Shumba

I was just wondering what you thought about the current declining economic conditions. With oil prices rising, but a falling economy, stagflation could set in. In these less than bouyant conidtions, do you think we may see a revised pricing stratey from operators as they belong to lose guests who feel the pinch.

I appreciate that many baby boomers may not be affected, but surely on the whole, it will make a difference.

HariS

In many countries, safaris are already over-priced IMHO.

Regardless of who is affected or not - there comes a point when every client starts to question if the asking price is justified or not!

and oh, let's not forget the USD.

sandi

Won't know till the '09 prices start to be published starting mid-'08 (usually from June forward).

Shumba

Hari, I think that you are right in that safaris are overpriced at the current levels. As oil prices raise the cost of flying and people generally feel more pesimistic, then more people will question the value of going to Africa. Not everyone who goes on safari is a millionaire..............

The USD is a massive factor, and camps must be losing some business already. Though it it will interesting to see the overall effects. In thses cirumstances we are talking about a lot hig end earners, amny already retired. So at the Wilderness level, the effects may be less.

Sandi, I think this will cause the problems, releasing pricing in June. I do not think the full impact of the crunch will hit until that time. At the same time, the peak season for Southern Africa would not have hit. So they would be gauging prices on the previous year successes. Overall, this could put them in a more dire situation as they certainly over price their safaris. Perhaps a number of discount offers may appear.

Still, it will be interesting no doubt. A number of friends in the Wilderness marketing bracket have lost their jobs on Wall Street. Combined with the housing debacle, another Arica trip are certainly the last thing on their mind.

thit_cho

Safaris are only overpriced if the lodges are witnessing unusual vacancies, and from what I've read, the top lodges (e.g., Mala Mala, the Wilderness Safaris properties, CCA's lodges) are not seeing experiencing unusual vacancies.

There's a difference between extremely expensive and over-priced.

Shumba

thit_cho

I think if the recession hits as hard as many are predicting, then vacancies may stay to impinge.

I would not belive all of the hype of limited availabilty. Bookings from what I hear have started to tail off somewhat...............

I think that over pricing Vs expensive is ultimately down to consumer confidence.

HariS

Michael,

CCA has plenty of discounted safaris - free night giveaways etc etc., for many lodges. Example, take a look at www.safariasap.com

HariS

Yes, agreed ..... limited availability is a hype by travel agents mostly to lure clients into early bookings. My last couple of trips to Botswana for example, was pretty quiet in terms of co-travellers. Except for Zibalianja which was full -which isn't surprising with only 3 tents. This was obviously prior to all the remodelling.

I suppose holiday periods like christmas and New Year's etc etc., is likely to be full, though.....

thit_cho

I hope you're right, but as long as people are willing to spend large amounts, the prices will not budge (and remember, the lodges are relatively small - we're not talking about filling up a 5-star hotel).

atravelynn

I've been wondering exactly what Shumba posted. At the top end, I would not expect many changes in response to the economy for the supply/demand reasons mentioned by Thit cho. But even some of those big budget folks who reside in the US and are not hooked on specifically Africa, but just looking for a vacation, may travel domestically where the impact of dollar's decline is not so pronounced.

For other more moderately priced offerings, when regional safety issues are thrown in to boot, I would think there would be some adjustments. The longer the unfortunate and tragic problems in Kenya linger, the more that area is going to take a hit.

Shumba, I am interested in why you think the baby boomer age group would not be affected by these economic conditions. Is it because they are more affluent as a whole or was it something else?

napamatt

Conventional wisdom has it that baby boomers just borrow and spend anyway, so of course they won't be affected.

Shumba

Lynne,

Even though baby boomers maybe be tempted to borrow, there are other factors. Many are not facing the sub-prime market disaster because the borrowing on most homes is probably relatively small as they have held them prior to the surge in housing prices.

Most are too old to be traders etc so will probably not be getting laid off by investment banking...............if they are, they are probably in the high severance package group anyhow.

HariS

Then there is the question of the football world cup in 2010. But, when i spoke to some folks in the Sabi Sands about this - they did mention that they are not too reliant on the World Cup as it isn't likely to generate too much business for the safari industry, but, would be helpful to the overall hospitality sectors.

jackssid2

If Geoff or John read this page:

If this had all happened earlier maybe places like the old Zib & Selinda would not have been re-done to 'keep up' with the rest of the market? I do not forsee many lodges/camps doing renovations for now because businesswise it would be better si sit tight a little and see what will happen with the market.

afrigalah

Maybe, but who cares? I don't. The new owners have done what they've done and abandoned their old clients. If that now impacts on them because of changed economic circumstances, too bad.

I feel sorry for their employees if it hurts them-- the guides, camp staff and admin etc who I like and respect-- but that's all. I've moved on.

John

GeoffG

Jackssid2,

Ditto John remarks.

The tourism industry often has to put up with economic downturns.

I have heard that one excuse for raising the rates (by an obscene amount) is the fall of the $US. Maybe the operators should consider hedging strategies.

Geoff.

sniktawk

Hi John,

HERE HERE as they say

nyama

Who had ever thought that the Jouberts would do something like that...