Start competing against other destinations and stop competing against yourself is the stern warning to South African properties from Expedia Director of Market Management Eastern Med and Africa Diego Lofeudo.

Lofeudo says since January 2011, 30 hotels in South Africa have closed their doors. “South Africans tend to compete with the hotel next door rather than competing with another destination, for example Cape Town competing against Sydney. If you were to compare South Africa with other destinations we would certainly say that it is overpriced. Hoteliers over-capitalised on their rooms so are now being forced to charge higher rates.”

But correcting the problem is not about running flash sales, adds Lofeudo. “This simply degrades the market.

“Because South Africa is a long-haul destination flights are being booked quite far in advance, but this is not the case with hotels. Bookings tend to happen about a month in advance which is causing flash sales. We have educated the customer to wait for the last minute to book so at the moment the only one who wins is the customer.”

What needs to happen is that at a market level, South African product has to re-evaluate the country’s position as a competitive tourism destination and then re-price accordingly. More focus should also be placed on the local market with local initiatives, as well as regional markets, says Lofeudo.

Lofeudo says Expedia anticipates getting a .co.za site in the next 18 months though the focus remains very much on inbound bookings. “We’re looking at gathering more hotels though we already have over 2 000 in South Africa. We have a further 200 hotels in Southern and Eastern Africa.

“There’s such an opportunity in the region that it hurts. Low cost carrier penetration is still lacking in Africa and once that happens it will bring people online. This ease of access, together with political stability and safety means the area will explode.”

Technology, says Lofeudo, is driving demand, but in the SA market there are still hotels that are working on allocations of seven-, 14- and 21-day releases. “Hotels should bring their inventory online instead of being brochure and allocation based.”

This will give them greater control over their rooms, he says. “Before, hoteliers could blame tour operators as their de facto sales managers. Now their inventory is running on a CRM or PMS that means they have a lot more control than they ever had before. Everybody should have full access to the inventory.

“This allows the hotelier to look at distribution channels and make decisions based on the nature of each distribution channel, for example which channel delivers early or last-minute bookings. I wonder how many hotels even know what expense they pay for each distribution channel and price accordingly.”

Lofeudo says hoteliers should stop relying on tour operators to be their sales managers and start being their own sales managers. “They need to take control. Manage the online content of their property. See what people are saying about their property on social media tools.”

In the online space, hoteliers can also play with different room types, lengths of stay, feeder markets and booking windows when they price their inventory. “There’s always something happening for the online shopper. But hoteliers are used to signing off contracts once and never having to manage the contract there after making the tour operator the de facto sales manager. Hoteliers should apply different metrics to create variety online.”

Of course playing in the online space is not for everyone, says Lofeudo. “You’re playing two separate games with two separate rules. Expedia’s argument is ‘do you have empty rooms?’ And if the answer is yes, ‘do you want to get more profit out of those rooms than what you’re getting?’”