Martin Snedden: Rugby profiteering will hurt NZ

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The World Cup is more than sport, it's about the nation's reputation, says Martin Snedden.

Martin Snedden is chief executive of Rugby New Zealand 2011. Photo / Dean Purcell
Martin Snedden is chief executive of Rugby New Zealand 2011. Photo / Dean Purcell

No one should back off this current debate about Rugby World Cup 2011 accommodation pricing. It is timely and will ultimately be helpful.

Charging fair prices will be one of the factors critical to making this event a success.

We want our visitors to enjoy their stay, linger long and leave with special memories.

Let's face it. Our country has probably never had a better international profiling and marketing opportunity. This is not just about 45 days next year. It's also about our future well beyond Rugby World Cup 2011.

The stark reality here is that we only get one crack at hosting this. If we don't get it right the first time, we don't get the chance to learn from our mistakes. Get this right and our international reputation will soar. Taint it by irresponsible profiteering within any aspect of hosting the event as a nation and we'll suffer badly. The consequential reputational and financial damage will be significant.

Most hotels are sensitive to this risk and are already acting responsibly.

More than 300 hotels in New Zealand are members of our RWC 2011 Official Accommodation Bank (OAB). The OAB's job is to act in an agency role to match-up the bed inventory provided to us by our OAB hotels with buyers from the "official market" we service (ie, the teams, official, sponsors, broadcasters, and the official travel and hospitality agents).

The rates being charged by the OAB hotels for the periods of peak demand (being the last three weekends of the tournament - the Wellington and Christchurch quarterfinals, then the semifinals and the final in Auckland) quite reasonably reflect the fact that demand for quality accommodation considerably exceeds supply, but in general are not much different than those for peak periods at other major international events.

But, within the OAB structure, there is one incredibly positive point of difference between this and some previous major events which, so far in this public debate, hasn't been appreciated, this being the minimum night stay factor.

In many previous major events, hotels in host cities have not only charged peak rates plus, but have often imposed hideous minimum night stay booking conditions. Sydney did this during the final stage of RWC 2003 where many hotels imposed nine-night minimum stays. This policy exploded in their faces. Visitors shunned these hotels and, as a result, the hotels lost money and lost face.

Fortunately, many of the hoteliers who the OAB was dealing with when we established the OAB three years ago clearly remembered that Sydney fiasco and almost all quickly agreed to restrict the minimum night stay length to two days throughout the tournament, extending to three nights only for the last (finals) weekend. Our hotel industry deserves much credit for this. .

So far, the OAB's top-end rooms, at peak demand times, are being quickly snapped up. The OAB has already confirmed bookings worth in excess of $60 million with our member hotels.

However, the official travel agents are now making it clear to the OAB that, in their opinion, the pricing for the periods outside of peak demand is generally too high. These agents say that, unless the market listens and adjusts their rates, they will either shorten their package tours or otherwise fill the gaps using alternative accommodation options.

Nothing wrong with this. It's how the free market operates. Either the seller meets the buyer or the buyer will go elsewhere or not come at all. I don't think travel agents are bluffing so the hotels will be wise to listen. The hoteliers are, by and large, a sensible bunch. I think they will respond appropriately, but I suspect they'll need to move quite quickly.

The other big "RWC 2011 accommodation" challenge now is for our entire accommodation industry to sensibly service the needs of the "free independent traveller" (FIT) market.

These FITs are the people who don't want or need help from travel agents, but who are comfortable piecing together their own travel, accommodation and match ticket arrangements. Our guesstimate is that the FITs will represent about 60 per cent of our RWC 2011 overseas visitor numbers.

This FIT market is just starting to activate now that we have begun our match ticket global sales campaign. Potential FITs are already on to the web looking at the various accommodation options. They'll be searching the sites of hotels, motels, B&Bs, holiday parks, private homes and even home hosting and some are now seeking quotes.

They'll know that bargains will be few and far between, but they'll be looking for fair value. The worldwide recession has hit people hard. There's less discretionary spend available. If they sense they are being ripped off they'll not only kill any idea about coming here, but will likely spread the word about why.

Once we gain a reputation for not providing fair value for money, it will be hard to shake off. Look at South Africa. Football World Cup 2010 visitor estimates, until three weeks ago, stood at 450,000.

Then, two months out from the start of the event and with thousands of match tickets unsold, these figures were suddenly revised down to 200,000.

I have faith that our accommodation providers will get it right, but the clock is ticking and the required fair balance needs to be found very soon.

In the meantime, the likes of the NZ Herald are doing us all a favour by keeping this issue firmly in the public eye.

- NZ Herald

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