.

He told the committee that issues that faced the tourism industry were “pricing, availability of accommodation, perceptions of South Africa as a destination, and the impact and concerns for the country after the tournament.  ‘Hotels will be under enormous pressure.  There will be job losses as some won’t be sustainable.  These were issues that were identified some time ago” , he is quoted as saying, and pointed the finger at logistics planning on air travel and car hire that was lacking for the World Cup.  So far, so good.

However, the following quote about the small accommodation industry is what makes Dungan look like an opportunist: ” Small operators like B&B’s had failed to market their ventures through websites like www.rooms4u.travel, a specially created portal which would steer visitors to available rooms in each city, which featured price comparisons.   He said rooms4u was the definitive South African accommodation portal but said hotels and small establishments not registered on the site within 60 days would struggle to sell their available rooms.”

Even “better” is this quote, showing how two-faced Dungan is: “He said many hotels were at fault for failing in their marketing and relying too much on Match, Fifa’s exclusive hospitality partner.  They should never have given up all their channels of sales just because Match was coming here”.

Our response to Dungan, FEDHASA and S A Tourism is as follows:

1.  We do not understand how Brett Dungan gets to address the Parliament portfolio committee on tourism, in his capacity as CEO of FEDHASA, an association that predominantly represents hotel interests only, and not those of small accommodation.  In the Western Cape branch, for example, a hotel and restaurant owner, Susanne Faussner-Ringer, heads up the Small Accommodation segment, not understanding the needs of small accommodation owners!  Neither Dungan nor FEDHASA are the official spokespersons of the accommodation  industry, and have no mandate to speak on our behalf.
 
2.   The paragraph berating “small operators like B&B’s”, that “failed to market their venues through websites like rooms4u.travel” annoys us: 
      *  we may have small operations, but many of us do understand about marketing
      *  we all have our own websites, and advertise on powerful accommodation websites such as S A Venues, Cape Stay and SafariNow, which send us enquiries
      *  Brett Dungan does not disclose that he is the (private) owner of the rooms4u.travel portal, and that he will earn commission from every booking he takes on this portal – we see this as a conflict of interest!   However, the portal is only 3 months old, so how dare Dungan berate us for not advertising on it! 
     
3.   Even worse is his quoted claim that “Rooms4u was the definitive South African accommodation portal” – we absolutely disagree
      *  Threatening that hotels and establishments who have not registered with his portal within 60 days “would struggle to sell their available rooms” is scaremongering and unprofessional.  The portal has no track record, it operating for just more than 3 months
      *  The attack on the accommodation industry for supporting Match is so shocking and is an absolute turn-around.   FEDHASA made sure that its hotel members offered 80 % of their rooms at the time South Africa was bidding for the World Cup about 5 years ago, and 80 % of the room stock was the requirement.   One was berated for being disloyal for not signing with MATCH at the time.   To now say that they were relying too much on MATCH is preposterous!!!!  Dungan regularly publicly supported Match, and pointed fingers at hotels and especially small accommodation establishments for allegedly charging “rip-off” pricing for accommodation, when it is MATCH that has been ripping off soccer fans by adding 30 % commission to accommodation prices.  FEDHASA even has a Match director on its national board!  
POSTSCRIPT: The Cape Times incorporated the essence of this blog post in an article it published on Monday 22 March – read the article 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

Hospitality industry should be grateful

The Cape Times article “Restaurants, hotels ‘need innovation to survive slump'” (28 May) appears to exaggerate the effect of the credit crunch on the hospitality industry.
 
The hospitality players interviewed are not reflecting the seasonality problem, which affects the hospitality business badly in winter in Cape Town, compared to many other cities in South Africa.
 
Misleading reports heralding closures of restaurants in Cape Town, neglect to correct these when a restaurant like Summerville in Camps Bay never stopped trading – the liquidators handed over the running of the restaurant to new owners on 1 May, just a week after the news that the restaurant had “closed down”.    Bruce Robertson, of The Showroom, which closed down at the same time, has already opened a new but smaller “gourmet bunny-chow restaurant” called The Quarter.   Ian Halfon has also denied that his coffee shop Donatella’s in the V & A Waterfront closed due to the credit crunch.  He says that his lease expired. 
 
The hospitality industry has a lot to be grateful for, and does not need to ride on World Cup 2010 to say that all will be well.   The British and Irish Lions rugby matches in Cape Town on 13 and 23 June will lead to many hotels and guest houses being fully booked around those dates, and these rugby fans are staying for four days or more, which is unusual for winter bookings.  Sadly, the IPL did not benefit the mainstream guesthouse and hotel industry in our city at all.
 
The five successive interest rate cuts are fantastic news for all with bonds on their guest houses and B & B’s  –  the Whale Cottage bond costs for four guest houses are now down by R 50 000 per month compared to December 2008, when the first rate cut was announced.   This means that Whale Cottage can afford to drop its winter rates by 50 % relative to the summer rate, and it helps to cushion the reduced occupancy. 

MATCH is ripping off 2010 tourists, not hospitality industry

The attack by SATSA Chairman Michael Tatalias on the accommodation industry for not signing with the FIFA accommodation and ticketing agency MATCH, and accusing it of “holding back” so that “they could inflate their prices to rip off tourists” (Cape Argus, 12 May, ‘City hoteliers warned against hiking prices”) is uncalled for.
 
SATSA is an association of tour operators, car rental companies, business tourism suppliers, etc, and has a small number of accommodation members.  Accommodation is not the association’s major focus.   It therefore cannot speak for the accommodation industry.
 
It is MATCH that has been greedy, in originally dictating to accommodation establishments that they should use the 2007 rate and add a 16 % inflation factor to this, to get to the 2010 rate.  MATCH then would take a preposterous 30 % commission on this rate.  However, with inflation in 2008 at around 13 %, this rate dictate was not acceptable to most establishments, and that is why the number of rooms offered to MATCH has been so low.
 
MATCH has been viewed critically, and its unfavourable terms as far as the small accommodation industry (i.e. guest houses, B&B’s, self-catering establishments) goes, but over the past two years MATCH has come to the party by becoming far more flexible in its pricing (accepting any fair price) and cancellation policy is concerned, mainly because they have no other choice.   It is still taking a 30 % commission, now as an add-on, making accommodation appear extremely expensive, unless it is hidden in ticket/accommodation/transport packages!
 
The cancellation of rooms at short notice during the 2006 World Cup in Germany has been communicated to the industry, and MATCH’s dictate to supply 80 % of one’s room stock was therefore not acceptable.   Even in this regard MATCH has become flexible, and they will now accept any number of rooms one will offer.
 
The accommodation industry believes that it is able to sell its rooms directly to soccer fans who do not wish to be ripped off by MATCH’s rates.   They are not short-sighted enough nor that dishonourable to “rip-off” any 2010 World Cup tourists.  Many will use the 2009/2010 summer rate for June/July 2010, instead of discounting rates to winter levels, as is usually the case. 
 
Ultimately pricing is about supply and demand – if they cannot sell their rooms at the summer rate, accommodation establishments will have to lower them.   Tourists are far too astute these days, given the credit crunch, to allow themselves to be “ripped-off”!