Monday, May 16, 2011

Demand v Supply

There is a perception that consumers of travel are obsessed with price. Many conversations about travel and written travel monologues will often faithfully catalogue the price of everything from the cost of a cup of coffee, price of accommodation and everything in between adnausm. Naturally folk often make price comparisons with what is supposedly on offer back 'ome and this is often misaligned to make a point.

Unfortunately many Kiwis seem to be inflicted with the inability to sit back and appreciate a travel experience without nasally banging-on about what stuff costs. The motel industry in New Zealand that relies on domestic trade the most, faces an ongoing challenge of convincing an unsophisticated market the value of their services.

UK ex-pat, Peter Bills hasn't helped Kiwi's price aversion by writing a provocative column in the New Zealand Herald last year titled: New Zealand - 100% Pure Rip-off that critiqued a carefully selected shopping list of prices paid on his New Zealand travels. In his column, Bills acknowledged that petrol was much cheaper than back 'ome, however he claimed that in just about every other field, hotels, car hire, restaurant food, wine, clothes or whatever, we are the victims of massive overcharging. Many naive Kiwis would have nodded knowingly and hung-on his every word. 

We see that Bills has given a back-handed apology for last year's 100% Pure Rip-off tirade by bursting into print with a further travel consumer watchdog opinion piece in today's New Zealand Herald: I'm sorry, NZ - Britain is a far bigger rip-off. 

Price obsessive Bills seems to have difficulty determining the difference between price and value and he continues with his focus on his view of travel costs in a separate article with: South African hotelier warns on RWC price hikes. 

In this article he quotes "a top South African hotelier" claiming that few South African hotels managed to break even during the Fifa World Cup last year. There is an inference that the lower than anticipated visitor numbers were due to South African businesses supposedly charging over-inflated rates during the tournament.

We somehow doubt that there was such a direct correlation as the majority of travellers can appreciate value and the rationale of dynamic pricing over times of peak demand. One lesson that we agree needs to be taken seriously is that the backers of speculative world events that use copious wads of public money will always over-state projections.

The fact that is never taken into consideration is that a hard core of travellers will go out of their way to avoid a destination that is hosting a large scale event they do not have a primary interest in. At this stage it is difficult to speculate if New Zealand's hosting of the Rugby World Cup will turn-on more travel decisions than it will turn-off.

With New Zealand, projecting a $500 million loss on hosting the Rugby World Cup, there is a real risk that the legacy this event will leave behind a large bill and empty commercial accommodation room nights before and after the tournament.

In spite of what Bills will claim, operators in New Zealand that briefly charge market rates over the Rugby World Cup will not be to blame when visitor numbers do not live up to expectations.

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