By Claire Neilson
27 Mon, Jun 2011
As global tourism still reels from economic recession and long-haul destinations like South Africa grapple with how best to attract price-sensitive international visitors, pricing policy is becoming what many believe is the industry’s biggest challenge.
One concern is that in the rush to grab a slice of a seemingly decreasing tourism pie, price-slashing has caused confusion in the marketplace as to the real value of the destination and packages on offer.
Says Linda Pampallis, CEO of Thompsons Africa: “The big concern about the downward push of margins is, at what point are quality and value compromised? Obviously we understand that it is better to have some contribution to your overhead than none. At Thompsons Africa our approach is to continue to impress this point upon our suppliers.”
The rising trend of travellers looking to the Internet to find deals has led to what some say are low prices simply being dumped online, with consumers not really knowing what level of quality to expect from those prices.
Martin Wiest, CEO of Tourvest Destination Management, agrees that deep discounts online can have a negative impact on the industry. “They accelerate disintermediation, confuse the consumer when it comes to price value proposition and discount distribution costs that are there for the promotion of a destination.”
While cheap deals both online and offline are seemingly ubiquitous, the solution to keep business flourishing without compromising on quality seems less so.
Colin Fryer, Owner of Centre Stage Travel says Internet deals can be useful in generating interest in a destination but clarity on pricing policy is needed. “We need to establish what our core tourism model is to be in Southern Africa in terms of low, medium or high value and then go and get this business. The challenge we face is that we have such a large diversity of product and price offerings under normal trading conditions and now, under duress, the five-star city centre room is sold at the same rate a moderate three-star property is being sold for. How confusing for us within the industry let alone the consumer who has little understanding of pricing policy.”
One solution in persuading price-sensitive consumers to take a value-for-money deal rather than the cheapest may require a more detailed explanation of the package and what it entails during the sales process.
Says Wiest: “It really hinges around documentation in terms of any form of sales collateral where the value proposition is documented in a comprehensive and understandable manner. We continuously amend our product range to offer the right product at the right price. However, we are most careful in discounting product of an established value.”
Fryer maintains that the industry needs to become more business-minded rather than emotionally driven reactors to market place developments. “Worthy clients are no fools and those who judge solely on price are not worthy clients. African tourism businesses need to realise their own unique selling benefit and market this in an all-inclusive manner in a way that their chosen client base relates to the overall experience in tandem with the resultant price model.”
How should the industry fight the trend of cheap packages and low-priced Internet deals while still offering travellers value for money? Let us know by leaving your comments below…