World Cup pricing | WhaleTales Blog by Chris von Ulmenstein

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:

â€˜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.

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

â€˜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„¢.

â€˜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

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