EXCHANGE RATE DISCOUNTS???

[Buckdog]

Hey guys and PH/Outfitters as some of you may or may not know the Rand is getting killed vs the dollar and a dollar was worth about 12 rand 6 months ago now is approaching 16 rand and is expected to go higher. RSA fired the finance minister and the rand is headed in the toilet.
SO if I can do the math a dollar now buys 1/3 more and soon to be maybe 50% more in RSA money.
So we should be seeing some serious hunt prices dropping if we are paying in dollars!

 

[JimP]

I wouldn't bet on it.

The hunt prices dropping that is. That is one of the reasons that the hunts are priced in US dollars or Euros.

 

[vinnymbogo]

That's not the way international commerce works! The country with the devalued currency must make hay while the sun shines.

 

[PHOENIX PHIL]

A few weeks to go until DSC, we'll know then.

 

[Red Leg]

That's not the way international commerce works! The country with the devalued currency must make hay while the sun shines.

It only works that way if the buyer participates. If he is still willing to buy product at the new provider "cost" then it is called profit on an international product. It is why our monetary policy for the longest time was a weak international dollar. Some of our products were priced more competitively, on others we had higher profit margins. The RSA might and could leverage a week Rand if the hunter market decided to move elsewhere - say Asia - but thus far, clients are still booking.

 

[Buckdog]

Hopefully a savy outfitter will realize he can make a tidy profit on the currency exchange rate and thus decrease the costs and increase his business and still make a nice profit!
International markets react instantly to currency fluctuations so why shouldn't the hunting market react? Especailly if WE start asking the question. The PH/outfitters will be all to happy to take the currency exchange windfall and shut up unless we ask. and you can bet they track it and if it was our dollars going down the prices would be going up. believe me if the dollar against the rand tanked 30-50% the price would go up.

 

[BRICKBURN]

..........
International markets react instantly to currency fluctuations so why shouldn't the hunting market react? .........

Just for arguments sake:
Have a look at the volatility of the currency then compare it to the safari booking timeline.
You are not jumping on a plane tomorrow?

Can you forecast where the Rand is going to be in 6 months, 1 year and 2 years from now.

Thus, the Outfitters try and remove that volatility by using first world currency. USD, Euro.

If you can get someone to book a hunt for you in Rand, go for it.

 

[PHOENIX PHIL]

If it were a simple matter of the dollar getting stronger it would be one thing. But this seems to be a case also of the Rand getting weaker, and yes there is a bit of a difference. As I understand it while we are enjoying far lower fuel prices here in the U.S., the price of fuel in RSA has actually increased somewhat. The weaker Rand still has to buy oil to refine into gas. So while the price of oil has come down in terms of USD, the cost of oil in Rand has gone up due to the weakening of the Rand. What other products which are imported to RSA and on which the outfitters depends has this occurred? I don't know the answer to that question, but time will tell.

 

[Bruce]

ALL the stock in my gun shop theoretically goes up with the weakening Rand... ie Rands used to pay for imports due in dollar currency payment.
We try to keep the "old Rand price" as long as possible and maintain our profit margin as it was at the old Rand price... with any new stock, the price obviously goes up accordingly... our valued customers understand this and tend to climb in and buy while the sun is shining and making the hay dry...selling RAND items in Dollars ( as do the hunting outfitters etc, is another issue to look at in these times..Buckdog seems to have an amicable solution here?

 

[Ridge Top Ranch]

Prices rarely go down. Animal feed, breakfast cereal, ect all go up quickly if price spikes. Commodities fall and the price stays high. Taxidermy prices go up due to oil effect of forms and shipping. Oil prices tank, taxidermy prices keep going up.

Cost of items is never a real factor. Prices are set by what people are willing to pay. Sometimes you make money, sometimes you lose.

 

[thi9elsp]

I agree with JimP - prices are quoted in stable (I say that somewhat bemusedly) currencies due to the risk of quoting in local currencies. Although a few deals have been put out there that reference the exchange rate, I think that is more marketing than true economics at work. Historically, the real deals seem to relate to new concessions or late season from what I've seen.

 

[KMG Hunting Safaris]

Just for arguments sake:
Have a look at the volatility of the currency then compare it to the safari booking timeline.
You are not jumping on a plane tomorrow?

Can you forecast where the Rand is going to be in 6 months, 1 year and 2 years from now.

Thus, the Outfitters try and remove that volatility by using first world currency. USD, Euro.

If you can get someone to book a hunt for you in Rand, go for it.

Wayne, you nailed it. If hunters are happy putting down 75 -100% deposits, they need to contact me. I have some GREAT deals for them.

 

[peras]

Agree with Marius, the Rand is very volatile and can move quickly up or down depending on political decisions. Large deposits will be needed to take advantage of the situation as Marius pointed out.

 

[Aaron N]

Agree with Marius, the Rand is very volatile and can move quickly up or down depending on political decisions. Large deposits will be needed to take advantage of the situation as Marius pointed out.

I'm more than willing to re-book the up-coming hunt to take advantage of the current economic climate!

 

[Buckdog]

brickburn, thank you for pointing out currency voltility and that is true HOWEVER the rand has been tanking for 6 months and is not expected to stop that trend anytime soon. take a look at the chart last i looked down 32% since last summer. Given the severe drought etc the predictions of the money gurus its not coming back anytime soon probably going further south over the next 6-9 months. dont think for a minute that hunting isnt a business and if the dollar tanked 32% that hunt prices wouldnt be going up.
now Pieter and Marius are some very savy businessmen and I appreciate that they see the silver lining in all this as I guessed they would and it is definitely a potential for them to increase business. possibly a win win situation.
So guys what are you proposing??

 

[JES Adventures]

Interesting thread, I've never booked a hunt based on exchange rates. I simply have a goal, make a plan, book a hunt and enjoy myself. Honest outfitters will stay in business regardless of fluctuations in economies, thus if you book right everyone benefits. At the end of the day, nearly every PH I've hunted with became a friend. So if they can benefit on my dollar, good on them.

 

[petrusg]

See thread: http://www.africahunting.com/thread...on-trophy-prices-and-daily-rates.23765/page-2 for a good explanation in my opinion:

This is an interesting thread...

My view on the matter:

If I were to book a hotel room for $100 in the States at 13/1 and the exchange rate changed between my booking and my actually staying there - would it be fair for me to ask the hotel to adjust its rate accordingly? Would any hotel even consider or entertain such a request? I guess the answer is "no", they price in US$, I pay in US$ and they couldn't give two hoots of what the ZAR is doing in relation to the US$... The hotel has priced itself - based on its star rating, on its reputation, on what the market is willing to pay and how much profit it wishes to make... Why should it be different the other way around?

Is it important for me to know how much profit the hotel is making at $100p/n and is it important for you as customer how much profit your Outfitter is making? Is there an acceptable "margin" that you - as customer perceive to be fair as far as your Outfitter's profit is concerned?

What is in my view important is that the receiving end of this deal is indeed making a profit - especially if I book my trip a year out... Last thing I would want is to do is to pay a deposit on a trip (or full fare in the case of booking a hotel) just to arrive there to find the doors are closed for business... I personally don't care whether the hotel I book makes a 30%, 50% or 100% profit. As long as they provide the service they promised and as long as I can afford it I'm happy...

Here in Limpopo - landowner's asking prices for e.g. Kudu increased by 100% and more from 2014 to 2015 (in ZAR). My price for Kudu (in US$) increased by 25% over the same timeframe... The Rand was changing at 10/1 last year and is changing at 13/1 now...

To put things in perspective - at 10/1 I got ZAR20,000 for a kudu bull last year and paid ZAR10,000 for it. So on the face of things I was making $1,000 on every kudu bull I hunted with clients (that is gross - not nett profit)...

Right now, I'm getting ZAR32,500 for the $2,500 I had listed for kudu when I was selling hunts at the shows beginning of the year but I'm paying ZAR25,000 for it. So I'm making ZAR7,500 (US$576 at present exchange rate) on a kudu bull. A few months ago - the Dollar was changing at 12/1 so then I was only getting ZAR30,000 for the $2,500 I charged and making ZAR5,000 ($384 in today's terms)...

Bottomline is my "profit margin" on kudu has more than halved in one year - in spite of the improving exchange rate (from a US perspective) and in spite of me increasing my price for kudu with 25%. Would it be fair for my clients to ask me for a discount now because the Dollar has strengthened? Fortunately they don't...

Of course; the favourable US$/ZAR exchange rate (from a US perspective) does give Outfitters more leniency in setting pricing in some instances and many of them (including myself) do. And all of us wants to get the most bang for our bucks - nothing wrong with that.

But personally I don't think the exchange rate should be a bargaining tool when negotiating your hunt.