Johannesburg – High prices are slowing South Africa’s growth as an international tourist destination with tourist accommodation rising by as much as 140%.

The Econex price index, which tracks price movements in the tourism industry, found that the average price per bed night over the past 20 years has risen from R480 to R1 200, based on data from the Portfolio Collection of three- to five-star accommodation.

Econex director Cobus Venter says prices rose sharply in 1994, with democratisation and increased demand in South Africa, and again in 2003 amid strong economic growth. In 2004 they reached a peak.

Between 2000 and 2003 the rand lost almost 40% of its value against the dollar and local suppliers hiked theor prices significantly, with their eyes on international markets.

In 2003 the rand began to recover and by 2004 had made up all its previous losses, but accommodation prices were not adjusted accordingly.

Venter says that by 2003 South Africa moved into a different pricing category. Foreigners who had paid $40 to $65 a night in the 1990s now had to fork out $100 to $130.

Venter says that from the beginning of the global economic recession South African prices have risen more than 20%.

This excludes the price increases for the World Cup soccer tournament.

When the global tourism industry was contracting in 2009 other countries dropped their prices, but South African service providers went ahead with normal price increases.

The strengthening of the rand has pushed up these prices even further for foreigners, whose disposable incomes in the current economic situation are under pressure.

Venter says even if America’s inflation rate is applied to the prices – to offset the real price increase that tourists have to deal with – prices have risen 140%.

Although tourism to South Africa is showing sustained growth, Venter says it could have grown even faster if prices had not risen so rapidly.

Furthermore, whole segments of the target markets have probably been discouraged by the high prices.and  South Africa has lost its competitive advantage over other tourist destinations.

Brett Dungan, chief executive of the Federated Hospitality Association of South Africa (Fedhasa), says investment in quality accommodation is boosting prices because investors expect a decent yield.

- Sake24.com