Pricing guidelines for graded hotels and guesthouses in South Africa

Abstract

Pricing accommodation is a complex process. This study attempted to provide guidelines for determining competitive prices for hotels and guesthouses in South Africa, the two types of accommodation that hold the largest share of the South African market. A survey was conducted in cooperation with the major role players in South Africa’s accommodation sector: the South African Tourism Service Association (SATSA), the Federated Hospitality Association of Southern Africa (FEDHASA), and the Tourism Grading Council of South Africa (TGCSA). A total of 2,288 questionnaires were sent out via e-mail and 247 were returned completed. The significance of the mean price differences of the star grading levels was tested, and hotels and guesthouses were compared using an independent test. A significant difference was found between the prices of hotels and guesthouses, especially in the five-star category. The study also revealed a 20% difference between the prices of the star categories. The pricing guidelines provided here can sustain competitiveness with growing profitability