High demand for travel to Southern Africa has shifted the balance of power. As a result, DMCs have reported that suppliers are putting in place stricter terms and conditions, including more stringent cancellation policies and higher deposits required to confirm bookings.

Illana Clayton, CEO of Travel Smart Crew, says some suppliers are asking for deposits at the time of booking and in some cases even asking for the balance prior to arrival, while some cancellation policies are kicking in from the time of booking. Charlotte Smith of Giltedge DMC has also seen property owners putting in place more onerous conditions to confirm bookings. “Deposits are usually due within a few weeks of booking, even if for example the group is travelling a year or more ahead and we may not be able to secure a deposit that quickly.”

“They often also demand more than one deposit. For example, a first and then a second deposit, followed by final payment,” says Smith. Clayton adds that some suppliers even request the balance be paid prior to arrival. According to Smith, suppliers are often not open to negotiating their terms.

In contrast, Katja Quasdorf, CEO and Director of Jenman Safaris, says that while booking conditions have become stricter, it’s very seldom that the operator doesn’t come to a favourable agreement with suppliers. “We often go into detail with our most important suppliers and explain what the regulations are in the different countries of our agents’ origin. Once explained, most suppliers become more lenient with regards to their cancellation policies and deposit policies.”

Clayton explains that the difficulty for DMCs is that they work on bookings a year in advance, but flight availability only opens up 11 months in advance. As a result, overseas clients will not confirm their bookings further in advance, forcing DMCs to carry the risk in order to secure accommodation.

In terms of cancellation policies, Clayton says DMCs cannot pass on the costs to their clients overseas because they are governed by different laws. For example, in Germany laws prevent more than a 20% penalty charge for cancellations more than 30 days in advance, while 100% cancellation fees is never applicable under German law.

The administration of processing two or three payments per booking also takes time and increases banking charges, eating into already tight margins, says Clayton.

While the situation places pressure on DMCs, Tourvest Destination Management CEO, Martin Wiest, says he has some sympathy for suppliers. “With supply and demand as it is at the moment now, the biggest problem suppliers are facing is high wash factors,” he says.

Wiest explains this when operators place block bookings and then don’t take up all the accommodation booked and release some beds 30 days out. “Suppliers are through their terms and conditions protecting themselves against DMCs that have high wash factors.”

Moreover, Wiest says the value that of DMCs add to the supply chain is managing cash flows and bridging the differences in law between source markets and destinations.