This week’s comment relates to an article on hospitality pricing in a post-COVID-19 world.
Owner of Tales from Africa Travel, Henko Wentholt, said the following:
“Tourism works with ridiculously low profit margins compared with other industries – very often a 5% nett profit margin is considered okay. The current pricing and competition model is only viable if times are good, as is showcased by the current situation.
A viable business model would be one where businesses generate enough revenue so they can survive a bad year without having to rely on government bail-outs, TERS or any outside support. I am a very strong advocate of setting aside enough money into a company fund or savings account to be able to pay your staff for a year without having to retrench them.
In this era of enormous unemployment, and government spending ridiculous amounts on unprofitable SOEs instead of investing in profitable and sustainable businesses, as an industry we have to be able to step away from the short-sighted competitiveness of demanding low prices and come to a business model where the revenue is sustainable and where we can survive the next COVID.
Because there will be a next one, whether pandemic, a Gulf war, a terrorist attack or whatever. We will have another bad year again and we have a social responsibility to be able to keep our staff employed and help our businesses survive. The one has to go with the other if we want to be truly sustainable as an industry.”
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