With fixed pricing still in demand by significant source markets, the South African inbound industry remains divided on the importance of a move to dynamic rates.
Francis Antrobus, the Chief Information Officer of Wilderness Safaris, puts his finger on one of the core issues. “Dynamic pricing is where the industry needs to go, however many people are resistant to what is needed to make the change viable. So it won’t happen tomorrow.”
Ian Taylor, Revenue and Reservations Manager of MORE Hotels, offers further explanation. “The safari industry is not necessarily ready for dynamic pricing yet, especially taking into account the fact that the majority of marketing still comes from brochures. We looked at dynamic pricing possibilities and then watered it down to quarterly updates where we review our rates and then fix them for the next quarter.”
Andrew Iles of Ashtons Tours, Safaris & Shuttles, who also reviewed dynamic pricing, agrees but says fixed pricing is a selling point for his services, making it a lot easier for tour operators and agents to sell.
For Monika Iuel, Private Safaris CEO for Southern Africa, a problem associated with dynamic pricing is that it is impossible for a tour operator to upsell a rate once that rate has been published. “This is because they have to comply with consumer protection laws.
“Furthermore, dynamic pricing really only works for larger hotels. The amount of management intervention that an accommodation company would have to put in place in order to make effective use of dynamic pricing, makes it less attractive.”
Antrobus says there is no one-size-fits-all solution to the ‘dynamic versus fixed pricing’ debate. “Our agent network is very key to us; 98% of our sales are intermediated through this network and we need to supply them with the information they need. At the same time, we have to build APIs [software that facilitates dynamic website pricing] that people want to consume and integrate into their systems. We also have to honour the fact that a large percentage of business is still done through brochures. At present, we have taken the stance of offering both fixed and dynamic pricing options, navigating this in a way that hopefully meets everyone’s needs.”
Dieter Holle, Tourvest Destination Management’s Chief Information Officer, says the DMC is taking a similar approach. “With regard to dynamic pricing, our customers and suppliers each have their own strategies. We have a big share in the Germanic market, which is still very driven by brochures. We already have a hybrid approach to this whereby we can offer the best of both worlds, STO and BAR. We don’t see brochures disappearing in the near future.”
However, Antrobus says: “Offering a hybrid approach does add a cost pressure that, while effective in the immediate zeitgeist, will not be sustainable in the long term. At some point the industry will have to make the transition. I think that the benefits of tour operators investing in an API outweigh the cost.”
According to Kevin Banks, CEO of Simple Cloud and a travel industry veteran, integrating with an API has become a lot easier and cheaper in the last 15 years. “I think it is mandatory for middle to large tour operators and DMCs to go the API or XML route if they want to stay competitive.”
He gives clues to the process involved. “The first step to API integration is to understand the compatibility of your current website. If you have a static html page you would really have to overhaul your site in order to integrate with an API. This can take anything from a few weeks to a few months. If you have a dynamic site (ie a database) then the integration will take between two and four weeks.
“The next step is to market the website correctly. Once you have an integrated API, your website will continually update with the latest specials. It is crucial that you have a strong digital marketing strategy in place to advertise these.
“During the integration process, your existing website would stay live so there would be no impact on your revenue.
“The cost of integrating your website depends on whether it is static or dynamic to start off with. Overall, you’re looking at a ball park of R15 000-R100 000 (€935-€6 245)). If your website is already dynamic you are looking at costs on the lower end of the scale. If your website is currently static then the starting costs would sit around R45 000 (€2 810),” says Banks.
However, for small tour operators who would be out of pocket by such an investment, more cost-effective options are rapidly becoming available. “In the next couple of months, you are going to get more API providers moving across to White Label sites,” says Banks. These sites are a more affordable option for small tour operators or DMCs that can’t yet invest in API integration.”