Why a hotel Appletiser costs 
N$70 in Namibia

The Hospitality Association of Namibia says hotels are free to determine their own prices under a free-market system, following public complaints over excessive beverage costs.

At some establishments, an Appletiser now costs N$70.

Hospitality Association of Namibia (HAN) chief executive Gitta Paetzold says the association has no mandate to regulate pricing among its members, arguing that demand and supply of goods determine what consumers ultimately pay in the hospitality sector.

“Namibia enjoys free-market policies, where demand and supply determine prices,” she says.

This follows complaints from members of the public about the amount charged for soft drinks and water.

The Namibian has found that Protea Hotel charges N$60 for an Appletiser, N$39 for a soft drink, and N$36 for bottled water.

At Windhoek Country Club Resort, an Appletiser costs N$70 and a soft drink N$45, while at another local hotel, you will cough up N$66 for an Appletiser, N$36 for a Coca-Cola and N$30 for a bottle of still water.

The survey shows prices are double and triple those supermarkets charge.

Paetzold says consumers should not compare hotel prices with supermarket shelf prices, because the hospitality experience comes with additional costs.

“When enjoyed in the ambience of a beautiful setting, in a fine glass, served by service personnel in a pristine and remote setting, all these elements add to the operational costs of the property and are calculated into the rates charged and prices for the products served,” she says.

‘OPERATIONAL COSTS’

Paetzold says hotels have also been grappling with rising operating costs due to increases in wholesale prices of food and beverages, including meat, sugar, milk and cheese, which have increased by between 30% and 35% over the past two years.

She says higher rates and taxes, coupled with recent fuel price increases, have further pushed up the cost of perishables, with these expenses ultimately reflected in menu prices.

“Tourism is becoming more and more of a luxury, not only in Namibia, and guests/consumers will have to make their own choice on whether they’re still keen to enjoy the extra service and ambience offered at hospitality establishments, or whether they would rather drink and dine at home,” she says.

The Namibia Competition Commission (NaCC) says the high prices consumers are paying for beverages at hotels may be driven by the rise in operating costs rather than price fixing.

“There may be a possibility of hotels operating at a high cost, and therefore this could translate into some of the product offerings,” NaCC spokesperson Dina 
//Gowases told The Namibian last month.

The commission deals with regulating business practices across all sectors of the economy to promote fair market competition, prevent monopolies, and protect consumer welfare.

//Gowases said the issue is complex and cannot be assessed at face value, adding that customers are free to buy drinks outside hotels.

“The commission cannot at face value conclude that hotels would have a valid reason to fix the prices of beverages. The first question would be whether this is a price offered through conference bookings, walk-in restaurants within hotels, or guests staying overnight.

“Additionally, hotels’ main product is the provision of accommodation they offer guests, and that would most likely be what they would compete on,” she said.

According to //Gowases, clients have the option to buy beverages outside hotels.

“We are not aware of any hotel putting restrictions on buying beverages from external suppliers,” she said.

She said without evidence of actual collusion to fix prices, the complex consideration has to pass a few tests to create a basis for suspecting price fixing.

“One cannot rule out the possibility of collusion to leverage products offered to guests. However, beverages are likely to be a very small portion of hotels’ revenue and therefore bring into question whether there exists an incentive to fix prices of such products,” she said.

‘HOSPITALITY PRINCIPLES’

Windhoek Country Club Resort general manager Rudie Putter says hotel beverage pricing is driven by global hospitality principles and a range of operational factors.

He says pricing is influenced by the purchase cost of goods, which has been affected by rising transport costs and government taxes, as well as staffing, extended service hours, and operational equipment.

Putter says differences in pricing across hotels may also be linked to brand positioning, service levels, and the type of products offered, including whether beverages are imported, locally sourced or bottled on site.

“The drivers of hotel retail prices have many components, and the ambiance, facilities, and service elements play a role.

“Our aim is not to sell cheap drinks; our mission is to provide a curated experience for a discerning clientele that values the facilities and atmosphere and caring service more than the cost of a drink,” he says.

Putter says the hotel is currently a top-rated establishment on TripAdvisor in Namibia.

“We do keep a close eye on guest feedback on service, ambiance, the perception of value for money, and take that into account in pricing decisions.

“The Windhoek Country Club Hotel and Casino Resort is currently rated number one out of 26 hotels in Windhoek on TripAdvisor, and that bears witness to our service delivery and facilities, as well as the upkeep of our outlets to deliver on the expectations and define the value of our offer,” he says.

Questions sent to Protea Hotel were not responded to by the time of going to print.

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N$70 in Namibia appeared first on The Namibian.