CEO Blog - A Responsible Pricing Reminder

Its been a better summer season for many of us compared to last year. The city is humming with visitors. The bars, restaurants, attractions and malls doing brisk trade as people from across the world (and our own country) discover destination Cape Town. Whilst many of these visitors had been planning their holiday ahead of the currency bonanza, it is clear that many travellers are choosing Cape Town because their money means much more here this season.

In our survey of members this past October – December, it is clear that room rates have averaged higher than they have in previous years. This is good news, suggesting that demand was high and that discounting was unnecessary. However, it also speaks to the need to exercise caution with our pricing.

Why you may ask? When visiting the Mining Indaba last week, I had the good fortune to overhear some of the delegates talking about the excessive price increases in accommodation and restaurants. They nodded their heads in agreement and one of the delegates used a term which no one in our industry wants to hear: “price gouging”.

I therefore want to use this opportunity, midway through our summer season, to remind readers of the “Tourism Code of Responsible Pricing”.

In February 2010, Cape Town Tourism and its affiliated associations FEDHASA, SATSA and SAACI supported and signed the Code. The Code is a commitment to ensuring that Cape Town maintains prices consistently and fairly. Following this Code is necessary to ensure that our destination averts a reputation for opportunistic pricing. The temptation to inflate prices is very real, and understandable, but it is a tough place to return from when the currency swings back.

Post our tourism boom of 2002 (which was also driven by a favourable exchange rate for visitors) Cape Town was branded as expensive and out of line. Some visitors voiced their disappointment at the prices of services and accommodation in particular. What’s more, a capricious escalation of prices can be damaging to local trade. We have worked hard over the last ten years to show that Cape Town is in fact a destination that offers excellent value, but one that does not need to discount or go to the ‘bargain basement’ to attract the visitors year after year. The recent placing of Cape Town as a top spot to visit in The Guardian, The New York Times and Lonely Planet attests to this.

There is a lot of evidence to show that visitors who stay in Cape Town during favourable currency periods will spend more on the extras. Adding value to your offering is the healthiest way to ensure higher spend, as well as a return visit and positive word of mouth from your visitors.

If you are not aware of the Code, please download it here. Adopt the Code and encourage your team and others in the industry to subscribe to its 4 core values.

Finally, the few perpetrators who are “price gouging” are doing great reputational damage to our industry. If this continues, we may see events like the Mining Indaba leaving Cape Town, resulting in long term negative economic impact because of a few who wanted short term gain.

March and April are exceptional times in Cape Town. As we head into event season, be sure to follow us on Twitter and Facebook for details on all the top events and opportunities in Cape Town.

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