What a Deal!

What a Deal!

At last East African tour companies are doing the right thing to try to get back on their feet, and there are incredible deals for new bookings.

The New Year arrived with a plethora of tour deals, and they’re real. They include ridiculously cheap airline tickets, internationally and domestic, 3rd and 4th nights free, and just the good old drop in prices. These are real deals that will be pulled once the market recalibrates.

One of my great criticisms of East African tourism over the years has been the typical but counterproductive reaction to a downturn in business of raising prices.

I know that’s counter-intuitive, but as I’ve explained before, supply/demand really only works well in a functioning free market. The developing world is moving that way, but they aren’t quite there. Even in the most scrooge-like companies in the developed world, laying off workers is expensive. There are either severances to negotiate, or high unemployment taxes to be paid.

Not so in the developing world. Just tell Johnny at 4 pm not to come to work, anymore, and then close a third of your lodge. Raise the prices on the bookings which are left and maintain a semblance of profit. The profit will be a lot smaller than it was, but it won’t be a loss… except, of course, for Johnny.

The problem with this strategy is that the market is not waiting in the sidelines to jump back into East Africa. If prices go down in India, it’s likely quite a few potential East African visitors will end up there, instead. A huge percentage of East African travelers come as referrals, so every booking lost represents multiple bookings for the future.

The raise-your-prices, lower-your-costs strategy is terribly short sighted for East Africa. East Africa must mature into the real supply/demand dynamic that governs world tourism.

This time, East African companies seem to be getting it right. Prices are definitely dropping. I reported earlier that 2010 contract rates issued last November showed a 5-10% decline over 2009. This is the first time since EWT has been keeping records that there was ever an announced decline in contracts.

And over the New Year’s weekend, a whole bunch of new offers began appearing.

A number of tour companies, including EWT, are now able to offer free Zanzibar or Mombasa beach stays after 10 or more day-long safaris.

Air fares have sunk through the basement. The leader is the airline, Swiss, which is offering roundtrips from New York at $1143.10 with taxes, and from London at $646.50 with taxes. But there are many others close to this. Many are offering free stopovers at interesting places, such as Turkish Airlines, where you can now stopover from the U.S. at Istanbul, then continue your East African trip for around $1200.

Business might be doing the right thing, but the Kenyan Tourist Board is stuck in the past.

Last week it announced a “vigorous recovery” of the tourism industry which was a flat-out lie. Announcing an expected 680,000 arrivals for 2009, the KTB proudly said this was a huge recovery representing a 17% increase over 2008.

Uh, did anybody remind that statistician that 2008 had tourist arrivals of 50% of 2007, because of the political turmoil in the country, and that there was no economic downturn in 2008?

What a joke. Kenya was approaching 1.2 million visitors in 2006. Let’s be real, honest and forthright. Neither the consumer or travel reseller is going to be anything but perturbed by these ridiculous statements.

Anyway, this morning’s overall reality is great! It’s taken so damn long for East African businessmen to realize what is necessary in the global market. I don’t think anyone should start planning a recovery party, soon, because this downturn has been deep. Whether tourism or tea, the recovery will be a long one.

But those who take true supply/demand initiatives, and who are honest with their consumers and resellers will still be standing when the sun finally rises.

And tourists, don’t wait for that sunrise! The deal is now!