JOHANNESBURG – South Africa’s tourism ministry has ordered an investigation into allegations World Cup hotel prices are unreasonably high, the second official probe into possible price gouging linked to the first African edition of soccer’s most prestigious tournament.
The allegations have worried hotel operators and others in South Africa’s tourism business, who called a news conference Tuesday to deny them a day after Tourism Minister Marthinus Van Schalkwyk announced an official investigation.
Members of the Tourism Business Council of South Africa, an industry group, said they were sure an independent investigation would prove most of them aren’t gouging.
Business leaders have urged South Africans not to take advantage of World Cup visitors, saying gouging will keep tourists from returning.
Jabu Mabuza, chairman of the board of South Africa’s state-owned tourism development company and chief executive of a national hotel and casino chain, said South Africa has sophisticated hotels, restaurants and attractions that rival those anywhere in the world. He said the strategy has been not to market the country as cheap, but as a place where a traveler can get value for money.
“It is quite disturbing to us … that there are people who have reportedly tripled prices,” he told reporters recently. “It is very shortsighted. I think it is, frankly, stupid.”
No one disputes prices will be higher during the World Cup, but the question is what is reasonable.
“In recent weeks we have noted allegations that accommodation establishments in the tourism industry are not responsible, and are inflating prices excessively,” the tourism minister said in a statement Monday. “Until now our impression has been that this is not the case, but we believe it should be investigated and the results of the investigation made public.”
Ministry spokeswoman Ronel Bester said Tuesday it was too early to say what action might be taken if prices are deemed too high. The investigation will be conducted by a private company, Grant Thornton, which provides risk analysis, financial and other services to South African businesses and has been closely monitoring World Cup economic trends.
The probe into hotel prices follows an investigation announced late last month into whether South African airlines are colluding to inflate prices during the monthlong World Cup which begins June 11. That investigation is being conducted by the government’s Competition Commission, which is charged with limiting monopolies and has a tribunal with the power to impose fines and other penalties. Keitumetse Letebele, a spokeswoman for the commission, said it was not yet clear when the airline probe would be completed.
An Internet check showed a flight from Johannesburg to Cape Town that would cost 870 rand Tuesday would cost 1,270 on a day after the World Cup kicks off. A room at a midrange hotel near Johannesburg’s airport that would cost 1,145 rand Tuesday night would be at least one-third more during the Word Cup.
Tourism business leaders said the higher prices reflect higher demand. They said that even though the World Cup falls during the South African winter, usually the low season, it will be treated as the high season because of the tournament.
Mmatsatsi Marobe, chief executive of the Tourism Business Council of South Africa acknowledged “sporadic” instances of gouging, but stressed it was not widespread.
“The market dictates what prices people charge,” she said, and added a warning for those who think the World Cup market can bear anything: “If you are going to be overcharging, guess what, your room is going to be empty.”
Marobe advised consumers to shop around, checking the Internet and comparing what different tour companies are offering.
Jaime Byrom, executive chairman of MATCH, charged by soccer’s international governing body with organizing accommodation during World Cups, appeared alongside Marobe at Tuesday’s news conference.
Byrom said that compared to previous tournaments in Europe, this year’s World Cup won’t be cheap. Europeans accustomed to hopping across a border for matches will have to travel much farther, and that costs more. He also cited the strength of South Africa’s currency.
Byrom said any gouging in South Africa did not differ from what has been experienced at other World Cups. He has contracted with South African hotels and inns to offer rooms to World Cup fans.
“We certainly received fair prices and reasonable terms of business that we were able to pass on to our customers,” he said, calling reports of gouging exaggerated.
“Once it’s out there, this bad news seems to have very long legs.”