Tour operators need to adapt their businesses, as dynamic rates or best available rates inevitably replace static rates.

Speaking at the Satsa conference on Friday, Rob More CEO of More Hotels, highlighted the challenges of fixing rates in an environment that is volatile. He said costs were unpredictable and therefore the pricing system needed to change. The group caused a stir earlier this year when it announced that it might introduce a quarterly review of its pricing instead of fixing rates annually. He said the reaction from operators was that they were not ready for a more dynamic pricing model.

However, he emphasised that dynamic rates were inevitable and operators would need to invest in systems that enabled them to work with dynamic rates. Neil Bald, CEO of aha, also highlighted the need to invest in systems that enabled operators to get rates to the traveller.

One of the challenges for local DMCs is the ability to push dynamic rates out to their overseas partners and ultimately the consumer. Trevor Hewett, CEO of African Pride Tours, said particularly small and medium operators lacked the capital to invest in technology that would enable them to do this.

Hewett warned that there was a danger of cutting out the tour operator, which linked suppliers to agents and travellers. He said that, to date, the engagement from suppliers on the issue of dynamic rates had been poor. Delegates also complained about the lack of consultation.

He also emphasised that DMCs had invested heavily in creating demand. Craig Smith, Founder of New Frontiers, also highlighted the role of the tour operator in growing the tourism industry. He said that while BAR rates were a reality, protecting the traditional channel was important and therefore commission levels needed to be protected in a dynamic rate system. He added that, because bookings did not confirm within 24 hours, suppliers would need to honour the rate quoted.

Martin Wiest, MD of Tourvest Destination Management, said Tourvest understood that dynamic rates were the future. However, he emphasised the need to ensure price parity to the traveller across channels.