Changes in pre- and post-pandemic pricing decision factors: An overview of South Africa’s luxury accommodation sector

Abstract

Large-scale events such as a worldwide pandemic impact multiple areas of the hospitality business, including the factors that influence luxury pricing. As pricing cannot be done in isolation, changes in trading environments need to be identified and pricing approaches adjusted to keep access to luxury products in the hospitality sector in line with changing consumer expectations and access to disposable incomes. An investigation was conducted using a qualitative method by collecting insights from 50 experts in pricing roles in the luxury hospitality sector in South Africa to determine the changes in pricing levels and approaches in the last decade and the expected future changes based on the current status of the economic and public health environment. The results from this investigation have shown a continuous increase in luxury accommodation price points with expected decreases in accommodation and events and catering revenue streams in the future, but no major change in food and beverage and auxiliary revenue streams due to the current global pandemic. The investigation has also shown, based on opinions of 50 key pricing decision-makers in South Africa, that service and product offerings, customer segmentation, location, forecast demand and the competitive environment remain the strongest influences in pricing decisions, with price sensitivity/elasticity, online presence strength, cost of hygiene practices and technological advancements becoming more relevant.

Keywords: digitalisation, hospitality, influencers, luxury, pricing, profitability, revenue management, technology