Are Prices Dropping?

Are Prices Dropping?

It’s Too Little, Too Late.

Sitting here on Valentine’s Day, I am surrounded by oodles of unrequited love: for only $99 I’ve been offered 5 nights in Orlando including a public bus ticket; a 5-night cruise to Antigua for $230; 6 nights during the mud season in Budapest including roundtrip air on Malov airlines (from Lisbon) for only $399; a week in Cancun for $444 at a condo next to the pineapple factory; or free tickets to the winter ballparks of major leagues in Phoenix including a free $100 coupon for a Canadian drug company.

For my East Africa, it’s even more embarrassing, and this is for real. CCAfrica (who I refuse to call by their new name, “&beyond”) first offered 4 nights at any of their $1000 per night camps for only the price of three and now (!) offers 6 nights for the price of four, Governor’s Camps has extended the low season pricing into the high season as have many other companies, and mega-giant Abercrombie and Kent has announced that next week it will begin lowering the price of many of their East African products by 5% per hour until they reach 60% off or sell out.

Meanwhile, the Bernie Madof ponzi scheme has even hit my circuit. A silent American partner in Sangare Ranch in the Aberdare is listed by the New York District Attorney’s office as one of the effected investors, and on this complex is Sangare Tented Camp, an important part of Kenya’s northern circuit for tourists. Greed. Greed in pricing East African products, and then greed to use the ridiculous returns to get even more.

Doesn’t anybody get it? Heavy discounts are meaningless when the baseline product is so overpriced to begin with! According to the offers on my desk right now, I could go cruising the Caribbean on an all expense paid boat like Carnival, for SIX WEEKS(!) for the cost that CCAfrica is now discounting for six nights in Kenya. Good Lord, WAKE UP EAST AFRICA!

More importantly for us in African travel and tourism, we should be using this critical moment to restructure our entire idea of future business in East Africa, not just discounting what had become ridiculously overvalued to begin with.

Business models for East African tourism haven’t changed for 40 years. The ROI (Return on Investment) must be 100% in 3-4 years, and after that’s achieved, you do as little as possible to maintain the property or company in working order, making hay while the sun shine and hibernating in the cold season. This is a horrible model, but it was a rational one, because both the political and economic climate of a developing area is so volatile. So the risk when compared to building a Holiday Inn at the intersection of I94 and I80, is considerable, and if things looked promising and peaceful for the next three years, there was a glimmer of opportunity.

This model left us with some of the most decrepit buildings, bathrooms, 4x4s, restaurants, and yes even tourism welcome stations, ever conceived. And whenever a good 3-year period seemed to appear on the horizon, a thin veneer of repair was slapped over everything.

Most East African lodges and tented camps, and most of them in southern Africa, too, are probably overpriced by 100-150%. If structured into a more customary business model with a longer ROI and smaller annual return, they would cost that much less. And despite press reports as eager to claim Kenya is imploding as Obama is mistaken, East Africa is growing more and more mature financially and socially, and it’s time to realize that travelers are comparing an East African safari with a vacation most anywhere else. And when this type of comparison is made, the ridiculously high prices we have seen over the last few years come into clear perspective.

Time to rethink, East Africa. Time to use this otherwise awful catastrophe as an opportunity to realign ourselves with mature tourism business worldwide.