Locals may soon pay less for high-end tourist attractions – but dual pricing is risky
- It's common for foreigners to pay more than locals at tourist attractions around the world – and sometimes for chips too.
- That's the kind of two-tier system Mmamoloko Kubayi-Ngubane has proposed for South Africa.
- Such pricing is already in place for some places in SA.
- But without careful management, it may alienate or frustrate foreign tourists - when they eventually return.
- For more stories go to www.BusinessInsider.co.za.
Tourists from a long list of countries remain banned from entering South Africa, and others may simply not return to local shores for fear of the coronavirus.
Businesses that typically target wealthy foreign tourists should “be innovative and adapt to the needs of the domestic market”, said tourism minister Mmamoloko Kubayi-Ngubane in a webinar this week – and one of the core policy shifts that she suggested related to a two-tier pricing model that offered lower rates for South Africans.
This is a concept that’s been in use in tourism markets around the world, both formally and informally.
In 2017, chip sellers in Bruges made headlines after it emerged they were charging tourists 10% extra for their Belgian frieten.
Venice has for several years attempted to manage tourist numbers and increase revenue from visitors by introducing a controversial two-tier pricing system that saw prices wildly inflated for outsiders.
Major tourist attractions like the Taj Mahal, the Colosseum, and Christ the Redeemer officially have differing prices for locals; in some cases, foreign visitors are required to pay several times the domestic rate in order to enter.
The Taj Mahal, for example, costs Indians just 50 rupees (R12) to enter; foreigners must pay Rs1100 (R255) - a difference of more than 180%.
Rome’s Colosseum is less discriminatory in its approach - but offers marked discounts for some European Union citizens.
A similar pricing policy found its way to South Africa in recent years at most South African National Parks establishments. On average, foreign visitors to South Africa’s national parks pay four times as much as locals.
This policy has been in place at the Kruger National Park for some time - where South Africans currently pay R100 in conservation fees, compared to foreign visitors’ R400.
Cape Point and Boulders have more recently reduced their entrance fees for local visitors, and nearly doubled them for foreign travellers. In some cases, locals visiting Cape Town’s national parks pay close to 50% less than their foreign counterparts.
“Standard entry” for adults at Cape Point is R320; visitors from the SADC regions pay half that amount; while South Africans with a valid ID pay just R80.
Similarly, South Africans pay just R40 to enter Boulders Beach, while foreign visitors pay four times that amount for the same access.
In spite of Kubayi-Ngubane’s assertion that a dual pricing model may be the best way to boost the tourism industry, particularly as it struggles to recover post-Covid-19, Federated Hospitality Association of Southern Africa (Fedhasa) CEO Lee Zama is less convinced.
“The operation costs to host an international guest and the domestic guest are the same,” Zama told Business Insider South Africa. “We do not see how this could be applied.”
Zama says that as the industry is reeling from the impact of Covid-19, “we should be focusing our discussion on the recovery plan and all the resources required to make this plan work - this includes the government’s efforts in this regard.”
Kubayi-Ngubane’s main concern is that foreign visitors will only start trickling in over the next few months - and the minister says she’s aware of complaints that prices for local attractions and accommodation are out of reach of many locals.
“You cannot compare prices from dollars to rand, it cannot be," Kubayi-Ngubane told the Cape Argus. "At the moment accommodation businesses are charging R30,000 a night. How can locals afford that? I am pleading with them to reduce their rates at least to keep locals in mind.”
According to Brett Hendricks, general manager of Thebe Tourism Group, which launched a luxury Kruger Park hotel in the midst of the pandemic, and manages a wide range of attractions in South Africa, including the concessions in Cape Point, dual pricing is the best way to grow the domestic market.
“Covid has made us rethink how we package and how we sell, and given the first market that reopened was the domestic market, if the industry as a whole wants to get the local market to support them, you can’t charge international prices,” Hendricks told Business Insider SA.
“At Cape Point we receive a lot of international visitors, but since SANParks split their tariffs we’ve seen a lot more locals visit. If we want to grow our domestic market we need to look at making it affordable for locals to experience and enjoy. So dual pricing is a yes for me," says Hendricks.
Managed transparently and via formal channels, a dual pricing model for locals and foreigners seems to work - but in some countries it has devolved into more complex system of "tourist prices", which runs the risk of leaving tourists feeling ripped off.
This was the case in San Sebastian, where a local newspaper revealed that pintxo bars in its Old Town were drastically overcharging tourists, a practice which the town’s mayor condemned as “absolutely unacceptable”.
But in a post-Covid environment where dual pricing is designed to alleviate pressure on the local tourism industry, and increase access to attractions for local travellers, it’s likely to be welcomed by many.
One study in Sri Lanka that examines the possibility of dual pricing in a post-Covid environment, particularly with the aim to examine the impact on foreign visitors when they do return, found a majority of tourists will accept a dual-pricing policy for foreigners and locals. But there were some conditions that impact on tourists’ willingness to pay these differing fees - including “income, knowledge, perceived price fairness, and visitor expectations”.
Without careful consideration, the study concludes, dual pricing in Sri Lanka runs the risk of creating "a negative ideology on foreign travellers that this practice is unethical and may ultimately affect a tourist’s decision (adversely) to choose Sri Lanka as a travel destination.”
Hendricks believes that even if there isn't an official policy on dual pricing, it is logical for businesses in the tourism space to realign their models at this time.
“When you price at international benchmarks as an attraction or hotel, for example, the perception is that you’re only catering to internationals. But when internationals are not here, like we’re seeing now, you can only rely on the domestic market. So I think we’re going to see a lot of businesses refocusing and starting to build their businesses around the domestic market, because they’ve felt this loss of international tourists for the first time.”
Receive a daily update on your cellphone with all our latest news: click here.
Get the best of our site emailed to you daily: click here.
Also from Business Insider South Africa:
- No UK or US tourists: Here is South Africa’s full red list of countries
- Discovery medical scheme freezes price hikes for six months
- Pam Golding will now auction properties online
- After an initial mistake, govt confirms Brazil is high risk – no tourism to SA allowed
- Vitality members to get a once-off points top-up to compensate for lockdown
- TAKE A LOOK | Castle Lager has a new label
- Steinhoff insider trading announcement is imminent