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Johannesburg - Ablution blocks and flip-flops have replaced white robes and slippers as South Africans choose caravan parks over staying in hotels, new data released on Tuesday showed.
Statistics SA's (Stats SA) Tourist Accommodation data for February showed occupancy rates for hotels were almost 6% lower during this month compared to last year. Caravan parks and camping sites, on the other hand, saw a 30% increase in occupancy as consumers down-traded.
Figures showed that caravan parks and camping sites were also more amenable to the idea of lowering their prices compared to hotels. According to the report, the average income per stay/unit for a caravan or camp site fell by almost 40%. Hotels saw no change in income per unit.
"The infrastructure costs of a hotel compared to a caravan park are enormous," said City Lodge CEO Clifford Ross in an e-mail to Fin24.com.
According to Ross, most caravan parks are situated on properties that the owners have had for many years, so the cost of land is not an issue, whereas hotels pay up to R400 000 per room to develop.
"Life is tricky for hotel owners these days," said Michael Tatalias, CEO of the South African Tourism Services Association (Satsa). "The figures definitely reflect the softer trading we're seeing." Tatalias said a hotel group with a variety of star offerings can't cut prices without cannibalising its lower-end hotels.
Tatalias also believed there is a lot of spare capacity as hotels were built in the anticipation of a Fifa World Cup tourist boom.
"There weren't enough market studies or intelligence gathered, and historical data used before feasibilities were converted into developments," said Ross.
Ross said these hotels' naivety will be tested "once the 100 000 World Cup visitors leave SA and the market continues to struggle to overcome the economic challenges it faces".
"Are their egos so big that they did not realise that the existing players are going to sit around idly waiting for them to challenge their livelihoods?"
Another reason hotels want to avoid the bargain hunting market is that it is very difficult to up rates once they've been lowered.
Cutting costs is also tricky. "Guests very quickly notice that costs are being cut and move to establishments that offer a value-for-money alternative," he said. "This is an age-old problem in the industry, yet many still believe that it works."
According to Ross if you sell a room at a discount you get a guest who's not normally able to afford your price and treat your room as they would a room they can afford. "Discounting destroys brand equity in a very short space of time."
- Fin24.com
