AnotherThought/Question on Botswana prices
May 20th, 2008, 06:30 PM
#21
Join Date: Mar 2007
Posts: 3,528
Likes: 0
Received 0 Likes
on
0 Posts
PS: Ofcourse, it's not my place to ask about pricing strategy. But, the Chitabe incident and the reaction is certainly eye-opening in terms of how things are marketed and the ensuing expectations!
May 21st, 2008, 12:27 AM
#22
Join Date: Apr 2008
Posts: 73
Likes: 0
Received 0 Likes
on
0 Posts
Mkhonzo,
I see your point about very high operational and marketing costs. But in other countries (eg, namibia, indonesia, maldives, ....) there are lodges/camps with seemingly equally high logistical costs, that also looks like they spend a ton in marketing, yet their rates are half of those of most Delta camps!
I see your point about very high operational and marketing costs. But in other countries (eg, namibia, indonesia, maldives, ....) there are lodges/camps with seemingly equally high logistical costs, that also looks like they spend a ton in marketing, yet their rates are half of those of most Delta camps!
May 21st, 2008, 01:24 AM
#23
Join Date: May 2008
Posts: 11
Likes: 0
Received 0 Likes
on
0 Posts
Call me a sceptical, though as Mkhonzo and Sandi both make a living from this industry, I would take what they say with a pinch of salt.
Let look at where you $1000 per night is spent:
Logistical Nightmare:
I really don't know how people can actually justify this argument. Most of the delivers to the head offices are based in either Maun or Kasane. These areas are on easy transport routes, with trucks supplying the local supermarkets as well as the operators.
The only goods that are flown in are the fresh produce. As many of you may have experienced, sometimes, this may be sent in with guests. One flight is certainly not expensive as imagined, as when produce is flown in, it is part of an overall schedule that involves guests.
Example:
Pilot needs to fly to a camp to take guests out. He is flying empty on the weigh in, so takes the fresh freight at the same time.
Secondly, all the dry goods are brought in by tractors. The monthly truck may stop at 3/4 camps along the way. Not the huge cost Mhkonso makes out. Sometimes the truck may cost 18 hours, but that is only fuel costs.
You give the impression that people are getting food to the most inhopsitable area in the world. This is not the Congo Basin.
Quite an interesting point would be to then look at lodges in the SAbi Sand. Some of these camps are 10-15km from large towns, or drivable roads. So what is the justification for charging the $1000 per night!
Advertising:
As has been mentioned in this thread, advertising is actually releatively minimal by the larger operators.
Why?
Agents can receive up to 30% commission for a nights stay. For a couple at Mombo, that is $1000 in commission per night.
In return for this, many operators expect the agents to do their bidding for them. After all, advetising is lost in the west on the average holiday maker. Most people know they just want to go on safari. Companies realised that by rewarding agents so well, and not taking direct bookings, a 10 bed camp will not have to compete with a 2000 bed hotel for advertising space.
Visiting Agents and photojournalists:
Lets not make a mountain out of a mole hill. May I ask you what your bednight rate for the lodge you work in is Mkhonzo? Or would you not like people on Fodors to know the real cost price of staying a night in your lodge?
Agents and photojournalists certainly do not pay the market rate, but they may pay the guides rate etc. Also, they often visit in the low season, when they are simply taking vacant rooms rather than the space for a high paying guest. These articles are a two way relationship, so do not give the impression it is all for free. People want to visit the top lodges, report on them as it was sells their magazines. So your londolozis whilst enjoying the free marketing, do not need to let people stay for free, as they too are needed by those giving them exposure.
I have not seen any articles in a glossy magazine on self drives in Kruger.........
LEts now talk about rates. Concession fees are not the high cost that people are led to believe, and the those at the top are making huge profits.
When I worked as an agent, I had many friends who were guides or managers. They would stay at these properties at their cost price. Which is what they call a bednight rate. For those interested, that ranges from 200-500Pula per person per night. For those unsure of the exchange rates, that works out between $50-100.
Her is an exmaple that I found somewhere else:
Shumba Camp, Kafue NP, simple bush camp, 2005:
I paid about US$220 per single person per night with all activities. Top guide with over twenty years experience of the area.
Shumba Camp, Kafue NP, rebuilt as WS 5-paw camp, 2006:
about US$600pppns. Imported guide from SA with 0 years experience in the area.
There wasn't a new lease of the concession. The old owners just got tired of running the camp and made a deal with WS.
Ultimately, big agents are making a lot of money from this industry, so are willing to sell the myth of high costs etc to justify the prices to concumsers. It does not help when you have industry insiders claining the same on sites like this.
Ultimately, it is more good PR and relations with agents, no direct bookings and lack of transparency that has meant the price increase has allowed to take place.
If there was an online booking system, you could see where the spaces were. Now, you just have to trust the agent to get that last room in the camp, which sometimes appears to be one of many when you finally arrive. Beleive me, I have used this selling tactic.
Ultimately, it is supply and demand, not costs that have enabled the prices to be driven up. THe strange anonomaly is that American guests have come in their droves dispite the prices increasing.
People seem to think that high cost means better game viewing. THe high returns for the agents, will also mean they will sell that destination over others.
Let look at where you $1000 per night is spent:
Logistical Nightmare:
I really don't know how people can actually justify this argument. Most of the delivers to the head offices are based in either Maun or Kasane. These areas are on easy transport routes, with trucks supplying the local supermarkets as well as the operators.
The only goods that are flown in are the fresh produce. As many of you may have experienced, sometimes, this may be sent in with guests. One flight is certainly not expensive as imagined, as when produce is flown in, it is part of an overall schedule that involves guests.
Example:
Pilot needs to fly to a camp to take guests out. He is flying empty on the weigh in, so takes the fresh freight at the same time.
Secondly, all the dry goods are brought in by tractors. The monthly truck may stop at 3/4 camps along the way. Not the huge cost Mhkonso makes out. Sometimes the truck may cost 18 hours, but that is only fuel costs.
You give the impression that people are getting food to the most inhopsitable area in the world. This is not the Congo Basin.
Quite an interesting point would be to then look at lodges in the SAbi Sand. Some of these camps are 10-15km from large towns, or drivable roads. So what is the justification for charging the $1000 per night!
Advertising:
As has been mentioned in this thread, advertising is actually releatively minimal by the larger operators.
Why?
Agents can receive up to 30% commission for a nights stay. For a couple at Mombo, that is $1000 in commission per night.
In return for this, many operators expect the agents to do their bidding for them. After all, advetising is lost in the west on the average holiday maker. Most people know they just want to go on safari. Companies realised that by rewarding agents so well, and not taking direct bookings, a 10 bed camp will not have to compete with a 2000 bed hotel for advertising space.
Visiting Agents and photojournalists:
Lets not make a mountain out of a mole hill. May I ask you what your bednight rate for the lodge you work in is Mkhonzo? Or would you not like people on Fodors to know the real cost price of staying a night in your lodge?
Agents and photojournalists certainly do not pay the market rate, but they may pay the guides rate etc. Also, they often visit in the low season, when they are simply taking vacant rooms rather than the space for a high paying guest. These articles are a two way relationship, so do not give the impression it is all for free. People want to visit the top lodges, report on them as it was sells their magazines. So your londolozis whilst enjoying the free marketing, do not need to let people stay for free, as they too are needed by those giving them exposure.
I have not seen any articles in a glossy magazine on self drives in Kruger.........
LEts now talk about rates. Concession fees are not the high cost that people are led to believe, and the those at the top are making huge profits.
When I worked as an agent, I had many friends who were guides or managers. They would stay at these properties at their cost price. Which is what they call a bednight rate. For those interested, that ranges from 200-500Pula per person per night. For those unsure of the exchange rates, that works out between $50-100.
Her is an exmaple that I found somewhere else:
Shumba Camp, Kafue NP, simple bush camp, 2005:
I paid about US$220 per single person per night with all activities. Top guide with over twenty years experience of the area.
Shumba Camp, Kafue NP, rebuilt as WS 5-paw camp, 2006:
about US$600pppns. Imported guide from SA with 0 years experience in the area.
There wasn't a new lease of the concession. The old owners just got tired of running the camp and made a deal with WS.
Ultimately, big agents are making a lot of money from this industry, so are willing to sell the myth of high costs etc to justify the prices to concumsers. It does not help when you have industry insiders claining the same on sites like this.
Ultimately, it is more good PR and relations with agents, no direct bookings and lack of transparency that has meant the price increase has allowed to take place.
If there was an online booking system, you could see where the spaces were. Now, you just have to trust the agent to get that last room in the camp, which sometimes appears to be one of many when you finally arrive. Beleive me, I have used this selling tactic.
Ultimately, it is supply and demand, not costs that have enabled the prices to be driven up. THe strange anonomaly is that American guests have come in their droves dispite the prices increasing.
People seem to think that high cost means better game viewing. THe high returns for the agents, will also mean they will sell that destination over others.
May 21st, 2008, 02:07 AM
#24
Join Date: Sep 2005
Posts: 1,087
Likes: 0
Received 0 Likes
on
0 Posts
My comments were intended to be thought provoking and not argumentative. I do not work in a lodge, however I did for many years, in fact have been around the bush for nearly twenty years. I am now indirectly involved and do believe that in this instance that I am the one eyed....
HARIS: It would be UTOPIAN for the commission paid to TA's to be used for promotional purposes, by sadly that is not the case 100% of the time. I don't see TA's enjoying other revenue streams, so IMO the commission funds their business. I see them advertising, however never really a single destination and seldom a specific lodge in say Botswana.
TORREM: I know many of the lodges in Namibia and while their rates are lower many enjoy higher bed capacities compared to the Botswana camps. I believe that in Asia the cost of labour is significantly lower than anywhere in the world and in particular compared to Africa.
DAORACLE: I highlighted a few elements of the underlying costs of managing a remote business, you make some valid comments, however your understanding of the daily logistical challenges is clearly clouding your argument.
I am not going to go into detail as I don't have a spread sheet of costs in front of me, but suffice to say that businesses that operate year round achieving 65% - 70% of their revenue in four months of trading need to manage the yield in those months to fund the operation for the outstanding eight months. This is a huge element of the cost structure of the Botswana lodges.
It is not dissimilar in the Sabi Sands. The critical difference there I believe is the cost of the brand. Why do you believe that Sabi sabi, Mala Mala, Londolozi & Singita are such well known brands WORLD WIDE? It didn't happen over night and didn't happen for free.
On that point you ask the cost of a bednight implying that a journalist is given a free ride... consider that every bed given away for free is displacing full revenue making that free night actually very expensive indeed.
In closing I do agree that demand has assisted the escalation of the price, however that in isolation is not true.
HARIS: It would be UTOPIAN for the commission paid to TA's to be used for promotional purposes, by sadly that is not the case 100% of the time. I don't see TA's enjoying other revenue streams, so IMO the commission funds their business. I see them advertising, however never really a single destination and seldom a specific lodge in say Botswana.
TORREM: I know many of the lodges in Namibia and while their rates are lower many enjoy higher bed capacities compared to the Botswana camps. I believe that in Asia the cost of labour is significantly lower than anywhere in the world and in particular compared to Africa.
DAORACLE: I highlighted a few elements of the underlying costs of managing a remote business, you make some valid comments, however your understanding of the daily logistical challenges is clearly clouding your argument.
I am not going to go into detail as I don't have a spread sheet of costs in front of me, but suffice to say that businesses that operate year round achieving 65% - 70% of their revenue in four months of trading need to manage the yield in those months to fund the operation for the outstanding eight months. This is a huge element of the cost structure of the Botswana lodges.
It is not dissimilar in the Sabi Sands. The critical difference there I believe is the cost of the brand. Why do you believe that Sabi sabi, Mala Mala, Londolozi & Singita are such well known brands WORLD WIDE? It didn't happen over night and didn't happen for free.
On that point you ask the cost of a bednight implying that a journalist is given a free ride... consider that every bed given away for free is displacing full revenue making that free night actually very expensive indeed.
In closing I do agree that demand has assisted the escalation of the price, however that in isolation is not true.
May 21st, 2008, 03:02 AM
#25
Join Date: May 2008
Posts: 11
Likes: 0
Received 0 Likes
on
0 Posts
My point on travel articles relates to the basic cost of someone staying. Even if they are charged $250 per night, they are still making a profit on that guest. In SA, the land is owned, so there are no concession costs for driving on your own property.
The point I made, there are acutally very few journos who visit at this rate. Ones of major magazines like Tatler etc, are worth sacraficing a few $$$$ few night for the wave of publicity received. As I mentioned, many visit in the low season and tend to fill space that would not be filled.
The bed night rate of $50-100 is effectively your cost price for the operation. So everything over is profit. So at $200 per night, even at 50% occupancy in the green season, you are breaking even (at the expensive/costly end) Then add 30% on top for agents fees. So beleive me, I will not be sheding a tear for those hard up operators blaancing their books over their course of the season.
Mombo rate January - $1500
It seems like they are not balancing, but profiteering the whole year round.
Yes, camps are branded and gain a reputation, yet this is not the same expense as major hotel chains etc. I have never seen Wilderness advertising in the US press, but I have their agents that supply them. Ulitmatley, places do gain their reputation through branding. Though this is normally investing in their product on the ground (vehicless, lodges) not advertising overseas.
Though my judgement is clearly clouded, just based on first hand knowledge of friends in the industry and a certain person who used to run WS.
The point I made, there are acutally very few journos who visit at this rate. Ones of major magazines like Tatler etc, are worth sacraficing a few $$$$ few night for the wave of publicity received. As I mentioned, many visit in the low season and tend to fill space that would not be filled.
The bed night rate of $50-100 is effectively your cost price for the operation. So everything over is profit. So at $200 per night, even at 50% occupancy in the green season, you are breaking even (at the expensive/costly end) Then add 30% on top for agents fees. So beleive me, I will not be sheding a tear for those hard up operators blaancing their books over their course of the season.
Mombo rate January - $1500
It seems like they are not balancing, but profiteering the whole year round.
Yes, camps are branded and gain a reputation, yet this is not the same expense as major hotel chains etc. I have never seen Wilderness advertising in the US press, but I have their agents that supply them. Ulitmatley, places do gain their reputation through branding. Though this is normally investing in their product on the ground (vehicless, lodges) not advertising overseas.
Though my judgement is clearly clouded, just based on first hand knowledge of friends in the industry and a certain person who used to run WS.
May 21st, 2008, 06:11 AM
#26
Join Date: Mar 2007
Posts: 3,528
Likes: 0
Received 0 Likes
on
0 Posts
In the old days, I would have thought Marketing costs would be a bit higher - but, today in the world of the internet, word does travel quick doesn't it? I haven't really seen any Marketing material (print or otherwise) that looks like they have been artistically created in a NY ad agency.
Also, I would think the tourism department of Botswana probably does some amount of marketing for the operators indirectly don't they?
Still, as I mentioned earlier - as long as there is a worth-while product people will go! But, this trend of trying to lure people into visiting the bush for all the wrong reasons may not be able to be replicated forever!
Also, I would think the tourism department of Botswana probably does some amount of marketing for the operators indirectly don't they?
Still, as I mentioned earlier - as long as there is a worth-while product people will go! But, this trend of trying to lure people into visiting the bush for all the wrong reasons may not be able to be replicated forever!
May 21st, 2008, 06:42 AM
#27
Join Date: Mar 2007
Posts: 3,528
Likes: 0
Received 0 Likes
on
0 Posts
"The high returns for the agents, will also mean they will sell that destination over others."- daoracle
Why isn't this surprising? We have read some of the stuff on this site over the years haven't we?
Why isn't this surprising? We have read some of the stuff on this site over the years haven't we?
May 21st, 2008, 08:18 AM
#28
Guest
Posts: n/a
This is a most interesting thread which I have avoided up until now for fear of appearing to criticise certain aspects of the travel industry.
It appears from some of the responses that we are expected to happily agree to the fact that travel agents should be paid ludicrously high commissions for providing nothing other than publicity, it follows that the customer will be told to go to the operator who is paying the highest commission.
I for one have no difficulty in figuring out which operator is paying the highest commissions.
Regarding the other factor of remoteness and the expense of bringing in food drink etc. this is complete nonsense, the vast majority of concessions bring in their fresh goods by plane which has usually been paid for by passengers, I once flew with a ghetto blaster for a member of staff! The dry goods are brought in overland usually by staff employed by the concession. If this was a great contributary factor to excessive costs then Kwando would be the most expensive camp, as it takes 18 hours for the tractor to get there from Maun, which for instance compares to arund 10 hours to Selinda.Many years ago all of the fresh vegetables etc were brought in from SA this obviously contributed to the costs, I now understand that much of this is grown in the Kasane area, yet I have seen no commensurate drop in prices.
Let's be quite honest none of the concessions operates on a no-profit basis,some even claim that their profits are used for the benefit of the local community,I have seen no evidence of this other than possibly CCA.
It is quite simple everybody is in it for the money and the more they can make people believe the green nonsense that the operators spout then the more people who know no better will pay.
The answer is to go elsewhere until the bubble bursts which will hopefully be very soon.
It appears from some of the responses that we are expected to happily agree to the fact that travel agents should be paid ludicrously high commissions for providing nothing other than publicity, it follows that the customer will be told to go to the operator who is paying the highest commission.
I for one have no difficulty in figuring out which operator is paying the highest commissions.
Regarding the other factor of remoteness and the expense of bringing in food drink etc. this is complete nonsense, the vast majority of concessions bring in their fresh goods by plane which has usually been paid for by passengers, I once flew with a ghetto blaster for a member of staff! The dry goods are brought in overland usually by staff employed by the concession. If this was a great contributary factor to excessive costs then Kwando would be the most expensive camp, as it takes 18 hours for the tractor to get there from Maun, which for instance compares to arund 10 hours to Selinda.Many years ago all of the fresh vegetables etc were brought in from SA this obviously contributed to the costs, I now understand that much of this is grown in the Kasane area, yet I have seen no commensurate drop in prices.
Let's be quite honest none of the concessions operates on a no-profit basis,some even claim that their profits are used for the benefit of the local community,I have seen no evidence of this other than possibly CCA.
It is quite simple everybody is in it for the money and the more they can make people believe the green nonsense that the operators spout then the more people who know no better will pay.
The answer is to go elsewhere until the bubble bursts which will hopefully be very soon.
May 21st, 2008, 09:14 AM
#30
Join Date: Oct 2004
Posts: 1,354
Likes: 0
Received 0 Likes
on
0 Posts
Mombo is $1500 pppn (in high season?)
Sounds like a good deal when compared with very popular group tours to Tanzania at $1000 pppd while staying in Tarangire Sopa, Ngorongoro Sopa and Serengeti Sopa in March!
Sounds like a good deal when compared with very popular group tours to Tanzania at $1000 pppd while staying in Tarangire Sopa, Ngorongoro Sopa and Serengeti Sopa in March!
May 21st, 2008, 09:50 AM
#32
Join Date: Oct 2004
Posts: 1,354
Likes: 0
Received 0 Likes
on
0 Posts
No joke!
http://www.micato.com/download.htm
Take a look at the Stanley Wing 2008 tour and costs! 12 days on a group safari (the rest are travel days) for a mere $12705 per person!
Fortunately these are "exclusive small groups" with a maximum of only 24 clients (only 6 per car)!
Makes Mombo and Botswana look very affordable in my opinion!
http://www.micato.com/download.htm
Take a look at the Stanley Wing 2008 tour and costs! 12 days on a group safari (the rest are travel days) for a mere $12705 per person!
Fortunately these are "exclusive small groups" with a maximum of only 24 clients (only 6 per car)!
Makes Mombo and Botswana look very affordable in my opinion!
May 21st, 2008, 10:08 AM
#33
Join Date: Jan 2003
Posts: 9,270
Likes: 0
Received 0 Likes
on
0 Posts
Criminy! I know such companies charge a premium but that's taking the mick isn't it?
Then again, they are in it to make a profit and if they can find enough customers who simply can't be bothered to do the research or shop around then good for them!
Ha!
Then again, they are in it to make a profit and if they can find enough customers who simply can't be bothered to do the research or shop around then good for them!
Ha!
May 21st, 2008, 10:25 AM
#34
Join Date: Sep 2005
Posts: 1,087
Likes: 0
Received 0 Likes
on
0 Posts
I hear you all, my points are generalisations, sure there are some camps, a handful that are able to get away with ridiculous pricing. I for one have always wondered what the differential in experience is that creates such an enormous cost variance.
May 21st, 2008, 06:42 PM
#36
Join Date: Mar 2007
Posts: 3,528
Likes: 0
Received 0 Likes
on
0 Posts
Hi Johan,
I fully remember the "safari myths" thread - at that time, didn't make much sense ....... you just have to put things into perspective! As I said - good marketing can take things only so far. Agree - there will always be people going to these places!
Ken,
Well said!
I fully remember the "safari myths" thread - at that time, didn't make much sense ....... you just have to put things into perspective! As I said - good marketing can take things only so far. Agree - there will always be people going to these places!
Ken,
Well said!
May 22nd, 2008, 06:59 AM
#37
Join Date: May 2008
Posts: 11
Likes: 0
Received 0 Likes
on
0 Posts
It appears many of the agents have lost their tongue.
I imagine many of you who have booked safaris for Botswana this high season would choose to believe their agents stories after shelling out a small fortune.
Then again, you are held to ransom, especially as many are not willing to travel to other countries believing they get less of an experience.
I imagine many of you who have booked safaris for Botswana this high season would choose to believe their agents stories after shelling out a small fortune.
Then again, you are held to ransom, especially as many are not willing to travel to other countries believing they get less of an experience.
May 22nd, 2008, 01:40 PM
#38
Guest
Posts: n/a
Daoracle,
Some questions:
Is there for you any reason to go to expensive lodges at any safari destination? Are we all being swindled?
To whom are you referring while visiting Shumba at Kafue?
Do you know why many of the people who were first involved with WS left? Are you familiar with BK - one of the former top guides at WS?
Why are other companies following the biggest operator in Botswana to upgrade their properties too. If they didn't they could attract a different segment of the market and still making money according to your calculations. Or did they all become too greedy thinking that the ultra luxury market is big enough to keep the rest of the people far away.
Shouldn't everyone's motto be: these are pristine areas where you couldn't expect luxuries like at home. Instead of following the clients demand at all cost, shouldn't he/she be reeducated?
Greetz,
Johan
Some questions:
Is there for you any reason to go to expensive lodges at any safari destination? Are we all being swindled?
To whom are you referring while visiting Shumba at Kafue?
Do you know why many of the people who were first involved with WS left? Are you familiar with BK - one of the former top guides at WS?
Why are other companies following the biggest operator in Botswana to upgrade their properties too. If they didn't they could attract a different segment of the market and still making money according to your calculations. Or did they all become too greedy thinking that the ultra luxury market is big enough to keep the rest of the people far away.
Shouldn't everyone's motto be: these are pristine areas where you couldn't expect luxuries like at home. Instead of following the clients demand at all cost, shouldn't he/she be reeducated?
Greetz,
Johan
May 22nd, 2008, 01:48 PM
#39
Join Date: May 2008
Posts: 4,232
Likes: 0
Received 0 Likes
on
0 Posts
don't repeat bot as long as the rates are that outragously high.
frequent other safari destinations which are not going over the top.....which countries will that be ?
comparing apples to apples SA isn't really cheap, nam the same, zam is getting more and more expensive, taz, ken???????????????
frequent other safari destinations which are not going over the top.....which countries will that be ?
comparing apples to apples SA isn't really cheap, nam the same, zam is getting more and more expensive, taz, ken???????????????
May 22nd, 2008, 04:59 PM
#40
Join Date: Aug 2007
Posts: 33
Likes: 0
Received 0 Likes
on
0 Posts
This issue can be debated back and forth ad infinitum. The surest way to answer the question whether the lodge operators are ripping customers is to analyse an audited annual report/balance sheet a company with not too many properties. (Ideally one). I am assuming that the auditor has more integrity than Enron.
