Tag Archives: rip-off pricing

International World Cup soccer fan attendance halves

The boom projection of foreign attendance of the World Cup of 483 000 has been revised to a still-optimistic 373 000 by Grant Thornton, the tourism consultancy that created the original projection about 3 years ago, a drop of 23 %, reports SA Tourism Update.

The Grant Thornton estimate contradicts the FIFA estimates that the number of international soccer fans attending matches in South Africa has dropped by almost half, from 500 000 to 220000, reports The Times.

Based on the original optimistic international soccer fan attendance, the hospitality industry saw $-signs , and actively renovated their establishments, and put excessive price tags onto their properties.  Private home owners did quick renovations of their properties in the major cities, and planned to travel overseas during the World Cup period, spending their rental income, only to find the rental market being almost non-existent for the World Cup, given the over-supply of accommodation.

MATCH, the accommodation and ticketing agency for FIFA, also greedily added a 30 % surcharge onto the accommodation it contracted, and will have added similar commission rates to transport, flight and ticket prices, giving South Africa a dreadful label of “rip-off” pricing in the international media.  It is the fear of the excessive costs as well as the soccer fans’ fear of the perceived crime risk, that has kept soccer fans away in the main, report the international media.

Grant Thornton only revised its international attendance projections in the last month, when it became clear that MATCH could not sell all its contracted rooms, and gave them back to establishments, and that more than two-thirds of the tickets sold to date are to South Africans.  Even World Cup sponsors and football associations have not been able to sell all their tickets, and have returned them to MATCH.  

One wonders why it took Grant Thornton such a long time to revise the estimates, as its first estimate set the expectations for the hospitality industry.   The tourism consultancy now blames the credit crunch (which has been around for 2 years) and the distance of our country from the qualifying nations as the main reasons for the poor international bookings.  It also says that accredited Tour Operators also did poorly in selling packages.   Such Tour Operators had to pay $ 30 000 for a licence fee per country in which they were looking to sell packages, reports The Daily Maverick.

MATCH cancelled 1,3 million room nights out of the 1,9 million it had originally contracted, reports SA Tourism Update.    Many of the rooms released were in Zimbabwe, Mauritius, and in smaller local country towns (e.g. Plettenberg Bay, Hermanus).  The Protea Hotel Group has had 60 % of its rooms returned, in Cape Town, Durban and smaller towns, having originally been forced to allocate 80 % of their rooms to MATCH.  The Kruger National Park had 25 000 room nights returned.

Grant Thornton is trying to put a positive spin on the tourism benefit of the World Cup, by claiming that the average length of stay now is 18 days as opposed to 14 days as estimated originally, and that the average spend per trip would be R 30 200 as opposed to the originally estimated R 22 000.  On average, international soccer fans will watch 5 World Cup  matches, as opposed to the 3 previously estimated.

Attendance by African soccer fans has fallen to an estimate of 11 000, in what was meant to be an “African World Cup”, reports Business Report.    High ticket prices and lack of access to credit cards and the internet in other African countries has been blamed on the poor support from this continent.   It had originally been estimated that 48 000 African soccer fans would attend the World Cup, which still would not have been a satisfactory attendance level.

Grant Thornton in 2007 estimated the impact of the World Cup on the economy of R21,3 billion, with 159000 new jobs created.   International consultants Morgan Stanley published an estimate two months ago, of 350000 international fans attending and the local economy benefit being R15 billion.  The government has spent R33 billion on the tournament, for the building of stadiums and upgrading its infrastructure around the country to date, reports The Times. 

Grant Thornton now says that no new jobs appear to have been created due to the World Cup, but that it has prevented job losses, reports Business Report.   An estimated 2,5% – 3,5 % growth in the GDP of South Africa has been drastically reduced to 0,54 %.   Many fans have chosen to book via the internet, and are booking at B&B’s and guest houses, rather than hotels, and therefore are not booking via the “official MATCH-hosted channels”, says  Business Report.

FIFA President Sapp Blatter will be staying in the 5-star Michelangelo Towers during the World Cup, while the rest of his FIFA entourage of 200 will be accommodated at the Michelangelo Hotel next door, reports The Times.   Herr President’s requirements are a minibar stocked with South African wines, which is a good boost for the local wine industry, but the ice cubes in his fridge must be made from Evian water.  He will be protected by 5 bodyguards.   While sponsors’ products are meant to be used, which would mean that Blatter would have to drink Coca Cola’s Bonaqua, he is breaking protocol by drinking imported San Pellegrino mineral water.

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

Cape tourism declares responsible World Cup pricing

Representatives of Cape-based tourism bodies as well as some commercial entities met in the offices of Cape Town Tourism yesterday, to sign a declaration of fair World Cup pricing and operation, to maintain and protect the reputation of the Western Cape and of Cape Town.

Driven by Western Cape Minister of Tourism Alan Winde and Cape Town Tourism CEO Mariette du Toit-Helmbold, representatives of Cape Town Routes Unlimited, Backpackers South Africa, FEDHASA Cape, SATSA, Portfolio Collection, Fair Trade in Tourism South Africa, the City of Cape Town, and the Western Cape Ministry of Finance, Economic Development and Tourism signed to support the declaration.    It is interesting that the Portfolio Collection is represented, when other accommodation guide publishers, and other tourism associations were not included in the ceremony yesterday.

Du Toit-Helmbold has reminded the accommodation industry how important it is that pricing for the World Cup should be kept at a reasonable level (the summer rate is suggested), and that short term “rip-off” pricing will damage the reputation of the city and province.  

The Code of Responsible Pricing for Cape Town has been created around four core principles: 

‘Fair Value’ means that the tourism sector will create fair and reasonable rates for the 2010 FIFA World Cupâ„¢ that are linked to current seasonal rates. 

‘Responsible Tourism’ underlies Cape Town’s commitment to be a destination that values and promotes social responsibility and environmental protection. 

‘Sustainable Tourism’, whereby businesses will be expected to be mindful of the interests of maintaining a legacy for Cape Town beyond the 2010 FIFA World Cupâ„¢. 

‘Consumer Protection’ against hidden costs and fees that surprise and annoy consumers.

It is interesting that MATCH, FIFA’s accommodation agency, was not invited to the Code signing ceremony, being the biggest culprit in charging “rip-off” pricing by loading the accommodation rate of its signatories with a 30 % commission.   Also, despite signing the fair pricing code, none of the signatories have spoken out about MATCH’s irresponsible accommodation rates.   Only Portfolio cautioned its advertisers about signing with MATCH, and that may have been out of self-interest to ensure that their advertisers receive the bookings, from which Portfolio can earn commission.

FEDHASA Cape Manager Rema van Niekerk is quoted in the Times today as saying that she will terminate the membership of hotels that are found to be transgressing the Code.   All complaints will also be passed on to the Tourism Grading Council of South Africa (TGCSA), the article says.  However, they have no mandate to act on pricing, given that the TGCSA is a standards assessment body.

The focus of the Code appears to be accommodation pricing, but relates to all tourism products and services.   It will be interesting to see how restaurant pricing, rumoured for example to be about R 1 000 per person for a set menu at Beluga during the World Cup, will be monitored relative to this Code.

Surprisingly, Cape Town Tourism has not communicated with its members about pricing guidelines, as they seem to assume that their members read the Cape Town Tourism website regularly, or the newspapers reporting on the media releases sent to them by Cape Town Tourism.

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

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