It is the norm for tourism businesses to determine their pricing based on demand and supply but are some establishments taking advantage of peak periods and ‘price gouging’, giving Cape Town a reputation for being expensive?
Cape Town Tourism CEO, Enver Duminy, doesn’t believe they are but in a recent blog post he wrote that delegates at the recent Mining Indaba had complained about excessive price increases by accommodation and restaurant establishments. He warned that overpricing could have a negative impact on the city’s reputation as a value-for-money destination.
Duminy told Tourism Update there was a 4.7% increase in the average room rate in 2013 compared with the previous year. “This is below consumer price index, showing that the industry is absorbing the costs and understanding the impact that changes in price will have on the industry. The perception of Cape Town by some local and international commentators is that the city is an expensive destination, but when visitors are here most report great value for money,” he says.

Stella Neethling, Product Purchasing and Development Manager for Springbok Atlas Tours & Safaris, says while there have been normal increases associated with high-demand periods, these are still available at STO or BAR rates. She says she doesn’t believe that hotels, restaurants or attractions in Cape Town are overpriced.
FEDHASA Cape Hotel Segment Chair, Jeff Rosenberg, and Alternate Chair, Chris Godenir, say prices that hotels charge are actually dictated by customer behaviour. “All over the world, if there is high demand over a certain period then prices are generally more expensive during that period.” 
Further, they say customers will determine if a destination is overpriced as there will be a decline in occupancy. “From an international perspective, Cape Town is great value, especially since the rand devaluation. The buying power of the international customer has increased by 30%, which can afford them great opportunity to buy an upgraded stay,” say Rosenberg and Godenir.

Allan Theron of Western Cape Tours says that, while generally tourism establishments are not overpricing, some attractions have hiked their rates twice in the last year. “Some places charge ridiculous rates for being closer to the ocean or with ocean views, while others don’t.”
But he adds that he still believes Cape Town is a value-for-money destination. “It just takes longer to find the right accommodation at the right price for the client’s requirements.”

Francoise Armour of Tour du Cap says a seasonal hike is expected but that some hotels are definitely overpriced for the quality they offer. “There is greed and it is obvious to guests. When increasing rates, hotels should ensure the service and quality of rooms/food is faultless. It’s often quite clear that they haven’t increased staff numbers or haven’t trained staff to deal with extra numbers.”
Armour adds: “Cape Town offers good value because of the exchange rates but when the rates stabilise it’ll need to compensate with quality – are we ready for that? There have been great overall improvements over the years but more is needed. It shouldn’t be only the five-star hotels and restaurants that offer excellence.”
Duminy says spend by visitors is still high and rooms are still being booked. “72.5% of visitors completing a Cape Town Tourism summer in-destination survey in 2013 indicated their experience of Cape Town to be good or very good in terms of value and only 2.6% said it was poor or very poor.”
But he says hiking prices beyond what is reasonable for short-term gain has serious long-term repercussions for the destination.
“There are a number of mechanisms in place that customers can use to protest what they feel to be unreasonably high prices. Cape Town Tourism is one such channel, or they can contact the Consumer Protector. Serious businesses will always take these complaints on and deal with the issues professionally, making sure they deliver what is expected,” adds Duminy.