During an unprecedented time when the industry should be working together to protect the value chain, a number of accommodation suppliers continue to offer international online booking platforms preferential rates that are much more heavily discounted than the ones they are making available to local tour operators and travel agents.
Briony Smith, Director of Bee Africa Travel & Tours, has been in the travel and tourism sector, which she loves, for 22 years. She, like many others in her situation, is now tired of always having to fight with suppliers for rates.
Speaking up for SMMEs and travel entrepreneurs, Smith says while she understands the market and a preference to book online, if the industry carries on like this without an awareness of the current plight of the travel trade and tour operators, they will be completely shattered.
“We understand that, as SMMEs, we can never give suppliers the volumes that international online booking platforms do, but we are appealing to properties to please afford us the opportunity to keep food on the table for our families during these trying times.”
Smith has to work three times harder because, not only is she contesting the rates, she is also checking the various platforms to assess whether their rates are more competitive so she doesn’t lose face with clients.
She says some of the international platforms receive up to 18% commission and their selling rate is still lower than the nett rate she is given as an SMME. “I have to market what I sell, get referrals and then risk losing it all to an online booking platform.”
Grow the economy
Frank Gaude, owner of KAPexkursionen, had a similar experience before the pandemic. “I was unaware that an accommodation provider in Springbok was charging me a surcharge for making provisional bookings. I only noticed when checking an online booking platform for additional accommodation that the rate for the same room was less than two-thirds the price I was charged. When confronted, the owner told me it was the rate for confirmed bookings. Strangely, you could cancel with full refund until the last minute when booking on the platform; at least it was advertised that way. In this case, the owner was fully aware of the price discrepancy.”
Gaude says dynamic pricing does influence rates on the platforms and often property owners don’t know about the lower rates until they receive the bookings.
“Now when I see something nice on a platform that I can afford, I call the establishment directly, so they don't have to pay the commission – I don’t ask for a discount for booking directly. Very often, however, the owners then insist on a higher rate than what was advertised on the site, so I have stopped asking owners/managers directly and I book via the platform straight away.”
Smith was recently negotiating for a rate for a group booking (more than 25 people) for a stay of over ten nights. The property in question gave her a nett rate of over R800 (€47) per room, which was higher than the selling rate on a few of the international platforms. “This was not for a one-night stay. The value of the booking was over R184 000 (€10 701) yet I still had to fight for rates.”
As another example, she says the only time she was able to negotiate a good rate at a different property was because of her industry relationships spanning decades. “It still took me three months to get this rate and it was valid for four months. Then in the December, they offered the nett travel trade rate to the public direct. How are our SMMEs who don’t have these relationships expected to survive these trying times?”
Leon Rajoo, Director of Discover Durban Travel & Tours, says enabling the local travel value chain to remain competitive in the current market is essential to grow the local economy.
“Allowing international online booking platforms to monopolise and dominate the market simply moves revenue and profit out of the country into international bank accounts. This does not stimulate the local economy and in the long run, local consumers – the only market for many at the moment – will not have sufficient disposable funds to afford booking a holiday.”
Collaboration is the recipe for success going forward, advises Seeza Tourism Growth Network Director, Septi Bukula. “The issue you are raising is of utmost importance. If there is one lesson for us all to learn from the devastating impact of COVID-19 it is that in everything we do, we have to think and act as one destination, Destination South Africa. If ever there was a time for a mindset change in how we do business it is now. Individual action is not the way of the future.”
Bukula says the 2002 Cape Town Declaration on Responsible Tourism in Destinations enjoins all players in a country’s tourism economy to “provide appropriate and sufficient support to small, medium and micro enterprises to ensure tourism-related enterprises thrive and are sustainable”.
He continues: “This is not Government’s responsibility alone – all tourism players bear this responsibility. How do we expect tourism SMMEs to thrive and be sustainable when we disadvantage them over large multinationals that couldn’t care less about our plight in difficult times?”
Smith asks what has happened to the relationship-based value chain. “I personally feel the way to help save the tourism industry during this period is not just to focus on the bottom line. Why can’t suppliers offer a SADC rack rate to the public direct, with 10% to travel agents and 20% to tour operators so everyone in the value chain is protected?”
Taking business seriously
Angela Matthews, Director of Alpha Destinations, says over the past 15 months, the pandemic has shown her which properties value tour operators and which don’t. “I’ve learned which service providers I can rely on 100% because they take my company and my business seriously.”
She appreciates those companies that have been transparent and helpful in terms of re-bookings, offering flexibility and doing everything in their power to assist her clients.
Matthews says her business isn’t affected much in terms of clients making rate comparisons on online booking platforms, as they are after the high-end, high-touch approach and not looking to book themselves, but agrees that SMMEs do have to fight for their rights (and rates).
“Smaller operators and travel agents work just as hard as the bigger companies and groups; they just can’t match the volumes.”
Bukula agrees. “The concept of shared value enjoins us to show loyalty to local SMMEs that have worked hard over the years to bring us what business they can, little as it may be in comparison to larger global players. At this critical time, their businesses, employees and families rely on our collective support for their very survival. Let’s act as one destination and win together.”
Are you as an operator experiencing this? How is it impacting you? Suppliers, can you comment on what is driving this? Please share your story with us – firstname.lastname@example.org.