The conversation on the cost of tourism in Zimbabwe has been going on for a while. Hotels have largely been under so much criticism over their prices. People say the pricing of accommodation is the biggest deterrent to their desire to stay at a hotel, and in comparison they find it cheaper to fly outside Zimbabwe and enjoy tourism at other destination countries. We sought to understand their perspective on the pricing issue, and find out what drives the cost. Following interviews with various stakeholders, we came up with this feature. 

What are the costs which contribute to the  price of hospitality?

The price you pay to make your booking is the end prove which is arrived at after considering a lot of cost lines which we will discuss below.

Value Chain Effect. 

Hospitality is part of a value network, for a hotel to serve a guest, it takes products and services from many other business operators. For you to enjoy the comfortable, luxurious experience and good meals, a lot of things are put together and they all come at a cost. Hardly is there something which you can point at in Zimbabwe and find it to be cheaper locally than in any other country. So it means the high cost of everything in Zimbabwe, builds up to the cost of hospitality, making it higher.

Interest Rates. 

Many hotels in Zimbabwe borrowed loans from financial institutions to refurbish, expand or carry other growth related operations. The local interest rate on borrowing is probably among the highest in the SADC region. Zimbabwe has an average interest rate of 25 percent; South Africa has 7 percent while Botswana has an average of 5.75 percent. This means it costs more for a Zimbabwean hotel to borrow money to improve facilities, and to recover, they have to raise their rates.

Rentals and Rates To City Councils

City Councils charge rentals and rates to every operating hotel, the  rental charge is based on the amount of space occupied and value of location. There are also rates paid for the services that the city council is responsible for providing; these include street lights, water, and refuse collection. Consider that many times there is no tap water, so a hotel will have to have an alternative supply. Also, many times the city council does no collect refuse, for one reason or the other, so hotels have to source other service providers who can pick up refuse so that guests can enjoy a clean environment. One local hotel is charged $14000USD per month for rent. For a hotel to raise that bill, it would have to have quite a lot of bookings to be able to covet that cost. 

Liquor License Fees.

To be able to serve you alcoholic beverages, hotels have to pay a liquor license for the hotel itself and for its separate bar. A liquor license costs nothings less than $600USD, and the cost can be higher for hotels. 

ZBC License and DSTV Subscription

Hotels pay licenses to ZBC, this is mandatory, whether guests watch local TV  or not. 

A subscription fee is also paid to DSTV for each television set in each room. Imagine how huge the bill is for a hotel with 100 rooms.

Broadband Subscription

Whenever a guest checks in to the hotel room, they want to have WiFi available, log in and start browsing for business or for entertainment. Hotels pay close to a million dollars for broadband costs. 

High Electricity Bill

One of the biggest cost lines a hotel faces is the cost of keeping everything switched on. To keep the lights in rooms, the computers for bookings, internet servers, kitchens, laundry machines, air conditioners and elevators comes at a huge cost. Some hotels are planning on switching to solar which is relatively cheaper.

Tourism Levies and License Fees 

To operate a hotel in Zimbabwe, regulatory procedures have to be followed through. License fees and levies have to be paid. These levies and fees are paid to the Zimbabwe Tourism Authority. Currently operators are required to submit a 2% levy on bookings. In comparison, a hotel in Botswana pays a levy of 0.2%. Earlier, a 15% VAT was scrapped off after stakeholders lobbied for its removal, this was anticipated to at least reduce the cost of tourism in Zimbabwe.

Cost of importing supplements.

A lot of the things you use when you get into a hotel are imported. The simple things such lotions, and shampoos are all imported as they are not produced locally. Linen, curtains, air fresheners and other products which make it comfortable for guests to stay in are imported. Importing means there are costs of transportation, and customs duty, which keep the cost high. 

Service and Maintenance Costs. 

These are costs which we will not likely see or think of, but hotels pay for maintaining facilities, keeping rooms cleaned — carpets and windows, keeping kitchen equipment running, servicing elevators, landscaping and cleaning pools. Since these costs are provided by local service providers, the value chain comes into play. If service providers charge high for their services, the cost will have to be recovered, and it’s through the price for booking. 

Hotel Pricing Strategy

Every hotel has its pricing model, based on its strategy. Some may choose to go for high volumes and low margins, expecting higher occupancy, whilst others may choose to go for lower volumes and higher margins. This may depend on the brand, the hotel’s target market, and the experience it provides. Some hotels sell exclusivity and elegance to their clients, so that attracts the high end clientele who pays more for a stay, whilst other hotels can sell convenience and access, which attracts  the middle and lower end of the market who can afford lesser budgets. There is no uniformity in hotel pricing, price will depend on the hotel’s strategy. As you go shop around for options on where to stay, familiarize yourself with this factor. 

Seasons: Peak and Off Peak Seasons

Laws of demand and supply work in the hospitality industry. Peak seasons are characterized by high demand, and when demand is high, prices will go up. When demand is low, prices are lowered — this applies to any other product or sector. When looking at prices, one should differentiate whether it’s the peak drown price or it’s the off peak price. In Zimbabwe, holiday periods like Christmas and Easter have high demand from leisure travelers, whilst the winters are usually off peak, making it cheaper to get a booking in that period. 

We hope after going through this breakdown of costs behind the scenes, you now understand how complex the pricing issue is. The bottom line is that for Zimbabwe’s tourism to become more competitive, a lot of macro and micro changes will have to be made, but it won’t be as easy as 1..2..3. 

There are some things you can’t control, but at a personal level, we are encourage you to take advantage of the special deals we share with you frequently. We are partnering with more hotels and soon you will be exposed at some amazing deals you never knew existed. Before you think of making your booking, check with us, we could have an amazing and irresistible deal! 

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