In the past year, a number of high-end safari properties have opted to move to a dynamic, and in some cases, best available rate (BAR) structure, but tour operators have voiced major concerns over the many challenges this has created for them.
Discussing the subject at the SATSA Conference in White River, Rob More, CEO of More Hotels, said: “The fear tends to come in around the ‘grey space’ where the systems aren’t advanced enough to deal with dynamic pricing.” He added that despite a severe initial reaction to his company’s decision to introduce a quarterly price review, the industry is now committed to working through any issues together. “We recognise that only 16% of our business is direct. We built our business up on traditional tour operators and will never forget that,” he added.
Indeed, concerns around the funds needed to be invested to develop high-tech systems that can deal with dynamic pricing is a major concern. Trevor Hewett, CEO African Pride Tours, pointed out that 82% of SATSA members fall into the small- to medium-sized category, and therefore are unable to invest in expensive technology. “We’ve always been of the opinion that the tourism industry has grown because of because of partnerships between tour operators and properties who have spent years creating a successful industry. We’re seeing the thin edge of the wedge when it comes to disrupters like OTAs at the moment, and we are in grave danger of cutting out the middle of the sector who have created the demand for South Africa,” he added.
Hewitt said that engagement with the traditional trade on the development of a dynamic rate system has been “relatively poor”. He said the industry needed to debate and engage issues, like the implications for consumer protection laws when rates in brochures fluctuate.
However, tour operators recognised that BAR is now a reality. Craig Smith, Founder of New Frontiers, said it’s now important that we look at the proper implementation of dynamic pricing, so that tour operators and commission structures are protected. “There are many complications – for example, a best available rate may come with different inclusions, terms and conditions to a STO rate, which creates challenges for quoting,” he said. “Additionally, wholesale tour operators will have to reload rates on a backoffice, which can be a lengthy process with every rate and terms and conditions change having a knock-on effect,” he added.
Smith said his market is not brochure-driven but instead works on a per quote basis, which gives him a certain degree of agility compared to other businesses. “However, it’s still a minefield of challenges and we need some kind of industry approach to solve frustrations,” he added.