prices | WhaleTales Blog by Chris von Ulmenstein

Tour operators say South African accommodation has become too expensive for their UK clients, and they have called on local accommodation suppliers to relook their prices for 2011, reports South African Tourism Update.

Portfolio of Places representative in the UK, James Westrip of Africa Collection, says that the “good-value-for-money perception” of South Africa has gone in the past year. This changed perception about tourism prices, coupled with tough economic times in the UK and the strong Rand “…is proving problematic for us all”, he said. He feels that “SA is pricing itself out of the market”. Portfolio of Places has experienced its worst year ever in its more than 20-year existence, we have been told.

Another operator said that it is no longer feasible for local establishments to increase their rates by 10 % annually, in excess of the inflation rate. These increases effect the value for money perception of South Africa, says Louise de Waal of Baobab Travel. She stated that budget accommodation options often are questionable as far as quality goes, and therefore cannot be booked. Tourvest Inbound’s Martin Wiest says that high pricing makes our country less competitive globally.

&Beyond’s Gary Lotter acknowledges that not all accommodation establishments have increased their prices above the inflation rate, or at all, but it is the strong Rand that is the root of the problem. He also said that if establishments were to drop their rates, they could receive more business, although this is not guaranteed.

Westrip also complained about establishments charging their direct clients better rates than they do tour operators, even though their clients may be a once-off and tour operators usually are loyal to establishments and book them regularly. De Waal queried the wisdom of last minute rate reductions, and called for early-bird discounts instead.

It is interesting to read that tour operators cry wolf about high rates when it is the operators that are exceptionally greedy in their commission demands. Africa Collection takes 20 % commission on bookings it gives Portfolio of Places clients, on top of close to the entry level R20000 annual advertising costs for the Bed and Breakfast Collection advertisers. While the standard commission rate is 10 %, tour operators tend to do business with establishments if they can get commissions of 20 % or more, leading their business to go to hotels rather than guest houses and B&B’s, which would be far more affordable for tourists.

It may well therefore be the tour operators that are the cause of the loss-of-value-for-money image that they are complaining about!

A survey on the Southern African Travel News website shows that the majority of respondents indicated that they have frozen their rates.

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

A recent letter to the Cape Argus by reader Merle Kaplan about rising prises and decreasing levels of service in Cape Town over the Festive season was food for thought. Our response to her letter, sent to the Cape Argus, was as follows:

“While not a restaurant owner, but a frequent restaurant user, I cannot agree with Ms Kaplan about price increases. I want to commend our restaurants for holding their prices in these difficult times – they probably have no choice anyway. I must immediately exclude the mad prices charged for New Year’s Eve dinners and entertainment, with up to R 2 000 per head charged for 3 or 4 courses, 2 free glasses of bubbly, and some entertainment.

A sensitive point raised is that of staff. If Ms Kaplan had any idea about how difficult it is to run a hospitality business, then she would be more sympathetic to the staffing problems our industry experiences. Realities are no-shows of staff – something else comes up or they want to go out with their friends, who are all on holiday. Staff move from one job to another on the basis of a few Rands, without giving the required notice period, as per their contracts and the Department of Labour’s Sectoral Determination for the Hospitality Industry. Students are a fantastic source of help, but they need to be trained. Students do not appear to be as “hungry” as they used to be, and they too would prefer to spend the Christmas and New Year’s days with their family and friends and forego the income. Unfortunately not arriving at work is not a “dismissible offence”, as Ms Kaplan claims – one can issue 3 letters of warning and then hold a disciplinary hearing before one can even contemplate firing an employee. Then the restaurant owner is still guaranteed to be called to the CCMA, or the Department of Labour.

But hardest of all, is the extreme short-term nature of customers’ decision-making. Last minute bookings, or arrivals without a booking, must be a restaurateurs’ worst nightmare, as they cannot predict how many customers they will have each day – this affects planning for stocks and staffing. Restaurants experience good and bad days, and there is no pattern to predict when they will be busy and when not.

I also think that after a quiet year due to the credit crunch, during which everything went at a slower pace, it is hard for restaurants and their staff to pick up the pace and deal with full restaurants again. All our businesses have become leaner, due to the credit crunch. Cape Town’s hospitality industry must get out of the credit crunch mode, and must gear up to face the busiest June and July ever during the World Cup.”

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