Look in the direction where the money is coming from!
Price hikes of safaris
Last month it was announced that the VAT in Botswana gets raised from 10% to 12%. Stillnot bad if you live in a country where one pays 19%. Yet, there is an outcryfrom the international tourism industry about this announcement by the Botswanagovernment. Why?
It is quite simple actually.
You are a tour-operator doing your utmost in these difficult economic times tokeep your head above water and you try to minimize your expenses to theextreme. You get prices from the local operators, you negotiate rates, decideon how to publish your competitive prices and you are ready when (amongst othertools) your brochure is printed. Than disaster strikes.
The African country that you focus on decides to hike its VAT with 2%. Not abig deal I hear you say, since 2% is not that much. But hang on, there is moreto it.
Consequences
You as an operator might as well take your printed brochures back home and light thefireplace with it. All the work that went into developing it is down the drainsince prices are not correct anymore.
The administrative system of the tour-operator has to be adjusted and allonline prices will have to be changed accordingly. This all requires hours ofmanpower and therefore (lots) of money.
Example 1:
Client: “Good day. Here speaks Mr(s) X. I had a look at the brochure that yousent me and I would like to hear more about that 10 day safari to Botswana for€ 5600,-“.
Tour-operator: “Good morning Mr(s) X. Let me start by saying that thisparticular trip, due to a VAT increase from the Botswana government, is not €5600,-, but unfortunately € 5712,-”.
Client: “But your brochure says that the price is € 5600,-, surely you have togive me that trip for the price that you advertise it for? And I would like tocome with a family of 5, that makes a difference of € 560,-!”.
Tour-operator: “We are very sorry about…….etc, etc.
Example 2:
Tour-operator: “Good day Mr(s) X. I am calling you with regards of yourBotswana trip that you booked two weeksago and for which we still have to receive payment. Unfortunately I have totell you that the invoice that we sent you is, due to an unexpected VATincrease in Botswana, not correct. We will send you a new invoice, which willunfortunately be € 560,- higher”.
Client: “What? Are you guys out of your mind? We have a verbal agreement on theprice that we discussed…..etc, etc.
The result of the VAT-hike will be a very unhappy client and a very unhappy tour-operator.Since that client doesn’t know anything about Africa or Botswana, it is thetour-operator that looks like a fool and looks unprofessional. Clients areclients and it is not strange that if we confront them with a price DE-crease(like the price reductions in Kenya after the 2008 violence), that they don’tmind and become all ears. But price IN-creases are seen in a completelydifferent light.
Are price increases right or wrong?
The fact that African countries increase their prices or their VAT percentages is not aproblem in itself. In difficult economic times we do the same in thewestern-world. But what is a problem is the timing. If, in the case ofBotswana, a reasonable time-frame could be implemented and the internationaltourism industry would get a warning that in six month time this and this isgoing to change, a lot of anger,unbelieve and mis-communication could be avoided. Not only would that benefitsafari clients and the oversees operators, but also the image of the Africancountries themselves.
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